Employers' Hiring Plans Show Continued Anxiety About Future

Even with rosier economic forecasts for next year, a survey of Washington area employers suggests skepticism. Employers appeared less optimistic about the future this year than last year, with more planning to freeze salaries and hire fewer new workers.

The survey results, released Wednesday, were prepared by the Human Resource Association of the National Capital Area, which has collected data from hundreds of companies, government agencies and associations for 30 years. The organization earlier this month reported on the compensation packages the employers had actually given workers this year. In the new study, employers were asked what they plan to do next year.

Researchers say last year's survey was conducted about a month before the financial meltdown in the fall, perhaps at a time when employers were more optimistic and before many took drastic measures in cutting workers and raises. Yet, according to the researchers, the results illustrate widespread uncertainty and caution among employers.

The employers are thinking, "'Maybe we need to take even fewer risks and not extend ourselves,'" said Angelo Kostopoulos, president of Akron Inc., a District-based firm that conducted the survey for the association. "You need a year or two to let things settle down before you start extending yourself again."

Federal Reserve Chairman Ben S. Bernanke has said he believes the recession is over. And data in the Washington region, which because of the large federal government presence did not feel the full brunt of the downturn, are beginning to show improvement. A study released Wednesday by the Brookings Institution shows the region's economy grew 0.6 percent from the first to the second quarters of this year, compared with a 0.2 percent drop in the U.S. gross domestic product.

Moreover, the federal government is expected to hire more than 100,000 new workers in the area over the next few years, and housing sales and prices have been rising.

"We're in a favorable position relative to other metros," said Alice M. Rivlin, senior fellow at Brookings.

Still, from August 2008 to August 2009, the Washington region experienced a net loss of about 50,000 jobs, said Stephen S. Fuller, director of George Mason University's Center for Regional Analysis. The largest losses occurred in retail, leisure and hospitality, and construction.

The good news for the region, Kostopoulos said, is that employers appear to be putting the brakes on layoffs for next year. Only five of the 245 employers that responded to the survey said they planned to cut staff by more than 10 percent.

But fewer employers this year said they expected to expand their staff. This year, 33 percent said they would increase the number of salaried employees, compared with 54 percent last year. Their plans to hire more hourly workers followed the same pattern.

This year, 13 percent of the employers surveyed said they would freeze salaries for 2010, compared with 2 percent who said so last year. On average, the employers' pay budgets will rise 2.8 percent, compared with 3.8 percent last year.

Thirty-seven percent said they would reduce their budgets for raises, compared with 28 percent who said so last year.

Employers planning to offer the highest raises are professional services firms -- 3.8 percent increases for salaried employees. Technology firms were more likely to report that they intend to increase their budgets for raises, while government agencies, schools and health-care institutions were less likely to say so.