Where The Best Paying Jobs Are (#GotBitcoin)
To determine the overall hottest and coldest labor markets, We looked at the 53 metro areas with more than 1 million people. Where The Paying Best Jobs Are (#GotBitcoin)
Corporate America Is Ponying Up For Workers Suddenly In Demand
For the first time in decades, the American worker is finally in command when it comes time to talk money.
There are tell-tale signs everywhere that this is so.
Like the way some employers — such as Kroger Co., Chipotle Mexican Grill Inc. and Under Armour Inc. — are frantically pushing up hourly wages to try to retain employees. Or the way others — like Starbucks Corp. and Drury Hotels — are dangling hiring bonuses to entry-level applicants. Or the way CVS Health Corp. is no longer requiring job seekers to have high-school diplomas. Or the way Dan Sacco, the owner of Your Pie restaurants in Iowa, is instructing his general managers to poach workers from rivals with offers of better hours and higher pay.
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“Everything is fair game now,” Sacco says.
It is unclear how long all of this will last in the wild and disjointed economic recovery that’s followed last year’s pandemic collapse. But one thing is certain: Workers are scoring the fattest pay hikes since the early 1980s.
Wages for the leisure and hospitality industry have surged at an annualized pace of 6.6% over the past two years. And data released Friday showed that payrolls rose nationally at the fastest pace in almost a year, a sign of how desperate employers are to fill jobs.
“If you’re not able to get staff to cover, it leaves you really crunched and that’s what we’re seeing at the moment,” said Neil Saunders, a managing director at market research firm GlobalData who covers retailers and grocers. “Wages have gone up and have been going up.”
There’s a risk the party could peter out as the delta variant causes U.S. coronavirus infections and hospitalizations to pick up, mostly among the unvaccinated. Some events, like the New York International Auto Show, are being canceled due to virus concerns. Companies including Alphabet Inc.’s Google, Amazon.com Inc. and BlackRock Inc. have all recently pushed back plans to return to the office as well. Economists at Bank of America Corp. have reported slowing momentum in credit-card spending.
Inflation is another complicating factor that’s limiting the benefits of pay raises. Consumer prices surged 5.4% in June from a year ago, the fastest pace since 2008. According to a Peterson Institute study, inflation-adjusted compensation for all civilian workers is now lower than it was in December 2019.
But if policy makers can tamp down on the price increases, workers should do well. Data from the Labor Department show median wage growth was 4.8% in July on a 24-month annualized basis, up from a 3.3% pace in January 2020. Service workers saw gains almost two percentage points higher than the average for all employees last month.
That could help narrow income inequality, however slightly, after years of widening gaps amid fairly stagnant wages for the service industry accompanied by soaring salaries for white-collar workers. For the most part, corporate America expects wage increases to continue.
The subject came up at a recent meeting with Treasury Secretary Janet Yellen in Atlanta, where she gathered senior leaders from companies including Delta Air Lines Inc. and Coca-Cola Co. to talk about inflation and the economy.
During private discussions, some executives bemoaned the fact they still can’t fill open positions even after wages were increased, according to a person familiar with the conversation. The consensus among employers was that higher pay is here to stay.
A Starbucks location in Manhattan is offering a $200 signing bonus to anyone who joins by the end of the month. Kroger said by the end of the year the average hourly rate at its grocery stores will be about $21, when comprehensive benefits are considered, up from $15.50 in March. And recruiting efforts have spread far and wide, with Church’s Chicken passing out coupon books that say “Always Hiring.”
At Amazon, warehouse workers and other hourly employees got raises this year as the retailer seeks to retain talent. Amazon is spending heavily on signing incentives, Chief Financial Officer Brian Olsavsky said during a call with analysts last month.
“It’s a very competitive labor market,” Olsavsky said.
Darius Adamczyk, the CEO of Honeywell International Inc., is doling out wage hikes of more than 10% for some factory workers. He’s trying to raise prices to offset steeper costs for labor, materials and services. Those higher wages will probably stick, since companies rarely reverse increased pay rates.
“If labor costs go up permanently, then we’re going to have to figure out how we sustain at least some level of that pricing power,” Adamczyk said in an interview.
In Iowa, Sacco says his Your Pie pizzerias have been able to hire a few more people after offering higher wages. He pays about $10.50 an hour, and workers often earn another $2 an hour in tips. His other recruiting pitch is a better schedule. He’s poached a few workers from nearby rivals that are open until 1 a.m., later than his restaurants’ 9:30 p.m. closing time.
There are some businesses who say the tide is turning in their favor. McDonald’s Corp. CEO Chris Kempczinski said after raising wages about 5% in its U.S. locations, applications have increased significantly, particularly as the federal stimulus has ended in parts of the country. Critics have argued that workers have stayed on the sidelines because of cash transfers and unemployment benefits.
Noodles & Co., a fast-casual restaurant chain, saw a 70% jump in applications in June compared with April.
