While 2014 was the strongest year for hiring and job gains since the 2007-'09 recession, economists say the fact that there haven't been corresponding wage increases, including at America's largest staffing firms, shows there is still "slack" in the labor force.
Rising demand for temporary employees at light assembly jobs and distribution centers helped drive a 7% gain in Kelly Services' fourth quarter U.S. revenues, up from 3.6% in the third quarter.
But that increasing demand has not yet translated into substantial wage gains for workers, because "the supply of unskilled labor is still pretty plentiful,” according to Kelly’s Chief Operations Officer George Corona in this Fortune/Reuters report.
Wages in the U.S. private sector reportedly rose 2% last year, while they were previously rising around 3% or 4% a year prior to the economic downturn.
Keith Waddell, the chief financial officer at Robert Half, said even salaries for occupations that typically require a college degree aren’t rising as quickly as they would in a "tight" labor market.
Robert Half reported a 14% increase in U.S. staffing revenues in the fourth quarter, the fifth consecutive quarter in which growth rates have accelerated.
What's been fueling the company's long-running winning streak? Robert Half is benefiting from workplace trends, Waddell told Investor's Business Daily in a November interview.
For one thing, he said, "there's clearly a secular shift for companies using more temporary staffers to have a more variable workforce."
Since the economic recovery began, by many economists' accounts in March of 2010, almost 10% of the jobs created have been temporary jobs, he says, better than the last recovery cycle starting in September of 2003, when temp jobs made up under 3% of jobs created.
Waddell told IBD 78% of Robert Half's revenue comes from its temporary and consultant staffing divisions such as Accountemps; 8% from its permanent placement division Robert Half Finance & Accounting and 14% from the Protiviti consulting and internal audit division, which specializes in risk, advisory and transactional services.
"We believe the labor markets have begun to improve our growth rates," Waddell added. He said the company has also seen improvement outside the U.S. as well, "most notably Europe. "
Wage gains in 2014 came in just above 3%. The company said it expects wage increases to get closer to the 6% range when the labor market tightens.
Randstad, a Netherlands-based staffing firm that is also a major player in the United States, is trying to improve recruiting efficiency to get ready for the tighter U.S. labor market it sees coming, according to Reuters.
The firm says it is investing in technology that will help recruiters do a more efficient job of sourcing candidates from social networks. Linda Galipeau, the chief executive for Randstad North America.
Linda Galipeau, the chief executive for Randstad North America, says it will eventually become harder to find forklift operators, machinists and welders.
Galipeau said that might be soon, though the lack of wage pressure for blue-collar jobs means this day hasn’t yet arrived.
“We’re back to a market that feels a little bit more like 2005 or 2007 than the market we have felt in last four years,” she said.