In ThIs Issue

1 Introduction2 TheEvolutionof

aCompetitiveWorkforce&WageGap

3 PerformanceExpectations

4 HigherLearningSectors

2008Le

high

Val

ley

Wor

kfor

ce R

epor

t This report was originally presented to the Lehigh Valley business community during the GLVCC Annual Economic Outlook on January 29, 2008.

Introduction

Thestatisticsthatarecommonlyusedtomeasurethehealthofaregion’slabormarketareimportant,butlimited.Numberslikeunemployment,newjobs,and

wagegrowtharelaggingindicators.Theytelluswhathappenedyesterday,butarelesseffectiveatpredictingthefuture.

Whenyourunafirmthatlivesandbreathesworkforcestrategy–youhavetofindothermeansofanalyzingthefactorsthataffecttheavailability&affordabilityoflabor.Theseelementsincludemoresubtletrendsthatmaynotbeobviousintherawdata.

WehireemployeesforpracticallyeveryindustryintheLehighValley.Wereviewandinterviewthousandsofcandidatesperyear.Overtime,weseepatternsinthewaythatthelabormarketbehavesandobservethesubtlechangesinthedemographicsofourworkforce.Whenweseeevidenceofashiftinthemarket’sbehavior,wegobacktothedatatoseeifwecanvalidateourexperience.

Thisreporthighlightsthreesignificanttrendsinthelocalworkforceenvironmentthatimpactbusiness’abilitytohireandretainstrongemployees.

copyright 2008 INTEGRITY Personnel, Inc.

Allentown, PA

Lehigh Valley Workforce Trends

• Increasing competitiveness with

surrounding metropolitan areas

• Competition within local talent market is

producing a higher quality workforce

• Unrealized potential from the region’s

higher education sector

The evolution of a competitive workforce

Whetherthey’reawareofitornot,LehighValleybusinessesarecompetingfortalentwithemployersfromoutsideoftheValley.Fromentry-levelworkerstoexperiencedprofessionals,the

easeoftravelfromheretoNewYorkCity,Philadelphia,andNewJerseymakesourlocalworkforcehighlymobile.

Additionally,theworkforceitselfiscompetingwithawiderpoolofpeoplethaneverbefore.Sowe’veanalyzedhowthisincreasedpopulationisaffectingthequalityoflabor.

Finally,thislabormarketincludesalargelyuntappedresourceofhigh-skilltalentamongthecurrentstudentpopulation.Thistrendpointstoourfuturecompetitivenessasmuchasourcurrentchallenges.

Wage gap is shrinking

It’scommonknowledgethatawagegapexistsbetweenourmarketandthesurroundingmetropolitanareas.AnaccountantintheLehighValleymakeslessthatanaccountantdoingthe

samejobinPhiladelphiaorNewYork.

Butwe’veseenastrikingshiftinthiswagedifferential.Welookedatmeanannualsalariesforseveraloccupationsoverthepast10years,andcomparedthemacrossthreeMetropolitanStatisticalAreas:ABE;Philadelphia;andNYC.We’veobservedthatthegapbetweenthoseregionshasbeen

consistentlyshrinkingduringthisperiod.

AccountantsstillearnmoreinNYthanintheLehighValley–butthespreadissignificantlylesstodaythanitwasin1998.

We’veseenthemostdramaticmovementinthemid-leveloccupationsofadministrativeandofficeprofessionals.

2 2008

copyright 2008 INTEGRITY Personnel, Inc.

Allentown, PA

Lehigh Valley vs. NYC

• ACCOUNTANTS

• 1998 wage gap

16.95%

• 2006 wage gap

7.75%

copyright 2008 INTEGRITY Personnel, Inc.

Allentown, PA

Competitiveness with surrounding

metropolitan areas

• Mean annual salaries in LV, NYC, &

Philadelphia MSA’s

• Wage gap has been shrinking over past 10

years

• Effect seen across all labor sectors

copyright 2008 INTEGRITY Personnel, Inc.

Allentown, PA

Lehigh Valley vs. NYC

• EXECUTIVE

SECRETARIES

• 1998 wage gap

30.3%

• 2006 wage gap

11.85%

copyright 2008 INTEGRITY Personnel, Inc.

Allentown, PA

Lehigh Valley vs. NYC

• WAREHOUSE

LABORERS

• 1998 wage gap

8.63%

• 2006 wage gap

1.42%

Unskilledoccupationshavealsoexperiencedadecline.Thesearetheleastportablejobsinthemarket,whichexplainswhythegapisnotaswide.

ThisshiftmeansthatthereislessfinancialjustificationforanindividualwholivesintheLehighValleytocommutetoanothercityforwork.Itopensupthatsegmentofthepopulationtolocalemployers.

Employees entering the region are raising performance expectations

Whilethenexttrendwe’reobservingisrelatedtothewagedifferential,itisawhollydifferentforceinthelabormarket.Itwasrevealedwhenwebegantohiremoreemployeeswhosepreviousjobs

wereoutsideofthearea.TheseincludebothpeoplewhohadbeenlivingintheLehighValleywhilecommutingtoothercities,andnewarrivalstotheregion.

