This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

June 30, 2004

The Shift has Begun

We have been forecasting the shift from a buyer's market to a seller's market in labor. Our message has been very clear that the past few years were only a pause in the demand for top talent and that the employment market would tighten up again.

The shift to a seller's market has begun.

The first metropolitan area to flip to a seller's market is the region known as "DELMARVA"---Delaware, Washington, DC, Maryland, and Virginia. The employment market in that region is now causing serious problems for employers who need to hire new workers. Enough opportunities are available that employee turnover has reached dangerous levels in a number of organizations.

To forecast which metropolitan areas---and other regions---are prone to flip to a seller's market, we monitor labor statistics, the economy, recruiting activity, staffing agency workloads, demand for executives by retained search firms, and other indicators. We have obtained comprehensive information that the National Capital Region has made the shift. Unemployment in Northern Virginia is now at 1.8 percent.

This condition in the Washington, D.C. area is just the beginning. Our research shows that ten other regions in the United States are positioned to flip in the not-too-distant future. These areas, identified in a "Red Alert Report" produced by The Herman Group and, are spread around the country and are influenced by different industrial sector factors.

The trends are in place. The move to a seller's market is underway---at a faster rate than most people expect. Consequently, at least one-third of employers will be caught without sufficient preparation for the groundswell of employee turnover and the need for aggressive recruiting. And a significant number of workers will not be prepared or positioned to take advantage of the situation and pursue the most desirable jobs.

Over the next few months, a substantial proportion of corporate leaders, employees, unemployed people, government officials, and journalists will be confused by seemingly conflicting numbers. Hampered by rear-view mirror forecasting---trying to move forward while looking at where they have been, many people will be surprised by the rapidly changing employment market.

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