Return of the tight job market
The economy added 243,000 jobs last month, and wages are on the upswing.
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Employers are on the prowl, trying to entice construction workers, nurses, database administrators, and certified public accountants, just to name a few areas where businesses can't keep up with demand. Wages, once nonnegotiable, are on the table.
Would you rather live in Fort Walton Beach, Fla.; Charlottesville, Va.; or Fargo, N.D.? Just call: Someone in each of these places is advertising for workers.
The vibrant economy is now spilling over to the workforce with a strength that hasn't been seen since the late 1990s. The economy has added an average of 226,800 jobs per month for the past four months, including 243,000 in February, as reported last Friday. The surge is so strong that some economists now believe the Federal Reserve will be able to hike interest rates even higher without putting too much of a drag on the economy.
"The economy is a little bit stronger than the Federal Reserve's expectation," says Gregory Miller, chief economist at SunTrust Banks in Atlanta. "It gives them cover to raise interest rates with minimum risk of undermining sustainable growth."
The improved job market is encouraging those who had given up on finding work to try again, which is one reason the official unemployment rate rose to 4.8 percent last month. The "quit" rate is also up - a sign that employees feel confident about finding another job.
Only spots in the industrial Midwest appear to be missing out on the jobs surge.
"We're seeing areas where the unemployment rate has fallen to the lowest point in their labor history," says Mr. Miller.
According to the Bureau of Labor Statistics, 178 major metropolitan areas had unemployment rates in December below the then-national average of 4.6 percent. Thirty-three cites had unemployment rates below 3 percent, including Morgantown, W.Va.; Dothan, Ala.; and Bismarck, N.D.
The Southeast is one of the hottest regions, particularly Florida, which had a 3 percent unemployment rate in January. In December, it had the three lowest unemployment areas in the nation: Fort Walton Beach and Fort Myers at 2.3 percent and Gainesville at 2.2 percent.
The Miami-Fort Lauderdale area has an unemployment rate of 3.3 percent. There are already reports that construction companies and hotels are having difficulty attracting workers. Some hotels reportedly might have to bring in labor from outside the United States.
The region could get even hotter. Recently, the state Legislature permitted Florida insurance companies to sell insurance to foreign nationals. That could result in the gain of 25,000 to 50,000 jobs over the next 10 years, estimates Frank Nero, president of the Miami-Dade Beacon Council, an economic development organization.
"One of the unique things is that our labor force continues to grow," adds Mr. Nero, who is also an economist. "From Palm Beach to Miami, we get 120,000 new residents in the state per year."
Shortages in construction workers are not limited to Florida. In Sacramento, Calif., Harbison-Mahony-Higgins Builders would like to hire six to eight project managers and engineers to handle complex construction projects such as hospitals.
"You just can't hire right out of school to build a hospital," notes Cynthia Adamson, a vice president.
The shortages in Sacramento construction go well beyond Ms. Adamson's core company. "We hire subcontractors who do the carpentry, plumbing, and drywall, and they are so busy they can't find people for their crews," she says.
Economists believe a major engine of the jobs surge is small business. Although the hiring by small companies does not show up in the payroll survey - which is mainly large business - it does show up in the household survey, another Labor Department report. "For some time they have been the driver beneath the surface of Atlanta's economy," says Miller.
One of these small companies is Builders Insurance Group, which provides insurance products for the home-building community. Five years ago, the Atlanta company had 73 employees. Today, it's up to 160.
"We're planning on hiring 50 people this year," says CEO Bill Lohmeyer, who notes it's hard to find educated and trained insurance professionals.
The Atlanta area might see an increase in people looking for jobs upon completion of the AT&T and BellSouth merger. AT&T, which is based in San Antonio, has already said it will lay off 10,000 people. BellSouth is headquartered in Atlanta.
For those losing their jobs in Atlanta, it might be heartening to know that nationwide, the number of people unemployed 27 weeks or longer is coming down. The long-term unemployed now represents 19 percent of the total unemployed, compared with 20.5 percent a year ago.
"We're getting the takeup of people who lost jobs in the recession," says Andrew Stettner, a policy analyst at the National Employment Law Project in New York.
At the same time, average annual earnings are rising, up 3.5 percent from February 2005. That's the strongest gain since 2001. "As [wages] accelerate, people have more income to spend, and as people spend, business hires more workers," says Gina Martin, a financial economist at Wachovia in Charlotte, N.C.
To hire the new staff, companies often turn to recruitment companies. But even those companies say it's becoming increasingly difficult to find candidates.
"We're finding people are getting multiple job offers," says William Grubbs, chief marketing officer at Spherion, a staffing firm in Fort Lauderdale. "Employers are being forced to make decisions quicker."