Economists tell us that 2011 will be the year the recovery gathers momentum and the pace of job creation accelerates. These analysts maintain that employers will increasingly have to think about hiring and also about retention, as current employees see more job options.
The 2011 Associated Industries of Massachusetts General Wage and Executive Compensation survey reports published today reflect both optimism and caution among Massachusetts employers about the direction of the economic recovery:
- Merit budgets continue to climb. Employers expect to raise salaries by an average of 2.4 percent during 2011, compared to 2.1 percent in 2010.
- Companies planning pay freezes dropped from 35 percent of survey respondents in 2010 to 17 percent in 2011.
- Seventy percent of survey participants are replacing open positions and critical hires. Another 25 percent report normal recruitment activity. Only 1 percent of companies report a hiring freeze for 2011.
- Steady resumption of bonus activity, elimination of reduced work hours and furloughs, and reductions of involuntary turnover.
The 212 AIM member employers who participated in the survey paint a picture consistent with recent economic numbers. The 7.8 percent Massachusetts unemployment rate in April, for example, compares favorably to the peak rate of 8.8 percent in October 2099 and the current national unemployment rate of 9 percent.
And the addition of 19,500 jobs to the Massachusetts economy during April is more significant than the minimal change in the unemployment rate. Job growth in the manufacturing, education and health services, hospitality and manufacturing point to measured confidence among employers. Buoyed by strengthened corporate profits and balance sheets, employers now appear poised to resume hiring and restore competitive compensation practices.
But these employers are moving forward cautiously. They realize that Massachusetts has recovered only one-third of the nearly 143,000 jobs that were lost during the last recession, and there are still more than 272,000 residents without a job.
Companies continue to expect turbulent economic news and conduct business with the expectation that we are in a prolonged recovery.