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March 2005

State of the Economy

I work in IT Staffing in St Louis.

I've been pitching to anyone that will listen that the economy in St Louis turned around in Spring 2003 - a little after a year when the coasts both picked up. IT Positions were not at the 1999 level, but everyone who wanted a job, had one, even if it wasn't at an overpriced salary with stock options.

A wasteland is how I describe the job market from 2001-2002, but by 2003, job orders were aplenty.

So why didn't that translate into rising employment? Because job orders don't translate to open positions. Wary executives were taking the easy road out, opening the purse strings, but closing them every other month, making it impossible to plan out budgets and staffing levels. Directors got the go-ahead to plan, but lacked headcount authority and couldn't spend their project budgets, necessitating 50 hour work weeks for their employees, who worked without raises because they were jsut happy to have a job.

We are now seeing jobs - real jobs, not just open positions going unfilled because those with the proper talents are still in scarcity, and now have the ability to pick and choose where they want to go. Rates have not gone up, because salaries have not gone up. Employers don't want their personnel budgets to spiral out of control, so they continue to do without the help they need. But the dam is breaking.

Six months ago, job-seekers were waiting a month on the decision to get a job, after they interviewed. Today, they're waiting for days - because if an offer isn't made - they take a second or third offer that appears. And so the market tightens. As the supply of available talent is still low, recruiters are increasingly having to go inside companies and pluck out the best talent. That is not possible without a higher rate. Good candidates will not switch jobs for a lateral move.

But as the need grows, rates will come up, and recruiters will start cherry-picking the talent out of companies that have grown complacent with their retention strategies. Once that starts, HR departments and CIO's will have to start increasing raises and benefits to retain their staff. Retention in a tight economy is about alleviating stress on workers and giving them hope about the future. Retention when the waters are churning with valuable employees bucking to leave for a $20,000 jump in salary - is about Showing Me The Money.

And on a side note - the ability of independent contractors to make their fortunes increases. Companies lacking the ability or the time to hire a contractor or a full-time employee will gladly hire an independent consultant for project work. I know, because I'm watching it happen.

The rules are being rewritten everywhere you look. Companies are starting to look nervous. The economy is back in a big way. Are you ready for your next career?