Strength in labor market reflected by rise in Citizens Business Index

Despite the risk of recession, Citizens Business Condition Index (CBCI) increased to 53.9 in the first quarter, Citizens announced on Tuesday. 

Citizens Bank has multiple locations throughout central Pennsylvania and the Lehigh Valley.

The index rise reflects continued strength in the labor market, additional business openings, and positive corporate revenue trends. The first quarter bounce-back indicates a return to positive business conditions following a drop below 50 in the fourth quarter last year.

“The U.S. economy bounced back during the first quarter and, despite the disruption in the financial sector, there are several positive signs going forward such as improving inflation measures and still-strong labor numbers,” Eric Merlis, Citizens’ managing director and co-head of global markets said in a statement. 

“Policymakers are still trying to thread the needle amid heightened recession concern, but companies that have made it through the pandemic and recent headwinds continue to prove their resiliency.” 

Despite aggressive Federal Reserve rate hikes aimed at slowing the economy to curb inflation, the labor market has remained resilient. Citizens’ proprietary data on client revenue grew across industries during the first quarter with consumer services and health care among the top sectors due to their ability to pass on rising costs to customers. 

The manufacturing sector slowed as higher borrowing costs impacted expansion by limiting capital expenditure. 

The index showed improving dynamics in the business environment. Three of the five components listed below boosted the index level while one was neutral, and one weighed on the reading: 

  • The proprietary activity data of Citizens’ commercial banking clients, a key component of the index, was very strong across regions, suggesting that the conditions at middle-market and mid-corporate businesses remained positive. 
  • The ISM non-manufacturing component grew as consumers spent more on services and companies in these sectors were more able to pass on any increased costs. 
  • New business applications increased, helping to boost the index. 
  • Employment trends, which are measured by initial jobless claims as an index component, were flat for the quarter, but nationally the number of jobs gained overall was surprisingly high despite much-publicized corporate layoff announcements. 
  • The ISM manufacturing index decreased as the sector is more sensitive to rising interest rates. 

 The trends capture a quarter where demand for goods was lower while demand for services was steady amid broader employment stability. CBCI’s first quarter rise revealed a business environment that is adapting to the year-long rate hike campaign from the Fed. The labor market’s strength continues to have a stabilizing effect on business.

Merlis said the first-quarter index indicated a business environment where activity has adjusted as interest-rate hikes seem to be working to curb inflation.

“The still-strong job market continued to be a source of support during the quarter,” said Merlis.

Harsco announces Q1 revenue of $453 million  

Harsco Corp., which plans to relocate its Camp Hill headquarters to Philadelphia early next year, reported first-quarter revenue Tuesday from continuing operations of $453 million. 

That represented a 1% increase from the prior quarter. Operating income from continuing operations was $8 million, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $49 million. 

Founded in 1853, Harsco provides environmental solutions for industrial and specialty waste systems and technology for the rail sector. The company employs 12,000 in more than 30 countries. 

“Despite Harsco facing a challenging operating environment marked by increased inflationary pressures, we met our first quarter guidance,” Chairman and CEO Nick Grasberger said in a release. “… As the global economy continues to grow and sustainability goals remain a focus, Harsco is poised to benefit as a leading provider of recycling and material re-use solutions within industrial markets.” 

Underlying demand within most key markets – including the steel industry – is firm, he said. “The global steel market is in the process of rebalancing as a result of the Russia-Ukraine conflict, and we anticipate limited impacts over time given the diversity of our portfolio. 

“Meanwhile, continued high inflation as well as supply-chain and labor-market tightness remain concerns, particularly in the U.S. Internal actions are underway to mitigate these impacts and we remain confident that each of our businesses is positioned to deliver operating results growth in 2022.” 

Harsco has updated its 2022 guidance to reflect the challenges related to inflation – particularly in transportation and container costs – and ongoing labor-market tightness. It now expects to report $81 million to $96 million in operating income for the year. 

The hiring game has changed. Here’s what you need to know.

James Carchidi, who runs JFC Staffing Companies, says traditional hiring methods won’t work anymore. PHOTO/SUBMITTED

The latest employment news — and what it might mean with the ongoing pressures for finding workers — reinforces something that James Carchidi says hasn’t been new for a long time.

“Now is the new normal,” said Carchidi, who runs JFC Staffing Companies, which has offices throughout Central Pennsylvania.

The unemployment rates for the nation and the state have been hovering around what is considered full employment — where those who want a job should be able to find one — for years now. On the national level, the unemployment rate reported at the end of October was 3.6 percent. In Pennsylvania, the jobless rate has been slightly higher, or about 4 percent, in recent years.

That tight labor market means the issues for companies trying to find talent are the same, said Carchidi and others involved in the staffing industry — employers no longer hold a lot of the power.

“It’s turned upside down,” Carchidi said. “Talent has the upper hand.”

The old days of placing advertisements and expecting to get the best workers are long over as well, Carchidi said. He and others advise companies to do what they can to retain talent, but Carchidi would add that they need to use modern tools to make their workplaces look special or exciting.

