We released the Q2 Yoh Index of Technology Wages this morning, and found that after two straight quarters of modest wage increases, positive momentum stalled. In fact, wages stood at $30.98 an hour in March 2011. By June, wages only increased one cent, to $30.99 an hour. This reversal of the six-month trend of wage increases suggests a slackening demand for temporary workers. The Index was negative in year-over-year comparisons. It was down 3.27 percent in April, 2.62 percent in May and 1.41 percent in June.
There could be a few reasons for this stagnation of wages and demand, revolving mostly around the uncertainty around the slow-moving and still-fragile economy. The anxiety over the potential downgrade of the U.S. credit rating, fears of a double-dip recession, and the deceleration of GDP growth have all played a role.
While this news is disheartening, there is still hope. U.S. corporations are holding record amounts of cash on their balance sheet, indicating that when uncertainty dissipates, companies will be able to take immediate advantage of building their businesses. They will likely look to the temporary workforce to jumpstart these strategic objectives.
In addition, consumers have been returning to the marketplace, raising confidence levels, even with lingering uncertainty. This will have an impact on the demand for highly skilled workers, as will historically low interest rates. Finally, earnings and growth are powerful motivators. And when businesses see there is an ability to make money, they will add to their workforce, regardless of employee productivity. This is particularly true at the beginning of a cyclical upturn.
It's still too soon to tell what the coming months will look like for recovery and job creation. But whatever the outcome, businesses must realize that leveraging a blended workforce that utilizes permanent, contracted, and temporary employees is the only way to achieve success during times of uncertainty.
