Growing Number Of Companies Complain About Inability To Find Workers: So Why Is Wage Growth So Low?

Authored by Mike Shedlock via MishTalk.com,

Since 2010, the highest year-over-year wage increase in any month for production and nonsupervisory employees is near 2.6%.

For a two-year stretch between summer of 2011 and summer of 2013 wage increases less than 2% were the norm.

Yet, firms complain about labor costs while simultaneously complaining about the lack of workers.
 

Bloomberg reports Firms Under Pressure as Labor Drought Grows, U.S. Survey Shows.

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

 

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.

Year-Over-Year Wage Growth

Year-Over-Year Wage Growth

Is 2.6% wage growth too hefty even as corporations complain about a lack of workers?

What’s Going On?

  • It’s not just salaries. Obamacare and benefits are hurting many companies.
  • Cheap money from the Fed keeps zombie companies alive.
  • Cheap money from the Fed induced (and still does) overexpansion fast of food restaurants and retail stores of all sorts.
  • Workers really are not worth benefit costs plus an extra 3% so companies seek to automate.
  • Are McDonald’s workers worth $15? Please be serious.
  • Amazon and online shopping are weakening retail profits.

Finally, I suspect the survey is deeply flawed.

Does some random small to medium-sized company have the same weight as Walmart? The regional Fed manufacturing and ISM surveys seem to have that defect.

Yet for now, enough stores are still expanding which adds to job growth despite automation. Apparently, the goal is a McDonald’s or a Walmart on every corner.

We will not quite get that far. Rampant expansion will turn on a dime at some point, most likely globally.

Comments

DownWithYogaPants jcaz Mon, 07/17/2017 - 12:54 Permalink

Engineer here.  In the engineering market they have grown accustomed to the H1B schtick where to pay rock bottom wages and tie the wog to the job like a dog on a clothes line runner chain.It's a shitty market for engineering jobs.  So methodology of survey appears to be tailored to outcome desired by our corporate overloards.

In reply to by jcaz

froze25 (not verified) Theosebes Goodfellow Mon, 07/17/2017 - 13:49 Permalink

This is the problem with separating management that actually oversees operations from the hiring process. You can have a applicant that has a horribly written resume but after the interview you can determine that what they lack in writing skills is far outweighed by their knowledge of the Job.
Or better yet their resume list skills that are exactly what you need but use diffrent technical jargen to describe them. A person that actually oversees the work would normally be able to get that in the interview but an HR person wouldn't have a clue.

I personally hire based on very little criteria.
1. Clearly is intelligent, so sorry don't want dumb-asses.
2. Has a clear history of employment with no major lapses (some exceptions can be made)
3. Does some type of regular volunteer work or has done it in the recent past.
4. Must be "into" what we do. (in my line its common place).

Interview a lot of applicants, It can be a pain in the ass but its worth it.

In reply to by Theosebes Goodfellow

Raging Debate giovanni_f Mon, 07/17/2017 - 15:06 Permalink

Giovanni - My best mentor told me business will never be perfect but as success happens always give some back to the community. Giving back gave me valuable insights I wouldnt have ever gained otherwise. A recent example was I was nominated as a president of our HOA. It is an unpaid job. I am turning the ship around and have learned more about nepotism and how to refocus people than raw business or a ZH could ever teach me. Plus, made some great new friends and potential investors if I ever need them. The final plus is this area is prime real estate, it is raising me and other Owners asset values :)  A man or woman that understands the value of charity (note I ddnt say welfare) is usually a wise person indeed. 

In reply to by giovanni_f

Teja froze25 (not verified) Mon, 07/17/2017 - 16:16 Permalink

That is what I see too. And additionally, HR people select for paper skills ticked off a list (eg knowing some obscure software tool), while a good engineer or programmer would be able to acquire the missing skills within a short time. That restricts the list of applicants to a minimum, without guarantee of quality.HR people should be restricted to hire other HR people only.Oops.

In reply to by froze25 (not verified)

ghengiskhan jcaz Mon, 07/17/2017 - 13:13 Permalink

That's it.  They have no need for more employees when they can just churn ZIRP loans while maintaining the illusion of productivity.  I know several start-ups who advertise engineering and management positions that have no intention of hiring just to maintain the illusion of productivity and growth.  Ask the recruiters how common this is ..... really common.  Also many of these companies are searching for magical employees that have decades of experience coupled with a decade of school or many years of experience with a brand new technology.  It's just nonsense especially in the tech / virtual sector living off of Zero Interest loans.

In reply to by jcaz

Bigly Shitonya Serfs Mon, 07/17/2017 - 13:00 Permalink

I did not downvote you BUTAs a sr mgr who has had multiple units and cost centers I will allow that deadwood %s are way too large... BUT it is not just that people are getting low/no increases (pvt sector, not govt) when there are layoffs, one cannot get their old salary back.Inflation continues to pound away no matter what.There ARE people who are not deadwood who are falling behind. This is systemic.Offshoring and h1b visas were the final straw but the fact is mgmt has been too focused on short term results for a couple decades at this point. 

In reply to by Shitonya Serfs

Sonny Brakes Bigly Mon, 07/17/2017 - 13:55 Permalink

He's an idea.1. When posting a job don't post it through an agency that takes their vig.2. Be honest about the conditions of employment. The hours, the time of day, where the job is located, is there travelling involved, do I need to use my own vehicle.3. What exactly the job involves. Will I be needing to compromise my personal ethics?4. What credentials do I honestly need or do you use credentials to disqualify people from even applying.5. Post the wages, benefits, etc.In other words, sell me on why I should want to come and work for you?