Companies should use social media to promote their brand and image because modern-day workers will seek out such media to get a feel for whether they would like working at a particular company. Carchidi goes so far as to suggest that workers should be encouraged to use their own, private platforms to talk about their jobs and workplaces.

“Let them play in it,” he said about the various platforms. “The stories of employees have a lot of weight.”

That openness could make some companies nervous, he said, because managers might not always like the comments. But insights coming directly from workers will sound much more genuine than pre-screened photos or comments posted on a company’s official social media platforms.

“I know that is real scary for some people,” he said, “but that is the way to do it. When it is done right, it is so much more impactful.”

If issues do arise about inappropriate or questionable comments, Carchidi suggests talking to an employee one-on-one to discuss the concerns with the goal of improving the workplace. That goes much farther than writing a broad-sweeping memo about do’s and don’ts of social media, he said.

In addition, companies cannot ignore independent platforms, such as Glassdoor, that rate their workplaces through postings by current or former employees.

“Negative ratings can be more powerful than positive ones,” Carchidi said.

But how you react becomes more important that the actual negative comment. Avoid sounding defensive or arguing with the person doing the posting, he suggested.

As far as the official sites, Carchidi said, companies should work to make sure the content is honest and doesn’t feel fake.

“You can’t make it look canned,” he said.

A tight labor market

He and others said companies also need to be sure they are offering a great place to work, generally. Staffing agencies network with employers to find good fits, whether temporary assignments for a specific project that might last months, or a few years, or a temporary assignment to fill a gap.

Some agencies also will place people in companies where the workers become a part of that organization, with the agencies receiving a fee for the recruiting help. Regardless, everyone is swimming against the same strong economic currents.

“The demand is higher and the supply is less,” said Deborah Abel, president of Abel Personnel, which has offices in the Harrisburg area and Maryland. “The number of people looking for a job is much, much lower, since so many people are employed.”

In the past, Abel said, her agency might like to see 10 people to find six or seven who would be placeable. That would include people with the skills, work ethic and experience to handle a number of positions. Today, perhaps two out of 10 might fit the profile needed to be placed.

Technology has helped businesses attract a flood of resumes and inquiries, but that often means that job seekers simply are sending out notices for any job, whether they are qualified or a good fit, she said. That wastes time for human-resources personnel.

A staffing company can cut through the clutter by screening workers. And they can help job seekers by ensuring they are focusing their search on jobs that are attainable.

“We can look at the whole person,” Abel said. “We can look at them for the range of jobs that they have potential.”

Susan Graham’s company, Susan Graham Consulting based in Camp Hill, specializes in placing people with backgrounds and skills in IT. Even during the Great Recession, when unemployment soared, people with technology skills remained in demand, especially if they kept up their skills or acquired new credentials, she said.

Today, competition is that much more intense for high-quality, experienced IT workers, she said.

Keep them satisfied

Companies that don’t invest in good pay and benefits will find it difficult to attract workers. In fact, her company will be increasing its benefits package next year, Graham said.

The worker shortages aren’t likely to end any time soon, the experts agreed. Abel noted that a teacher shortage has become so acute that there is a great demand for substitute teachers, which includes an increasing use of subs who do not have official teaching credentials.

Several observers noted that the best policies for dealing with worker shortages start with how you care for those hired long ago.

“The best thing an employer can do is keep people satisfied,” Abel said. That includes competitive salaries and benefits. “It’s also showing employees appreciation, showing them respect.”

Immigration could ease industry labor woes

“It’s human capital, it’s a numbers thing,” said Kevin Schreiber, president and CEO of the York County Economic Alliance about the role of immigrants in solving workforce woes. – Amy Spangler

Two things sometimes get lost in the discussion about how to improve workforce development in Pennsylvania, according to Kevin Schreiber, president and CEO of the York County Economic Alliance.

Simple math and immigration.

“We have a labor shortage in America right now,” Schreiber said. It’s human capital, it’s a numbers thing.

And, he said, “I think a solution to our workforce challenges rests in immigration.”

The Economic Alliance hosted more than 50 educational and industrial representatives on Friday in York to hear State Auditor General Eugene DePasquale talk about ways to improve the workforce development system in Pennsylvania.

Most of the discussion centered on findings from a performance audit review of the Pennsylvania Workforce Development Board released by DePasquale in February, attendees said.

Media was invited to the event but were not permitted entry for the presentation.

The performance audit, a highly-detailed document based on surveys and interviews with industry executives and others, recommended the state and its workforce development partners put more focus on basic people skills, emphasize the earning potential and job security in manufacturing and increase efforts into training older workers.

It’s an important discussion in York where, Schreiber said, 17% of county’s workforce is in manufacturing.

“That’s nearly twice the state and national average,” he said. “We’re going to suffer the same retirement wave of people exiting the workforce in the next decade that everyone else will, and ours will be more predominantly in manufacturing. We know young people that will be entering the workforce, generally speaking, are not necessarily looking for those trades. So what are we doing now to position ourselves to backfill those positions?”

