Philadelphia-area companies have big plans for hiring in 2018 but don't know whether they will find enough skilled applicants as the labor market tightens, according to a new survey from the Federal Reserve Bank of Philadelphia.
Finding good job candidates was the second-biggest problem among the 124 companies that responded to an annual survey commissioned by the Greater Philadelphia Chamber of Commerce, behind only competition.
Taxes didn't seem important even as Congress passed reforms that slashed the corporate tax rate last month. In a ranking of potential problems for 2018, responding Philadelphia-area companies ranked taxes as seventh out of 11 potential problems. Companies responded to the survey during the first two weeks of December, about the time that Congress was drafting the final version of the tax reform legislation.
The survey results were released at the chamber's outlook breakfast on Friday at which Michael Angelakis, past chairman of the bank's board and a former top Comcast executive, said he was "awkwardly optimistic" about the economy but also wonders how long the economic expansion can last.
Labor quality is likely to emerge as a concern nationally as the stock market surges and unemployment trends down, leading companies to compete for workers with sought-after skills. The Philadelphia region's unemployment rate in November, the latest available from the federal government, was 4.7 percent, compared with 4.1 percent nationally.
Potentially placing more of a burden on the Philadelphia-area job market, Amazon said last week that the city made its first cut of potential locations for its second U.S. headquarters, an economic-development project that could add tens of thousands of jobs.
Elif Sen, senior economic analyst with the Philadelphia Fed, said that the expectations for hiring in 2018 could be a result that companies did not find the right people for jobs in 2017 so their plans for boosting payrolls have spilled into this year. Or it could be that Philadelphia-area companies "ran lean" for years and now are hiring full-time employees, Sen said. Almost half of the respondents said they expect to hire full-time employees this year.
According to the survey, the biggest concerns for Philadelphia area companies for 2018, in addition to U.S. competition and labor quality, were wages, benefits, government regulation, poor sales and taxes. These were ranked from the highest concerns to the least concern.
In 2011, Philadelphia-area companies listed poor sales, benefits, competition, and wages as their top concerns. Labor quality ranked seventh.
Even with the labor concerns, Philadelphia-area companies are anticipating strong demand for new orders and sales in 2018, the survey indicated.
"There is nothing that sticks out as something that would impede improvement," Sen said. "There is nothing that will bring everything to a lurching stop."
The survey respondents, all members of the Greater Philadelphia Chamber of Commerce, skewed toward service firms, Sen said. This is reflective of both the regional and national economies. The chamber has commissioned the survey since 2010. Based on the survey's trend lines, it looks as if economic expectations for new orders among Philadelphia-area companies seem to have peaked in 2015.