Is Technology Bottoming?

Is the technology sector about ready to turnaround, or has it at least hit bottom?

The Department of Labor says that technology related-employment actually rose by 7,400 in July, after several months of declines. Granted, 7,400 jobs isn't a lot for the entire country, but that sure beats the 247,000 jobs that were lost overall, and one of the first really positive bottoming-out signs seen yet, at least in the employment arena, which tends to be a lagging economic indicator.

To date, most of the euphoria about the economy bottoming has been about things getting less bad, as opposed to seeing actual positive numbers (like increased retail sales or increased hiring). So, to see the technology sector actually increasing employment is a huge plus.

Of course, one month does not make a trend, but this at least indicates that a bottom is near or here, at least in technology.

If you work in the technology sector, have you seen any positive changes? Let us hear from you about what you're seeing.

Seattle VCs Project Increase in Layoffs at Funded Companies

An article in today's TechFlash say that a large chunk (50%) of VC funded businesses in the area are looking to decrease their workforces in the coming months.

With funding WAY down, and most of these businesses not generating enough (or any) cash flow to support their current payroll, staffing has nowhere to go but down.

Just another example of what we've been projecting all along: we have more to go on the downside, before the labor market bottoms.

Projected Salary Budget Increases Lowest in 36 Years

Salary budget increases are at there lowest in 36 Years, according to preliminary results released last week by WorldatWork.

In addition, according to the press release, at least 40 percent of salary budgets are frozen for officers and executives, says the WorldatWork survey of U.S. organizations.

Below is the press release from WorldatWork that was published earlier today:

Washington, D.C. – July 8, 2009 – Corporate salary budget increases have dropped to historic lows, according to the WorldatWork 36th Annual Salary Budget Survey. At 2.2 percent, the 2009 increase is the smallest in the survey's history and 1.7 percentage points below the 3.9 percent that had been projected in the previous year's report. The WorldatWork survey, the largest of its kind, clearly shows that the economic crisis continues to put pressure on employee salaries, though projections for 2010 suggest improvement.

The 2,600 respondents to the survey are WorldatWork members who are employed in the compensation and benefits departments of various employers, representing a total of 16 million U.S. employees.

"A projected salary budget increase of 2.8 percent for 2010 indicates we may have touched the bottom this year and a turnaround may be on the horizon," said Anne C. Ruddy, CCP, president of WorldatWork. "While it's heartening to think the worst may be behind us, compensation plans will likely be in flux for at least the next 12 months. We plan to re-survey our members this summer to monitor thawing of any kind."

"This recession is having a greater impact on compensation than the previous recession brought on by 9/11, when employers still managed to increase salary budgets by 3.6 percent," observed Alison Avalos, research manager for WorldatWork. In spite of the falling budgets, the survey shows employers are committed to awarding raises to about eight in every 10 of those employed. "This may come as a surprise to many given that one in three survey respondents indicated they are planning zero-percent salary budget increases this year," added Avalos. "Layoffs, hiring freezes, shifting pay increase dollars from executives to staff, and other cost-saving actions may be allowing employers to continue planning for at least some pay increases for remaining employees, especially top performers," Avalos explained.

Human resource practitioners continue to use variable pay, which consists of cash bonuses and other incentives, to reward results. For 2009, employers are budgeting an average of 5 to 11.5 percent for variable pay, depending on employee category.

About the Survey:
WorldatWork collected survey data in April 2009. The full survey report includes results for North American regions, all 50 states, major U.S. metropolitan areas, major industries as well as data by organization size, performance category and employee category.

Additional data cuts are now possible via SBS Online, which gives subscribers the ability to customize data cuts. A free Webinar will be held on August 25 for members and non-members.

In an independent survey by IOMA (April 2009), the WorldatWork Salary Budget Survey was rated the most popular source by 74 percent of large companies surveyed.

About WorldatWork® - The Total Rewards Association
WorldatWork is a global human resources association focused on compensation, benefits, work-life and integrated total rewards to attract, motivate and retain a talented workforce. Founded in 1955, WorldatWork provides a network of more than 30,000 members and professionals in 75 countries with training, certification, research, conferences and community. It has offices in Washington, D.C. and Scottsdale, Arizona.

WA State Unemployment Rate Hits 9.4%

After stabilizing for one month in April (after a long string of unemployment rate increases), the State's unemployment rate has resumed its upward march, standing now at 9.4% for May 2009 (up from April's adjusted 9.0%).

In the past year, the total number of unemployed in the state has nearly doubled rising from 177,000 to 336,00. Over the past year 116,000 jobs have been lost in the state, but even more surprising is that over 40% of those losses have taken place since the beginning of this year.

Even some of the formerly strong areas such as high tech workers are now on the decline. "Information" workers are down 2.9% in the past year.

The only areas showing net increases over the past year are healthcare, social services and government (virtually nothing can't halt the growth of government!). The view the compete report from the state, click here.

Visit Doug at the Conference!

When I was at the WorldatWork conference in early June in Seattle, I ran into an old friend and colleague, Matt Johnson of NextComp (developer of a great market pricing tool you should checkout at www.Nextcomp.net).

Matt was nice enough to shoot a brief video of me introducing the new StrategicPay Series (www.strategicpayseries.com). You can find that blog post and accompanying video here.

Enjoy!

Healthcare Cost Containment?

If you see any real healthcare cost containment going on, please let me (and the rest of the country) know.

Each year some major consulting firms and others conduct their annual healthcare cost studies, and while the trends seemed to be moving toward slightly lower annual increases (down to the upper single digits, from the low double digit percentage annual increases), the last two studies I've seen are predicting roughly 10% annual increases in healthcare cost for 2009 and 2010, in the middle of major a major recession with virtually no (non-healthcare) inflation!

For instance the Buck Consultants 20th National Health Care Trend Survey is predicting between 10% and 11% annual increases (depending on plan type) for 2009 and 2010. In other words, while wages are are flat to down in real (post-inflation) terms and companies suffering from falling sales and profits, somehow, healthcare can increase 10% in cost.

I've been reading about how many consumers are delaying going to the doctor, and not electing to have elective procedures done, but costs still go up 10%? Somewhere I recall hearing about this concept called "the law of supply and demand," but apparently I was mistaken about that!

Healthcare costs for employers have more than doubled since the turn of the century and employee's out-of-pocket cost have tripled. Healthcare is slowly bankrupting our country.

I'm not a fan of government intervention in the free market, or of government-provided healthcare, but something has to be done. In 1980, healthcare was about 9% of GDP, and in 2009 it will be approximately 18%. We're heading toward 20% of GDP being spent on healthcare in this country within a few years. Yes, you read correctly, one out of every five dollars spent in this country, will be spent on healthcare alone.

Announcing the StrategicPay Series!

Today, Applied HR Strategies is announcing the publication of the first of several planned "hands on" guidebooks to help business, HR and even compensation professionals to be able to "do it yourself" ("DIY") on compensation development projects that are normally hired out to compensation consultants, at many times the cost of the Series modules (we call then toolkits).

The StrategicPay™ Series was created for HR, compensation and business professionals that want to have technically sound and professional compensation programs, but who can't afford (or don't want to afford) the high cost of hiring outside compensation consultants. It's also designed to help HR and compensation professionals learn and grow professionally in strategic areas of compensation planning and program development.

Also, effective immediately, the StrategicPay Series website will also be the home of our main blog. We will continue to periodically post compensation and HR stories directly related to the Pacific Northwest here, but for our main blog, visit us here.