The answer lies partly in immigration policy, he believes.

There’s much discussion among employers about H-1B visas, particularly in the tech industry, Schreiber said. That program allows companies in the U.S. to temporarily employ foreign workers in certain occupations.

Some are concerned that denials of H-1B visas has risen steadily from 13,073 denials of first-time applications in 2015 to 69,543 this year. The approval rate fell from about 96% in 2015 to 85% this year.

These employees are essential at many companies, according to Schreiber.

“More broadly, a constant level of uncertainty pertaining to immigration injects a level of instability for current or potentially future workers for their companies,” Schreiber said.

He pointed out that Immigration needs to be part of the discussion to solve workforce challenges in the country, the state and in York County.

A study by researchers at the Migration Policy Institute examined the role of immigration in the labor market. That report, released in August, noted an expected decline in GDP growth over the next decade is due in part to slow growth of the labor force.

Researchers stated that U.S. labor force growth is currently one-third of its recent historical average, and it is projected to slow further as population aging and lower birth rates take their toll on labor supply. Admitting more immigrants is one way U.S. policymakers can bolster growth in the workforce and the economy, the report said, and a larger role for immigrant workers could also help mitigate other symptoms of a slowing economy, including low productivity growth, declining domestic geographic mobility and falling entrepreneurship.

Thais Carrero director of the Pennsylvania chapter of CASA, an immigrant advocacy organization based in Virginia and with an office in York.

“That is definitely the angle that we need to bring up to actually talk about immigration,” said Thais Carrero, the director of the Pennsylvania chapter of CASA based in York who attended Friday’s event.

CASA is a nonprofit organization that works to organize, advocate for, and expand opportunities for Latino and immigrant people in Maryland, Pennsylvania and Virginia.

“I think we’ve been discussing other rhetoric for far too long, and what we really need to focus on is the economic impact of immigration,” she said.  “If we bring to light the economic impact, and if we make people understand that this is not just people coming in to just be here, but to actually contribute to the economy and fill these jobs that are available that other people are not able to take, I think the discussion will definitely take a different turn.”

Guest view: From a firm in the middle, a perspective on hiring

A year ago, about 75 percent of managers surveyed nationally were struggling to find suitable candidates.

Here in Central Pennsylvania, where unemployment was even lower than the national rate, that percentage was likely even higher.

And a year later? Little has changed. We’re experiencing the tightest labor market conditions in 18 years.

The unemployment rate in counties in Central Pennsylvania ranges from 3.0 to 3.8 percent — great for job applicants but a significant challenge for employers with open positions to fill.

Those of us in the staffing and recruiting industry understand those challenges — we’re dealing with them ourselves. While most of our time is spent finding top prospects for our clients, we’re also looking for and hiring candidates for our own open positions.

Tackling the challenge

With most professionals currently employed and not job hunting, businesses are having more difficulty than ever finding candidates for key positions. To combat shortages of skilled and technical labor, companies are increasing pay and expanding training opportunities.

And in this strong economy, companies are adding positions as well. So, while they may be searching for qualified people to fill vacant existing jobs, they may also be looking for skilled workers for new positions.

Some searches are requiring extraordinary time and patience, particularly for positions that entail specific technical skills. Top performers might be mulling over several employment offers. So, if you need to find the best candidates for a key position, start sooner rather than later. Your search could take even longer than it would have a year or two ago.

Now more than ever, companies need to be strategically smart when recruiting employees. Here are several actions to include in your recruitment plan:

  • Network with peers from other companies — yes, competitors — who may have leads to share from time to time.
  • Review salaries and benefits, compare them to the local market and upgrade as needed. Improve other incentives, such as advancement opportunities, training and education.
  • Look at employees already on your payroll who show promise and ambition. With some training, some might be well-qualified for open positions.
  • Use behavioral and personality assessments to identify candidates who appear compatible with your company but may need additional training. While ability is important, so is a good fit for your company’s culture and values.
  • Be more flexible when hiring part-timers by fitting their work time to their needs. If you can accommodate their personal schedules, you have a better chance of keeping them.
  • Plan ways to create positive candidate experiences. Today’s employees desire a work/life balance and want to feel happy and fulfilled, including at work. Potential employees are more likely to join your firm if they sense camaraderie and a welcoming environment.

When the market is tight, your competitors are experiencing the same challenges, so don’t let your best employees get lured away by your competition. You might have to go the extra mile to retain them. In addition to providing generous compensation, offer valuable employees professional development and mentoring as well.

What will the employment picture look like a year from now? No one knows for sure, but 2019 is looking to be much the same as 2018. So, continue to plan ahead, start candidate searches promptly and use strategy in your recruiting efforts.

(Photo: Submitted)

Scott Fiore is president of TriStarr, a staffing, recruiting and consulting agency in Lancaster. TriStarr serves client companies, as well as temporary and permanent workers, in the Lancaster, Harrisburg, York and southern Berks County markets.