A recent survey of Washington area employers found that fewer organizations plan to hire in 2013 and their budgets for raises are likely to remain flat, a finding that human resources professionals say is a result of uncertainty about the “fiscal cliff.”
Just 36 percent of local firms plan to increase their staff in 2013, down from 44 percent that said the same last year, according to data compiled by consulting firm Akron on behalf of the Human Resource Association of the National Capital Area.
Only 6 percent said they expected to cut staff, meaning the largest percentage of employers plan to keep their workforces about the same size.
“Employers across the board are being pretty cautious,” said Tom Wimer, chief executive of Axeo, a Reston-based human resources consulting firm.
The combination of possible government spending cuts and tax hikes known as the fiscal cliff includes a series of automatic budget cuts that could take place as part of a federal process known as sequestration. These cuts could take a big bite out of defense spending and, in turn, could hurt companies in the region’s extensive government contracting industry.
In that sector, hiring expectations are sharply lower for 2013 than they were the previous year, with 36 percent of employers planning to hire more workers next year, compared with 57 percent in 2012.
“The government contractor [industry], especially, would definitely be one where they’re holding their breath in some ways,” said Christian Britton, a compensation consultant at PRM Consulting Group.
Human resources professionals also say that the close election race between President Obama and Republican challenger Mitt Romney is putting employers in wait-and-see mode.
“Hiring in this town is greatly affected if we change political parties that are in power,” said Fran D’Ooge, president of Washington-based human resources consulting firm Tangent.
The election will inevitably result in churn among government workers, but D’Ooge said it could also have an impact on hiring at the associations, law firms and lobby shops whose work is shaped by priorities in the White House and on Capitol Hill.
When it comes to money available for raises, employers project that the hikes will account for 3.2 percent of their total payroll budget, the same level reported for 2012 and 2011.
“They have limited pools to distribute, but everybody still wants to reward their high performers,” said Kathy Albarado, chief executive of Helios HR.
Because the dollars will likely be funneled to top workers, “that’s going to mean more people go without a raise,” Albarado said.
At Computech, a Bethesda-based professional services firm, Vice President Fred Ackerman said the company is not looking to cut back its workforce. But because his firm contracts with the government, Ackerman said sequestration is a long-term concern.
“If it does hit, it won’t affect the business we have right now, today. And it won’t affect our hiring and salaries for 2013,” he said, adding: “It will have a dramatic impact after that. As in a ridiculously dramatic impact.”
For now, “our bonuses and our increases are smaller, but there,” he said.
The data reflect what employers plan to do for a category of workers defined as “exempt,” which generally includes salaried employees. Angelo Kostopoulos, president of Akron, said about 80 percent of Washington’s workforce falls under this category. For “non-exempt” workers, who are typically paid hourly, the survey results were similar: Fewer employers are planning to hire them, and budgets for them to get raises are slated to hold steady.