In reply to by Bigly

CPL nidaar Mon, 07/17/2017 - 12:46 Permalink

That was the case once.  But a round table was had in April with other house groups and they are also running a cull in their countries.  Glacial period is up an coming, everyone that's been through this cycle before knows one thing.  Having excess overhead is a bad place to be.  Most the members argued how it could be done and that was easy.   Bio-engineered weaponized H1N1.  Now H9N7...fact is while you were all sleeping and looking the wrong direction.We've already killed all the people that supply everyone with labour, food and energy.  Your welcome, enjoy being trapped in your 1080p universe until the power goes tits up.  In the meanwhile you can have fun watching the extinction of all those on the surface.  As mentioned, starting from scratch was always going to be the direction selected if no payment was given.----H9N7 dead count - all gone----June 3rd 2017http://i.imgur.com/JljWXbc.pnghttp://i.imgur.com/cWBUkbo.pngMay 7th 2017http://i.imgur.com/bncY0xJ.pngMay 1st 2017http://i.imgur.com/XgJx6R5.pngApril 27th 2017http://i.imgur.com/THpw6AN.pngApril 22nd 2017http://i.imgur.com/eJouGvu.pngApril 02 2017http://i.imgur.com/9NZTm8Y.png

In reply to by nidaar

CPL pazmaker Mon, 07/17/2017 - 16:01 Permalink

All those dots on the map are where people that can catch H9N7. It highlights where people actually live.  If you noticed places like Canada and Russia haven't had a peep out of them for years.  I suspect you all know why as well.  I also suspect you all know why now all of the people of earth had to die as well.  It took very little energy to arrange a highly virulent and newly weaponized strain that kills everything but bugs and trees. If you notice there is only one area left with people now.  China.  The rest of them are all dead or in hiding.  The base numbers I've getting back are 8.4 billion dead, there are currently less than 30,000 people left on earth in the cities with a natural immunity to H9N7.   A secondary and third virus based from a couple things lying around are being deployed in a week to clean up any stragglers and take care of of asshole lizards that owe me money. Should have confirmation of a total system reset when the RSOE system stops updating.  Once the emergency management system stops updating means you are all getting kicked out of where you are.  Protip:  Don't die from the three plagues that are going to be running around there when you are thrown back to your shithole home 'erf' to roll around in the approaching 130000 year glacial period that always happens after the 14000 year interglacial period.

In reply to by pazmaker

Grandad Grumps Mon, 07/17/2017 - 12:34 Permalink

The social and educational programs given to us by the Tavistock institute and their cronies are not designed to give people the skills and attitudes needed to be the right kind of workers.

Purpose, creativity and incentive have been taken away. Job well done!

me123me Mon, 07/17/2017 - 12:34 Permalink

Problem is they want someone that has the exact skills they want. They arent flexible at all. Thats the problem, not shortage of workers. 

Oreilly me123me Mon, 07/17/2017 - 13:04 Permalink

I agree with this.

In addition, hiring has been turned over to HR, even at smaller firms. HR guarantees that only someone who matches what's written in black and white will be hired, because they have no f-ing idea what the job actually requires and can only go by the exact script written in their database.

I do also think there is a hesitancy to hire more experienced staff due to the insecurity in the economy. Firms do not want to get stuck laying off high priced staff (except golden parachute type layoffs ... those they don't mind so much).

In reply to by me123me

Bigly Oreilly Mon, 07/17/2017 - 13:32 Permalink

^^^^^THIS.ZHrs, I implore you if you are sr at your company, get your execs to understand that THE BEST HR PEOPLE ARE OLDER WORKERS WHO HAVE DONE THESE JOBS AND UNDERSTAND YOUR INDUSTRY. Not some 25 year old bimbo, a word match or someone in the Phillipines..In fact, after these workers mentor the next gen, put these people in these positions until they retire. 1.gets older workers out of these positions once trained next gen and frees them up2. Gives them meaningful positions that can even be done remotely3. Will hire truly better matches.Anyone game???

In reply to by Oreilly

The Ram me123me Mon, 07/17/2017 - 13:19 Permalink

Many companies have their own custom software or commercial software that has been heavily customized.  There seems to be the non-sense notion that everyone is trained for 1 type of environment or one specific company.  Most companies survive in IT by having just a few people who understand the systems.  I can say that when some of the old timers die off or retire, there will be some really hard up companies.  Oh well, what happens when everyone is looking for the 1-2 skilled people in the country with a particular system in a specialized environment?  We are definitely down the rabbit hole.  

In reply to by me123me

scintillator9 me123me Mon, 07/17/2017 - 15:29 Permalink

An addendum would be beside the match, also have about a minimum of ten years experience, a Bachelors or PHD degree, various certifications, licenses, etc.In the past, when I applied for a different occupation, I became irate over how I more or less wasted my morning after being told I did not have "recent job skills".Other friends of mine who are in a similar age group who have degrees, certificates, experience, etc, are finding it difficult to become employed even after having interview after interview.In short, it is all bullshit.           

In reply to by me123me

LawsofPhysics Mon, 07/17/2017 - 12:34 Permalink

Clearly, these business do not get to use "mark to fantasy" accounting like all the bankers and financiers...I agree, the survey is flawed (most likely by design, much akin to The Fed's inflation calculation) "Full Faith and Credit"