A Buying Time for Employers as Yoh Index of Technology Wages Continues to StrengthenPosted on 4.20.2011 by Day & Zimmermann
PHILADELPHIA—April 20, 2011—For the second consecutive quarter, the Yoh Index of Technology Wages has shown modest gains as demand for highly skilled temporary workers increased, and wages for these same workers stabilized and ticked slightly upward.
The Yoh Q1 Index (Figure 1) followed Q4 results that showed a clear bottoming out of falling technical wages in information technology, life sciences, engineering, health care, aerospace, and defense.
“First quarter results confirmed our Q4 report that the bottom may have been reached, and wages for this vital component of the American employment market are strengthening, ever so slightly, as industry stabilizes and American employers search for ways to post gains in a recovering economy,” says Lori Schultz, President of Yoh.
The Yoh Index, which since 2001 has been benchmarking temporary wages for highly skilled employees, serves as a bellwether of longer-term economic health by assessing demand for technical skills in a knowledge-based economy.
While the Index fell 3 percent from December 2010 to January 2011, it rebounded 1.15 percent and 0.08 percent in February and March 2011, leading to a Q1 average Index performance of 110.4, nearly a 1 percent gain over the Q4 2010 Yoh Index (Figure 2). The January decrease reflected the same results as the Bureau of Labor Statistics (BLS) and payroll surveys, which blamed slackened first month demand on poor weather in key markets nationwide. Weather anomalies can have a significant impact upon the on-demand market of hourly-based temporary employment.
“Stabilization, while preferred over reductions in employment demand and wages, does not immediately translate into a vibrant labor market and illustrates ongoing employment weakness in the economy as a whole,” explains Schultz. “This is not surprising when you consider that while Q1 overall employment figures were widely reported as an improvement with some 216,000 jobs added to the U.S. economy, at current job creation levels, the country will require eight years of growth to replace the 8.8 million jobs lost in the recession.”
Recommended Actions for Employers: Capitalize by Decreasing Cost to Value of Talent Acquisition
While a non-robust but consistent employment market will moderate consumer optimism, it does present a number of opportunities for companies to maintain Wall Street momentum. This momentum can be sustained through smart employment practices that control labor costs while fueling key enterprise-wide initiatives designed to drive growth and seize competitive advantages.
One such area is in mergers and acquisitions. Last year, The Wall Street Journal reported that companies held more cash on their balance sheets than any time since 1952, the furthest back they could accurately research.
With corporate coffers flush, and organic growth difficult to find, M&A activity is heating up and expected to reach a boiling point in a number of industries in 2011. “First quarter M&A deals, such as AT&T’s intention to purchase T-Mobile, demonstrate the willingness of companies to acquire growth by putting cash on hand to work,” says Schultz.
Highly skilled temporary workers serve as a hedge to risk in acquisitive markets. During periods of high M&A activity, risk mounts as a possible target company works to maintain a dual track of operation, in case the deal never materializes. In such cases, highly skilled temporary workers can be deployed to move programs and initiatives forward, while not adding to long-term employment obligations if and when a deal is consummated.
At the same time, business demands for organic growth—while not revolutionary—are evolving, along with demand for skilled labor.
In technology, for instance, cloud computing and application development is positively impacting demand, even outside of what some might describe as the bubble of Silicon Valley. “Cloud computing and Web application development is for real, as seen in increased demand for these technicians across the country,” says Schultz. “While far from frothy, the demand in these areas is one factor that is stabilizing falling wages, and providing for more consistent future employment markets.”
Surprisingly, ERP is also showing renewed strength. Schultz continues, “Not everything is going to the cloud. Higher risk, back office processes will remain within the enterprise. And Yoh is seeing consistent demand for traditional ERP technicians who can build and deploy solutions quickly.”
Inflation Unlikely to Spur Wage Increases for Top Technical Talent
While commodity, food and fuel prices are spiking, inflation is unlikely to significantly increase wages for highly skilled employees in the near term. “To date, inflation has been walled off from the economy as a whole, and employees, still stung by the harsh realities of the recent recession, are reluctant to push for wage increases in light of the number of professionals still under-employed or absent from unemployment numbers through long-term joblessness,” explains Schultz.
However, the recession has also had the unintended effect of loosening the electrons that bind employees to an employer’s nucleus. As the economy recovers, employees are becoming more viscous and willing to consider change, and fear is slowly giving way to optimism. “For the first time in years,” begins Schultz, “we are seeing a willingness of some full-time employees to shift to the temporary market as a strategy to improve career and income prospects. As other workers see this success, it is likely to begin a domino effect of wage acceleration.”
For employers, the implications are obvious. “The ability to benefit from highly skilled workers at historically attractive rates and at historically high talent levels is an open invitation to tightly control costs while spurring growth and profitability,” says Schultz. “Skilled temporary workers provide tremendous flexibility in a still hardening economic recovery, where corporations need to deploy unimagined creativity to maintain growth, dividends, and competitive advantages in a less than robust demand environment.”
For more information, please visit yoh.com/yohindex or www.theseamlessworkforce.com.
For over 70 years, Yoh has provided the talent needed for the jobs and projects critical to our clients’ success, by providing comprehensive workforce solutions that focus on Aerospace and Defense, Engineering, Federal Services, Health Care, Life Sciences, Information Technology and Telecommunications. Yoh fulfills immediate resource needs and delivers enterprise workforce solutions, including Managed Services, Recruitment Process Outsourcing, Vendor Management Systems, Independent Contractor Compliance, and Payroll Services. For more information, visit yoh.com.
Yoh is a part of Yoh Services LLC, a Day & Zimmermann Company.
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