Is the economic crunch affecting the local job market?

It doesn’t take a genius to recognize that the current economic picture in the United States isn’t exactly rosy. The crash of the sub-prime mortgage market has had trickle-down effects through the entire economy, and the word recession is being tossed around more often than a football from Tom Brady’s hands.

Consumer confidence seems low, but sometimes that can be attributed to the fact that we’re in the midst of presidential primary elections and the gloom and doom that is often spouted by candidates. Still, there are legitimate consumer concerns. The ever-rising costs of oil and natural gas have a direct-to-pocket impact on the American wallets. Lower interest rates are generally met with inflation across the board, which could further threaten consumer spending.

The burning question that accompanies is how the labor market will be affected.

In December, the national unemployment rate rose to a two-year high of 5.0 percent, up from 4.7 percent in November. That’s something that America should be mindful of as economic concerns rise.

In Massachusetts, though, the story paints a more positive picture.

The data released last week for the state indicated that, as expected, there was a spike in December’s unemployment rate. The state unemployment rate rose from 4.3 to 4.5 percent, a slightly lower pace than the national economy. But for the Bay State, looking at this data in such a small window doesn’t paint the entire picture.

Over the 2007 calendar year, the state and national unemployment rates have moved in opposite directions: Massachusetts' rate is seven-tenths of a percentage point lower than the rate of 5.2 percent recorded in December 2006, while the U.S. rate is six-tenths of a percentage point higher than in December 2006.

Much of this can be linked to the ongoing success of some of the state’s key industries: healthcare and education. These industries added 300 jobs in December. Over the year, jobs in Massachusetts' largest super sector increased by 11,000 or 1.8 percent to 624,000, the largest numerical increase of any super sector.

We’re seeing similar growth in technology. Companies across the board continue to invest in improved technologies, making demand for key positions such as developers and project managers.

In fact, a recent survey of more than 100 business executives from Massachusetts-based companies conducted by AAI showed that now is a good time to be an IT employee in the Bay State.

Twenty-two percent of the respondents said that finding qualified candidates is a top priority for 2008. Sixty-nine percent of the respondents said that salaries for certified IT employees will rise this year, likely a response to the supply vs. demand issue.

We need to continue to watch the markets and the economy – both locally and nationally – with interest. But at this point key Massachusetts industries appear very safe which should be received as a silver lining for the state at this time of national economic concern.

As we’ve turned the corner into 2008, we wanted to get far ahead of the technology curve (yes, that’s a joke) and jump feet-first into the world of social networking with our new “Ask the Wise Men” blog. We’ll use this space to talk about the employment trends in Massachusetts, our area of expertise. Anyone who knows us, though, also knows that we have opinions about everything Boston, so you’ll also see musings about other topics near and dear to us like politics, business, finance and sports. We’d love to hear your thoughts, so don’t be bashful in leaving feedback or dropping us an email.

For our first blog post, we decided the New Year is the perfect time to look into the crystal ball and prognosticate on what we believe might lie ahead for New England in the New Year. The topics are broad, but heretofore is the “Top 10 Things You Can Expect to See in 2008.” Mark our words (though whatever you do, don’t wager on these happenings!) and enjoy our look at what lies ahead.

1. Sunny skies are ahead for local job market. The Massachusetts job market will continue to enjoy solid, yet unspectacular, job growth in 2008.
2. The economic forecast is as bright – partially cloudy with storm clouds ahead for the stock market. Due to the ongoing credit, mortgage and subprime woes, the stock market will experience some declines, but we will avoid experiencing a recession.
3. In the tech sector, the IT job market will remain strong. The hottest market to watch in 2008? Biotech will experience strongest growth as the established, larger local biotech and pharma companies such as Genzyme will rebound. You can also count on the fact that Massachusetts’ new biotech chief Bob Coughlin will set the path for local growth. In the start up front, watch for big things from companies like Elixir, which will continue to drive the local area tech market. While we expect dramatic boosts in biotech for IT staffing, healthcare jobs also continue to grow although more slowly.
4. The direct hiring trend isn’t going away. Due to a shrinking and aging labor pool coupled with growing technology needs, finding top IT contracting talent is becoming increasingly more difficult. This makes skilled IT workers a valued commodity.
5. Politics. Our riskiest prediction and boldest pick yet! Mayor Menino will seek re-election for yet another term as Boston’s mayor. Yes, we realize we are going out on a limb with this one.
6. Expect the feds to step in on the mortgage and credit crunch. They already have signs of this with the recent announcement that regulations on mortgage companies will tighten to combat predatory mortgage that currently have a stranglehold on the economy. If this credit crunch is to be solved, the solution will start at the federal level.
7. Boston’s reign as a championship town will continue. The Pats will win the Super Bowl, the Celtics will complete their worst-to-first run and win their 17th banner and the Sox will successfully defend their World Series title. Welcome to Championship Town.
8. Project managers will become the most coveted workers in the IT sector. There is growing complexity and need for IT professionals to have core business and management skills in order to oversee budgets and projects with cross-functional teams that impact various lines of businesses.
9. Maturing millenials generation will continue to drive the job market, but still may drive bosses and hiring managers crazy! Millenials will need to mature in the business world but their attitude is likely to bring with it an improved job culture across the board.
10. As Atlantic Associates celebrates its 10th anniversary in 2008, we predict decades and decades of successfully serving the IT staffing needs of New England business.

“The Wisemen,” John Fitzgerald and Jack Harrington, are co-founders of Atlantic Associates, New England’s leading IT staffing company serving the healthcare, biotech, financial services, higher education and government industries. Both were born and still reside in Boston. The pair is extremely active in local philanthropy and politics, and will publish occasional blogs with topics varying from business and politics to the economy and sports. They welcome your feedback and questions. Email askthewisemen@atlanticai.com.