REPEAT:MNI REALITY CHECK PART 1: HIRING REMAINED ROBUST IN DEC

Repeats Story Initially Transmitted at 15:48 GMT Jan 4/10:48 EST Jan 4

--TAX REFORM EFFECTS DOWNPLAYED

--RECRUITERS HOPEFUL ABOUT 2018 PROSPECTS

By Vicki Schmelzer

     NEW YORK (MNI) - U.S. hiring remained robust in December, with little sign

of the usual end-of-year slowdown, according to recruiters interviewed for

Market News International's latest REALITY CHECK on U.S. employment trends.

     DECEMBER HIRING ROBUST

     "We had a great December, everything was still just as busy as it was the

previous month - there was not really a lot of fall-off," said Daniel Morgan,

owner of two Express Employment Professionals franchises in the Birmingham, AL

area.

     "Across the board," at all staffing levels, "people are expanding," he

said. 

     On the West Coast, "last year, December and then coming into January, it

was a bit slow," with election uncertainty stalling hiring. "This year, it

hasn't been slow," said Preet Kuar, Executive Recruiter and Business Development

Manager at Pacific Staffing in Sacramento, CA.

     In the last month, Kuar's clients have been quicker to hire workers and

have become increasingly competitive in their hiring, she said. 

     Contract-to-hire workers, who in the past needed to work for three to four

months before being hired directly, might now only work a month before being

offered a permanent position. 

     "There are a lot of companies converting and paying a fee to get the

employees on their payroll because they're afraid to lose them," Kuar said.

     For Anne Woods, franchise owner at the Express office in Covina/Santa Fe

Springs, CA, December was "good, in a weird kind of way," with businesses

"staying busier longer." But as the holidays neared, job candidates became "less

interested in talking to you."

     Now, at the start of 2018, "we're back open for business today and we're

slammed, we're absolutely slammed, " she said. 

     TAX REFORM DOWNPLAYED

     Companies were in hiring mode in December because of the strength of the

U.S. economy and not because of expectations of a big boost from tax reform,

recruiters told MNI. 

     In the Sacramento area, "employers are feeling good" about the prospects of

paying lower taxes going forward, "but it is not as major as they were hoping

for," said Pacific Staffing's Kuar. 

     And now being unable to deduct local property taxes larger than $10,000 on

the federal return makes California real estate look less attractive to

candidates moving to the area. 

     "Employers know that because there's such talent shortage, if we don't have

affordable housing and proper tax breaks for employees, we are not going to be

able to sustain good business here," Kuar said. 

     U.S. hiring is up mainly because of solid U.S. growth, although the

corporate tax cuts are "seen as a positive," said Express's Morgan. 

     "I think it's gotten to the point where they think they will lose business

if they don't have the extra person. Now, it's easier to pay for that person

because if not, I am going to lose the business anyway, he said. 

     Express's Woods maintained that companies would likely use tax savings to

pay down debt before using remaining monies for new hires, if they hire at all

as a result of tax reform. 

     "The market is incredibly efficient. And companies who are trying to buy

market share, and there's always somebody trying to buy market share, will use

that extra cash flow to lower their prices," she said. 

     "Will it help in the long run? Yes, sure, maybe. But will they hire more? I

don't see that happening at all," Woods said. 

     2018 PROSPECTS HOPEFUL

     On 2018 prospects, "it's hard to say for the whole year, but from my

conversations with my clients, it seems like it's still going to be strong,"

said Pacific Staffing's Kuar. 

     "It's still going to be a candidates' job market. A lot of companies are

running lean," she said.

     In the past three years, first quarter hiring has been sluggish in the

Birmingham area and Express's Morgan was watching to see if Q1 2018 will be

different.

     "If our sales, our business, starts to slide off, then we will know really

that there is no change from this year to next year. It might still be more, but

there's still a drop off," he said. 

     "Whereas maybe, because of the tax cuts, people go like 'let's go ahead and

get this person in here - I don't need to wait until March when business picks

up even more. I need to go ahead and get them in here and get them trained so

when March comes, they are ready to go,'" Morgan said.  

     Express's Woods observed that "all indicators are" that job postings and

placements will remain "robust" in the first half of this year, barring "some

big event."

     But, what will happen in the second half of 2018 "remains to be seen,", she

said. 

     "A seasoned person is pragmatically going to say - you just don't have

recovery forever," Woods said.

     Clients do not know what might cause the U.S. economy to slow down again,

only that the current expansion is overstretched and likely to correct at some

point in the not so distant future. 

     "We are due for a softening - not a great recession - but a softening,"

Woods said.

     Editor's Note: Reality Check stories report on topics of interest in the

U.S. economy and are intended to complement and anticipate economic data. If you

are currently an MNI subscriber and want to be on the Reality Check

email-distribution list, contact sales@marketnews.com

--MNI New York Bureau; tel: +1 212-669-6438; email: vicki.schmelzer@marketnews.com