Mid-sized companies feel more upbeat about the economy, but it’s getting tougher for them to find the workers to fill job openings.
In a survey by M&T Bank economist Gary Keith, 45 percent of respondents said it was more difficult to acquire talent than a year ago. The survey was based on the views of middle market firms – with sales of $10 million to $500 million – in Buffalo-based M&T’s territory, which consists of six states and the District of Columbia.
The overall picture was favorable: 59 percent of the respondents expected U.S. economic growth to accelerate in the following six months, the highest percentage answering that way since the start of 2011.
And 32 percent of the firms planned to hire more workers in the next six months, while only 2 percent planned to lay off workers.
But their hiring plans could hit a snag if they can’t hire people with the right skills.
“We’re going to have this disconnect between employers wanting to add employees and then the difficulty finding qualified employees addressed,” Keith said.
Keith said he expects Federal Reserve will keep a close eye on the trend. If employers resort to wage increases to attract people or hire them away from other companies, “we could get some buildup, I think, in some inflationary pressures on the labor front,” he said.
In the Buffalo Niagara region, the average annual size of the labor force declined in 2013 and 2014, according to state labor data. It declined again in January from a year ago, to a size that was 6.1 percent smaller than it was 10 years ago.
Keith said the sluggish nature of the recovery left some workers on the sidelines for a while, and their skills may have atrophied. “It’s sort of an interesting dynamic where we’ve been waiting for jobs to happen, and now they’re here, and the labor force sort of has to work on its ability to provide what’s needed.”
The survey found only 29 percent of mid-market firms in upstate New York expected their regional economy to outperform the U.S. economy during the first half of 2015. That trailed the percentages of firms in the mid Atlantic, metro New York City and Pennsylvania who felt that way about their regions.
Is it a sign of hard-earned skepticism by upstate firms? The answer is more nuanced, he said. Within the upstate results, firms in Central New York, such as Syracuse and Binghamton, had less confidence that their own region would outperform the U.S. economy than those in Western New York or Albany did, he said. “They’ve been trailing this recovery to a larger extent than, say, Buffalo or Albany.”
Overall, 59 percent of mid-market firms in the survey said they expected U.S. economic growth to accelerate over the next six months, the highest reading in the survey since the start of 2011. A net 36 percent of the firms planned to increase their capital spending this year.
Keith also surveyed commercial real estate companies; 69 percent of them expected the national economy to improve in the first half of 2015, while 3 percent expected it to deteriorate.
The Internet survey was conducted in January and February. A total of 340 middle market companies and 65 commercial real estate investors/lessors responded. Keith conducts his survey twice a year.