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US Firms Under Pressure as Labor Drought Grows

Many economists expect the jobs market to start putting pressure on wages and inflation.Many economists expect the jobs market to start putting pressure on wages and inflation.

A growing number of companies in the US are finding it difficult to recruit skilled workers, which threatens to curtail profits and growth, according to a quarterly survey conducted by the Washington-based National Association for Business Economics.

The results reinforce data coming out of the US this year, which show a tightening labor market amid low interest rates and an economic expansion. Many economists expect the jobs market to start putting pressure on wages and inflation, though that phenomenon has yet to fully materialize, Bloomberg reported.

The results of NABE’s July Business Conditions Survey published on Monday showed that 34% of respondents have had trouble hiring skilled employees over the last three months, up from 27% in January. The Washington-based association polled 101 panelists, who are economists from companies and industry associations.

NABE survey analyst Patrick Jankowski said businesses in Houston, where he’s based, are under pressure to find workers with more than a high-school diploma but less than a four-year university degree to fill vacancies in the oil and construction industries. “When you cannot bring in the workforce you need, it’s going to affect your sales and affect your profits,” Jankowski said.

In response, companies are sponsoring foreign workers, expanding their search and hiring more independent contractors, according to the survey. They’re also boosting automation, stepping up internal training and in some cases improving pay, Jankowski said.

Perhaps at least partially as a result, more than a third of respondents cited labor costs as having the largest negative impact on their profits so far this year.

The Federal Reserve says a shortage of qualified workers in the U.S. has “limited” hiring, but there’s little evidence firms are raising wages to attract jobseekers, according to the central bank’s latest deep dive on the economy.

Meanwhile, the so-called Beige Book, the Fed’s regular survey of business conditions around the country, said economic growth was “slight to moderate” from late May through June. That’s a bit less upbeat compared to the May report, MarketWatch reported.

The ultra-tight labor market, with unemployment near a 16-year low at 4.4%, was frequently cited by those surveyed as a headwind.

“Employment was held back by tight labor availability,” the Minneapolis Federal Reserve Bank found. Many companies complain they cannot find enough suitable workers to fill all their empty positions. In April job openings rose to the second highest level ever.

 

 

 

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