Companies Use Downturn to Cut Slackers

April 6, 2009

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Agency Business | Analytics, Automated & MarTech | Retail & E-Commerce | Trade Shows & Events

As the unemployment rate climbed to 8.5% in March, only 13% of US employers say they increased their number of permanent, full-time employees at their companies during Q109, while 64% hope to keep employment levels steady in Q209, according to the most recent quarterly employment forecast based on a survey from CareerBuilder and USA TODAY.

The “Q2 2009 Job Forecast” (pdf) survey finds that a large majority of employers appear to be holding off on hiring while they focus all their efforts on keeping current headcount intact during the down economy.

However, some companies are still taking advantage of the hiring slowdown to replace lower-performing employees with top talent that may not have been available in healthier financial times.

Hiring in Q1 2009

Though 13% of companies added positions (down from 31% during Q108), the majority of employers (60%) say their staff levels remained the same in Q109, while 26% reported a reduction in headcount, up from 13% this time last year. One percent of employers were undecided.

Hiring in Q2 2009

Looking forward to the second quarter, 14% of companies surveyed anticipate there will be a decrease in their headcount while the majority (64%) again expect no change, and 7% are undecided.


The 14% of employers that expect to add full-time, permanent employees in Q209 is relatively unchanged from the first quarter of 2009 (13%) and down from 29% in the Q208.


More than one-fifth (22%) of hiring managers report layoffs at their locations in Q109, up from 11% during the same period in 2008. Some 12% anticipate there will be layoffs in the next three months while 16% are unsure. Again, the majority (72%) expect no change.


Stimulus Poised to Help Companies

When looking more closely at a subset of managers specializing in HR, nearly half (48%) believe their organizations will benefit from the economic stimulus in terms of getting more business, the survey found Nearly one-fourth (23%) say their companies are planning to bring back workers who were laid off once the economy turns around.

Hourly Workers in Q109

When asked if hours had changed, on average, for hourly workers in Q109 year-over-year, 53% of hiring managers report no change in the number of hours offered while 25% report hours were cut. Some 5% state that hours had increased while another 5% are unsure.


Hiring By Region in Q209

The South continues to perform better than other regions in terms of hiring, seeing the benefits of growth in healthcare and energy. Some 16% of hiring managers in the South plan to increase their full-time staff, compared with a 14% average among other region, the survey found. The Northeast, plagued by losses in banking and financial jobs, is expecting the largest decrease in headcount among the regions. Nearly one-fifth (19%) of hiring managers expect to trim staffs compared with 14% in the Midwest and West and 12% in the South.

Compensation in Q209

Tightened budgets are restricting pay increases and, in some cases, resulting in pay reductions:

  • 46% percent of employers anticipate no change in compensation levels.
  • 7% expect a decrease in compensation levels.
  • 5% are unsure.
  • 42% of employers expect to increase salaries for full-time, permanent employees in Q209, down from 70% for the same period in 2008. Of these:
    • 29% estimate the average raise to range between 1-3%.
    • 12% expect an average raise of 4-10% percent.
    • 1% expect raises to be 11% or more.

Top Employment Trends

Survey results also point to six key employment trends for employers and job seekers:

1. Trimming Perks and Benefits: Companies are taking interim measures to free up funds to weather the economic storm. Some 42% percent of employers report a cut in perks and benefits at their organizations in Q109; 31% expect cuts in the second Q209. The top three areas that will be impacted are bonuses, 401K matching and healthcare coverage.

2. Upgrading Talent Rosters: 23% of employers said they are taking this time, when hiring has slowed, to replace lower-performing employees with top talent that may not have been available in a healthier economy. Job seekers who stand to benefit the most include those operating in sales, accounting/finance, retail and customer service.

3. Postponing Retirement: Six-in-ten workers (60%) over age 60 said, in a separate survey, they are putting off their retirement because of the impact of the US financial crisis on their long-term savings. The majority (73%) anticipate it will take them up to six years to recoup lost savings while 10% fear they may never be able to retire.

4. Transferring Skills: 71% of workers who were laid off and have not found work said they are looking for jobs outside of their chosen profession either because they’re ready for a change or there are no available jobs in their field. Hiring managers are amenable with 69% saying they would hire someone who didn’t have experience in their profession, but had transferable skills.

5. Relocating: 39% of workers who were laid off and have not found work say they would consider relocating to another city or state for a job. Employers are open to recruiting candidates from other cities with 28% of hiring managers saying they would pay to relocate a good job candidate.

6. Going Back to the Classroom: 21% of all workers surveyed are going back to school for formal degrees, certifications and refresher courses to make themselves more marketable to employers.

“We’ll be looking for the market to stabilize over the next three to six months, when you’ll hopefully see job losses below 100,000 and eventually closer to zero,” said Matt Ferguson, CEO of “Employers want to hold on to their talent and are taking measures to contain costs and bring in new revenue streams, so they can maintain their staff levels. Sixty-four percent of employers expect there will be no change in their number of full-time, permanent employees in the second quarter.”

About the survey: The survey was conducted by Harris Interactive in the US from February 20 through March 11, 2009, among 2,543 hiring managers and human resource professionals and 4,435 workers in private sector companies.


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