Employee Sentiment Is Improving: Here's What That Really Means
byJul 13th 2012 10:23AM
News from Glassdoor's recent Employment Confidence Survey is encouraging. The company polled adults across the country from June 12 to 14, and the results were generally positive.
Not feeling elated just yet? That's normal: It takes time for things to filter through our economic machine and show results on the bottom line.
In other words, the optimism could be a bellwether for better times in our near future.
Job Security, More Hiring, But No Raises
By far the most encouraging piece of news coming out of the report deals with the ranks of the unemployed.
After bottoming out last summer, more people believe they will find a job that matches their experience and compensation level within the next six months than at any point since the Great Recession.
Though feeling like there's a good chance you'll find a job and actually getting that job are two different things, it's encouraging to see such a marked improvement over the last year. Time will tell if that optimism is warranted.
The report also revealed that fewer employees are currently expecting a raise in the next six months. That said, there is a major shift taking place that could still increase spending: job security.
While employees seem to have found a baseline (with 19% saying they are concerned with being laid off in the next six months), they seem much more confident than before that their peers' jobs are safer than they were two years ago.
Instead of having a delayed effect on the economy, this kind of sentiment can yield immediate results. People who feel more confident that they and their peers have job security are more likely to devote capital to major (and minor) purchases. That's not the case when someone isn't sure where their next paycheck will come from. Such spending filters through the system and eventually improves the employment situation.
While there's no question that more working people would translate into more economic activity, a recent graph from the St. Louis Federal Reserve shows just the type of effect it could have on the stock market.
Source: Business Insider.
Joe Weisenthal of Business Insider sees this as an all-important metric to investors. "It's a reminder of what's driving this market. Fundamentals. There haven't been many periods where the two lines separated much, and where they did, it was always the market (blue line) that caught back up with the fundamentals."
Jobs numbers have certainly been disappointing over the past few months, but the situation is improving -- albeit at a painfully slow pace. With the market (blue line) trailing initial jobless claims, that could mean good news for investors over the coming months.
And, as we've seen before, the performance of the stock market in the months leading up to a presidential election correlates strongly with whether the incumbent party wins. In fact, it has been an accurate predictor 90% of the time.
Time will tell if Glassdoor's report turns out to be a bellwether or just another data point. But its undoubtedly good news that Americans are feeling safer in their jobs today than they were two years ago.