Increased pre-job screening leading indicator?

Employment rates are seen as a lagging economic indicator, because businesses don’t feel comfortable hiring after an economic downturn until they see their customers coming back. For example, Chicago-based employment consultants Challenger, Gray & Christmas recently reported that two consecutive months of sales gains could be enough to trigger increased seasonal hiring by national retailers, but the number of workers added in October, November and December is still likely to fall short of pre-recession levels.

Holiday hires in 2009 were up 30 percent from 2008, according to the U.S. Bureau of Labor and Statistics – but 2008 represented a 22-year low for seasonal employment.

“This year we expect to see further gains in seasonal hiring, but it probably will not achieve the levels we saw in 2006 or 2007,´ said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. “Retailers do not want to be caught with too many workers at a time when many of the fundamentals needed for strong consumer spending remain a little shaky. There are still nearly 15 million Americans out of work and many have lost their homes or are struggling to hang on to them. This does not bode well for heavy holiday spending.”

But what about after the new year? Data from Premier Employment Screening Services in Fort Collins may point to more employers updating their HR processes ahead of additional hiring in 2011.

The number of pre-employment background checks Premier ran for its business clients in the second quarter of 2010 rose dramatically – 81 percent compared to the same period in 2009. This could indicate that companies could be preparing to hire next year after not hiring at all last year.

“We’ve had a significant increase in business this year, which can be attributed to two things,´ said Katie Zwetzig, co-owner and COO of Premier. “First, we see companies wanting to look at more tools and more automation to help them with the recruiting process, and second, we have seen our same-store sales begin a slow, steady increase. Overall – if pre-employment screening is an indicator of economic recovery – we are feeling pretty upbeat about 2011.”

Same-store sales are revenues from clients that used Premier in both 2009 and 2010, which increased by 1 percent in the second quarter year-over-year, after declining between 2008 and 2009.

Within the screenings themselves, Premier has also seen encouraging signs of employer confidence.

Employers continue to increase the number of checks they are running per applicant – the average was up 7 percent compared to last year – and the percent that include education verification more than doubled to 9.8 percent.

“Employers are making sure they have the most qualified person and they are verifying that those job seekers are being honest on their resumes,” explained Doug Hay, marketing director for Premier.

At the same time, the percent of background checks that include job verification decreased by 4.8 percent.

“You could argue that this points to recovery as companies just need workers and are not as concerned about how the applicant performed in previous positions,” he added.

on Facebook on LinkedIn