Theseindividualshavebroughtanentirelynewlevelofcompetitiontoourcandidatepool.Becausetheygenerallyhavemoreyearsofdirectexperience,andhaveworkedforfast-paced,competitivefirms–theseemployeeshaveexceededtheexpectationsofourLehighValleyclients.

Theeffectofthisnewgroupofemployeesonthelocallaborpoolisageneralincreaseinproductivityandoveralljobperformance.Onepieceofevidencethatweobtainedwasthroughacomprehensivesurveyofourtemporaryworkforceayearandahalfago.

Evenweweresurprisedtofindthatover62%ofourtemporaryemployeesheldaBachelorsdegreeorhigher.Theseareofficeprofessionalswhochoosetoworkintemporaryorcontractpositions.Thereasonstheychoosetemporaryworkovertraditionaljobsvary.Somestatethattheywantnewexperienceornewskills,whileotherspreferhavingflexibilityintheirworklives.

Inalllaborsectors,theinfluxofnewworkersfromNewJersey,NewYorkandelsewhereisimprovingthequalityofourlocalworkforce.

Unique higher learning sector provides new resources

Forthosesmalleremployerswhoareconcernedthattheymaybepricedoutofthisnewlabormarket–thereisopportunitytobefoundthroughtappingintoanunderutilizedpoolofnewworkers.

TheLehighValleyishometo6independentcolleges,2statecolleges,and2communitycolleges.Allcombined,theseschoolsregisterover40,000studentsperyearaccordingtoLVEDC.

Todate,therehasbeennorealcooperativeeffortonthepartoftheLehighValleybusinesscommunitytoleveragetheflockofnewgradscomingoutoftheseschoolseveryyear.Onereasonhasbeenthatnewgraduatesareoftenoverlookedforpositionsthatdon’trequireacollegedegree.Asecondreasonisthatmanyemployersoveremphasizetheneedforworkexperienceintheirhiringcriteria.

�2008

copyright 2008 INTEGRITY Personnel, Inc.

Allentown, PA

Competition within local talent

market

• More candidates entering from other

markets (like NYC & Phila.)

• Bringing education, experience &

professionalism.

• Raising performance expectations.

Therearetwoimportantconceptsthatsmallemployersshouldintegrateintheirhiringstrategies.First,inacompetitivelabormarket,thereisnosuchthingasbeingoverqualified.Theseyoungerworkersareeagertotakejobsthathavetraditionallybeenconsideredsupportorparaprofessional.

Second,themembersoftheMillennialGeneration(orGenerationY)arethemostflexibleandfastlearnerswehaveeverworkedwith.Ifemployerskeepthemchallengedandofferthemopportunitiestocontributetotheorganization,theywillbecomeproductivequickly.

Ifyouthinkyoumissedsomething–don’tworry.Youhaven’treadaboutanyofthesetrendsyet.Ourfirmhasbeenworkingwiththisforthepast18monthsbecauseit’sourresponsibilitytobeontheleadingedgeofanychangestotheworkforce.

Fortraditionalemployers,thereareeasy-to-implementtacticsavailablethatwillpreparetheirorganizationstomanagethesechangeseffectively.Byfocusingonbothretentionandpromotion,acompanycansaveenormouscostswhilemaintainingacompetitiveadvantageduringthetoughesteconomiccycles.

Webelievethatthesetrendswillcontinuefortheforeseeablefuture.TheLehighValleyworkforcewillonlybecomebetterskilledandmoreexpensiveforemployers.Byadjustingtheirrecruitmentandretentionstrategies,localcompaniescanleveragethebusinessbenefitsthatresultfromasuperiorlaborforce.

About the AuthorKevin F. Flemming is the President of INTEGRITY Personnel, Inc., a business services firm based in the Lehigh Valley, PA. Integrity delivers recruitment & staffing, business administration, and workforce planning to companies throughout the region. Mr. Flemming joined the firm in 1997 and developed its first integrated service model, blending traditional temporary staffing with complex project management services.

A Certified Staffing Professional (CSP) and graduate of DeSales University, Kevin has been a featured speaker on workforce topics for such groups as Lehigh University’s Graduate Studies program, the Greater Lehigh Valley Chamber of Commerce, and the Manufacturers Resource Center. He has been closely involved with economic development in the Lehigh Valley since 2004, and has published several articles on the region’s economics and workforce.

� 2008

copyright 2008 INTEGRITY Personnel, Inc.

Allentown, PA

Action Items for 2008

• Retention is critical to every employer

• Benchmark your compensation levels to

current wage data

• Focus on developing your existing

employees through training & promotion

© 2008 INTEGRITY PERSONNEL, INC. Allentown, PA 610-433-3500

copyright 2008 INTEGRITY Personnel, Inc.

Allentown, PA

Unrealized potential from our own

institutions of higher education

• In 2007, region’s colleges produced over 6,000new graduates with Bachelor & Master degrees.

• Current grads are very flexible – willing to takeon entry-level positions in exchange for learningopportunities.

• There is a disconnect between LV businesscommunity and LV colleges.