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12/4/2013
IOWA NEWSPAPER ASSOCIATION

Iowa Hiring Will Stall in 2014 According to Hamilton Hiring Survey

December 4, 2013 -- Des Moines, IA -- The Hamilton Hiring Survey, conducted in November, examined the hiring intentions of Iowa businesses for the first half of 2014. The results indicate that Iowa employers are feeling less optimistic than they were just six months ago.

Key Findings:

* Optimism for hiring has stalled for first half of 2014
* Some layoffs have crept back into the forecast
* Retail hiring a positive trend
* Hiring Authorities are seeing tight supply for workers in some industries
* Healthcare costs, unresolved budgets, debt ceiling, red tape and taxes still negatively impacting hiring decisions

Analysis:

The Hamilton Hiring Survey for the first half of 2014 indicates that Iowa employers' overall outlook for hiring has back-tracked from last summer.

The company surveyed 5,000+ small and medium-sized employers about their sense of optimism for industry job growth in the first half of 2014. Results showed that 50% of the respondents were either somewhat or very optimistic. This is down 18 percentage points from the 3rd quarter of 2013. "Business's optimism for hiring in the first half of 2014 is stalling." Hamilton Group President and staffing expert Tom Hamilton said. "Hiring and expanding a business is all about confidence, and employers confidence is being stymied by a number of national factors. Although we are off our highs from earlier this year, hiring could easily swing positive again if the macro business environment would become more clear." He added.

According to the Bureau of Labor Statistics, the national unemployment rate was at 7.3% in October. According to Iowa Workforce Development, Iowa's unemployment rate was 4.6% in October. One year ago, Iowa's unemployment rate stood at 5.1%.
Forty-one percent (down from 46% in the previous survey) of respondents said they expect to increase total employment over the next six months. Businesses indicated that sales have been steady and increased profits are increasing the demand for select employees. "Reinvesting profits into new hires is a long term trend that we are seeing across many industries in Iowa from agriculture, to manufacturing and retail. Many different industries are showing strong profits and will be the main contributors to the states modest job growth in the next six months." said Hamilton.

However, there are still some companies surveyed who said they were not ready to make changes to their hiring stance. Twenty eight percent (vs. 35% 2Q 2013) of respondents fell into the "neither optimistic nor pessimistic about their business prospects" category, and 42% (up from 36%) indicated there would be no change in their workforce or were essentially undecided about their future hiring. The uncertainty in hiring is driven by respondent's top four concerns, which included:

1. Costs and implementation uncertainties surrounding healthcare
2. Business regulations and red tape in their industry
3. Tax policies (corporate income, sales, gas etc.)
4. Federal Government Debt

"Until we can have a degree of confidence that our federal government wants to create an environment where a small business can rely on pro-business policies that don't over tax, over legislate and over regulate us, it is hard to make long term plans," said Gary Nelson, President of Rada Mfg. Co. in Waverly, Iowa. "Uncertainty kills making business decisions and it has never been tougher in my 30+ years to run a business," he added.

The percentage of Iowa companies who plan to reduce their workforce was 8%, unchanged from last summer. "Employers indicated they were not planning many layoffs for the first half of 2014. However, their appetite for technology and productivity is a growing trend showing respondents may purchase new technology in lieu of hiring more staff," added Hamilton.

A trend that has been prevalent in previous quarters was the use of contract labor. And it appears that the desire to add contract labor is steady. "Many organizations feel the use of contract employees gives them flexibility during uncertain times," said Hamilton.

Mixed bag: The survey concluded that Iowa employers have backed off from the positive shift in optimism since late 2012. With the State of Iowa's economic and political uncertainties becoming clearer, employers in most industries are showing improved confidence at the local level. Much of the hiring that will take place in the state will be a direct result of improving business conditions, a falling unemployment rate, a successful legislative session that included property tax reform, a state government budget surplus, rising stock market and home values, and recent national press on how Iowa's economy is outperforming other Midwestern states. These and many other positive factors are fueling the confidence of Iowa's small and medium-sized employers. However, employers cited the federal government and their continued failure to clarify a national strategy as a reason for pessimism. Because of this concern, it could be expected that Iowa's unemployment rate will stay in a range between 4.4% and 4.8 % into the first half of 2014.

"I am hopeful that Iowa can continue to be a leader in job creation and GDP in the Midwest," said Hamilton. "But the future risks to job growth include the federal government's unknowns next year. Businesses will keep a close eye on the risks that will impact profitability and ultimately job growth," concluded Hamilton.

The semi annual Hamilton Hiring Index for the first half of 2014 is now at 67*, a seven point decrease from the mid 2013 survey of 74*, but a sixteen point increase from (51*) a year ago.

About the survey:

The Hamilton Hiring Survey looks at employer confidence and hiring intentions in the state of Iowa. The survey results in an index number representing the overall hiring confidence for the next 180 days.

Much of the employment data available today is trailing statistics. The Hamilton Hiring Survey is the only statewide staffing survey of small and medium-sized businesses predicting future hiring trends.

The semi annual Hamilton Hiring survey was completed in late November 2013 and reflects attitudes and intentions for December - June 2014.

*From the survey a hiring index is calculated to indicate the level of optimism and hiring plans for the upcoming quarter. The Hamilton Hiring Index is based on a scale of 1-100. While 50 is considered neutral, a number above 50 indicates an expanding job market for small- and medium-sized businesses in Iowa. A number below 50 indicates a retracting job market for small and medium sized businesses in Iowa.

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For interviews with Tom Hamilton, contact:
(515) 221-1733
tth@hamiltonassociates.com

 

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