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Beige book: Staffing firms optimistic, districts report skilled-labor shortages

September 04, 2014

Conditions for staffing services were generally positive across reporting Federal Reserve districts, according to the Federal Reserve’s Beige Book report released Wednesday.

Staffing activity generally increased in Boston, and staffing contacts in Philadelphia noted increases in new clients and firms hiring to grow their businesses. Dallas reported mixed demand from staffing firms, noting strength in engineering, information technology, and health-care positions but flat demand for legal services.

Labor market conditions, as measured by hiring trends, were reported to be relatively unchanged from generally modest rates in most districts; however, contacts in nearly all districts reported difficulties finding certain types of skilled labor.

Contacts cited shortages of skilled information technology workers in the Boston district; truck drivers in New York; and construction workers in Atlanta. Employment agencies in New York described the job market as strengthening, and some Dallas contacts noted the labor market remains very tight in the energy sector. Contacts in the Cleveland, Richmond and San Francisco districts also mentioned challenges finding qualified workers. 

Some staffing highlights include:

Boston: New England staffing contacts generally cited increased activity since their last reports in May. Labor demand is reportedly strong in the information technology, software, aerospace, nursing, electronics and legal industries. Supply is largely unchanged since May, with continued shortages of high-end technical workers such as software developers, Java programmers, computer engineers, mechanical design engineers and quality assurance managers. Maintenance and ambulatory nursing positions are also reportedly difficult to fill. Both bill and pay rates have increased, with one contact expecting continued upward pressure on wages through the coming months.

Staffing contacts in the Boston district expressed concern about increased health insurance costs as a result of the Affordable Care Act and the extent to which they will be able to pass these additional costs on to their client base. However, New England staffing contacts are increasingly optimistic, expecting year-over-year revenue growth in the high single-digit range in coming months.

New York: Manufacturers continue to add workers, on balance, and considerably more plan to increase than to reduce staffing levels in the months ahead. A growing proportion of service firms say they are hiring. One major New York City employment agency reports hiring activity has continued to improve gradually, while another reports more widespread strengthening and notes increased wage pressures across the board. A growing percentage of workers are said to be switching jobs for increased pay.

Philadelphia: Some staffing contacts in New Jersey and Pennsylvania reported they are adding new clients and that firms are hiring to grow their businesses, not just replacing staff. Staffing firms were upbeat about prospects for the remainder of the year.

Cleveland: Many companies would like to add workers but can’t find qualified candidates. Staffing firms reported little change in the number of job openings and placements. Upward pressure on wages is being felt mainly by the construction and freight transport industries.

Richmond: Demand for both temporary and permanent employees rose slightly in recent weeks. In Maryland, contacts from the manufacturing, financial services, technology and construction industries indicated increases in hiring, including some previously outsourced positions. A South Carolina staffing firm representative noted an increase in hiring, including for temporary and temp-to-permanent jobs; however, some hardware merchants reported cutbacks in employee hours. Some call centers in North Carolina had difficulty filling open positions.

Atlanta: Employment levels picked up modestly across most of the region; however, businesses still mentioned difficulties in finding qualified workers, which seem to be both intensifying and broadening across skills and occupations. In addition to trucking, engineering, construction, and information technology positions, contacts increasingly reported difficulty filling mid-level positions such as analysts and clinicians.

Chicago: The pace of hiring slowed slightly, though hiring plans ticked up. Demand remained strong for skilled workers, particularly for professional and technical occupations and skilled manufacturing and building trades. Demand for lower-skilled workers picked up some, with a staffing firm reporting increases in billable hours in the trade, transportation and utilities industries.

St. Louis: Firms in healthcare, finance, retail, transportation and telecommunications services reported new hiring and expansion plans while firms in food, information technology and news media services plan to lay off employees. Producers of steel, pet food, plastics, lighting products, consumer goods and industrial appliances plan to hire additional employees and expand operations in the district while firms that manufacture tools and light machinery reported plans to lay off workers and close facilities.

Minneapolis: Labor markets continued to tighten gradually since the last report. More than half of all respondents expect to keep the same number of full-time employees on staff over the next 12 months, while about a third anticipate increased employment.

Kansas City: Wage pressures increased slightly since the last survey period, particularly for some skilled trade positions.

Dallas: Demand reports from staffing firms were mixed, but contacts noting an increase said it was broad-based across sectors, with particular strength in direct hires for engineers, IT and science positions. Demand for legal services was flat, although contacts said healthcare was a new bright spot.

San Francisco: Wages generally continued to rise at a modest pace, although skilled construction workers experienced more pronounced wage gains, as did certain technical employees in the computer industry. In addition, some contacts noted upward pressure on salaries for entry-level positions in the financial industry.