The sheer depth and breadth of the Great Recession and its impact on employment in the U.S. have led many economists to posit that it will be years -- as late as 2016 -- before the nation can dig itself out of its jobs deficit. The downturn cost the economy some 8 million jobs as employers pared down staffing to cut costs.
Though job creation remains anemic, other parts of the economy have shown signs of vibrancy. Amid the current round of quarterly earnings announcements, many corporations are reporting stellar profits, and stocks have enjoyed their best monthly gains in a year.
Focusing on Growth, Not Just Cost Control
Even normally cautious CEOs are saying the future looks bright -- or at least brighter, and have begun focusing on growth rather than cost control. More than half of large U.S. businesses that reduced staff in the last year plan to rebuild their workforces to pre-recession levels within two years, according to a recent report by employment-consultancy Accenture (ACN).
TheAccenture High Performance Workforce Study showed that among all U.S. companies surveyed, only 13% of executives said that they plan to reduce staffing levels during the next year. "The outlook is improving," says David Smith, managing director of Accenture's talent and organization performance practice. The study surveyed nearly 700 executives worldwide at firms with annual revenues of at least $250 million, including 117 in the U.S.
The report found that the percentage of U.S. companies focused primarily on cost control is expected to decrease to 18% in 2011, down from 41% in mid-2009. Further, the percentage of U.S. companies focused on expanding their businesses, which includes investments in such things as hiring, is expected to increase to 37% within the next year, up from the current 24%.
Familiar Reaction to Recession
Though the upbeat report may seem at odds with recent news about sluggishness in hiring, the survey's findings have little that's surprising, says Farrokh Hormozi, professor of economics and public administration at Pace University in New York. "It just fits within the rational expectation of the labor market," he says.
The recession and companies' reaction to it have followed a familiar pattern, Hormozi says. The Accenture report mirrors Hormozi's own research into the New York City area high-tech job market. Known as the Pace/SkillPROOF IT Index, the measure surged 47% during the second quarter in Manhattan, the largest three-month gain since data collection began in 2004. The composite index, which provides a snapshot of the local info-tech job market, saw a similar 50% gain in neighboring Westchester County. Both increases were on top of gains recorded during the first quarter.
"The increase that we've observed in the past two quarters in the IT market may be an indicator of [the overall hiring] trend," he says. Still, Hormozi says, expecting employment to return to pre-recession levels within two years may be a little too optimistic, except within high-performance jobs, those that require exceptional skills and expertise.
Finding -- or Being -- the Top Employees
But the Accenture report also showed that employers may have difficulty finding those tip-top employees. Of the U.S. executives surveyed, only 15% described the overall skill level of their workforces as leading their industry. The shortage of employees with relevant skills presents a hurdle for companies as they plan for growth, says Accenture's Smith.
"Companies need to rethink how they equip employees with the skills required to be competitive today," Smith says. "They must also consider new strategies for hiring and developing untapped talent currently available in the market."
So, too, do unemployed workers need to find ways to boost their own skills. As Pace's Hormozi's notes, underperforming employees are the first to be let go amid an economic downturn. And without additional training, they're likely to remain among the last to be rehired.