“We’re starting to see the light at the end of the tunnel in terms of the whole staffing shortage,” CEO Dave Boennighausen said.
Labor Secretary Marty Walsh says the U.S. job market is healthy as people resume traveling and eating out at restaurants, though he acknowledged that delta variant poses a risk. Vaccinations and wage growth are encouraging people to return to the workforce, though salaries may have to go higher, he said in an interview Aug. 6 after the payrolls report.
“Wage growth is good. It’s good for the American worker,” Walsh told Bloomberg Television. “In some sectors, we’re definitely going to need to see higher wage growth for people to come back to work. But I think where we’re headed right now, all signs are incrementally going in a good, positive direction.”
A Look At The 10 Hottest And Coldest Labor Markets In The U.S.
The ranking is based on five attributes: average unemployment rate in 2018; labor-force participation rate in 2018; the change in employment and change in labor force for the fourth quarter of 2018 from a year earlier; and the change in average weekly wage in the first half of 2018 from the first half 2017, reflecting the latest available wage data. The area with the highest average ranking among the five categories was determined to be the hottest labor market. Moody’s Analytics provided the analysis of Labor Department data necessary for this report.
In This Oil Boom Town, Even a Barber Can Make $180,000
One of America’s hottest labor markets is in West Texas, where the brisket is scarce, the ‘man-camps’ are full, and oil workers with no time to spare pay $75 to skip the line at the barber shop.
West Texas has seen its share of oil booms, but the people there say this one is unlike any they’ve seen.
Driven by shale drilling, a gusher of crude production has transformed the Permian Basin into America’s hottest oilfield, turning what was a remote stretch of towns spread among mesquite trees and scrubland into an industrial zone, seemingly overnight.
Fortunes are being made in this fracking-related gold rush, and money and workers are flooding in. But many necessities in the area now cost a small fortune, creating opportunities for businesses selling everything from dipping tobacco to sand for fracking. It can be hard to get a haircut, grab a plate of good Texas barbecue, or find a table at a popular bar, because demand outstrips supply. Housing is scarce and hotel room prices sometimes rival those of New York City at more than $500 a night.
There are more than 300 metropolitan areas across the U.S. with fewer than 1 million people. The Midland-Odessa job market, in the heart of the fracking boom, was the hottest of all of them last year, according to our analysis. Among those metro areas, Midland had the fastest job and labor-force growth, and one of the lowest unemployment rates, a monthly average of 2.3% in 2018.
Oil prices have fallen about 25% since October to around $57 a barrel. But West Texas residents are hopeful the boom won’t go bust soon because companies have pumped billions into building out the oilfield, and drilling is not expected to peak for years.
The Permian produced an average of more than 3.9 million barrels per day as of January, according to the Energy Information Administration. Analytics firm IHS Markit estimates Permian production could top 5 million barrels a day in 2023, surpassing Iraq.
Here’s What A Modern-Day Boomtown Looks Like.
$180,000 For A Barber
Pete McGarity opened Headlines Barber Shop in Odessa in 1998 and has ridden the boom-bust cycle before. This time around he decided to capitalize on it.
In 2017, Mr. McGarity spent about $25,000 to retrofit a trailer into a custom, mobile barber shop. That October, he drove it about an hour west to Pecos, Texas, and parked in front of the town’s only grocery store, hoping to catch oil field workers between shifts. It was an instant success.
“It was crazy, it went berserk,” says Mr. McGarity, 48. “I’d show up around one o’clock and we’d cut until after midnight.”
These days Mr. McGarity sends the trailer to Pecos, which is closer to the oilfields, six days a week with five barbers, who cut hair all day long. A cut costs as much as $40, more than the $25 he charged before the boom. There is usually a long waiting list, but patrons can cut the line if they pay $60, or $75 with a shave, a popular option with oil workers.
“It is flooded with oilfield workers galore, and these guys tip well,” he says.
Mr. McGarity’s barbers are raking it in. Those who venture to Pecos can make anywhere from $130,000 to $180,000 per year, he said. He is considering investing in additional trailers to send to farther-flung towns in the oil patch and says the additional revenue may allow him to retire soon. If there’s a bust, he’ll just store the mobile shops until things come back, he adds.
By The Numbers: Headlines Barber Shop
$30 To $40 For A Haircut
$60 To Cut The Line
About 20 Haircuts Given Daily By Each Barber
$700 To $900 Made Daily By Each Barber
If you’re hoping to get some brisket at Pody’s BBQ in Pecos, you’d better show up early. During the week, there are usually 30 or more oil field workers lined up outside the restaurant before it opens at 11 a.m., an unusual sight for the small town before the boom.
Israel Campos says he has doubled his sales since starting the restaurant in 2012. Mr. Campos, 44 years old, says he is lucky his staff is family members, because many restaurants in the area struggle to keep workers, who are lured away by higher paying oil industry jobs.
The oil hands waiting in line will often order for their co-workers, sometimes 10 plates at a time, according to Mr. Campos. Company men frequently call ahead with larger orders they bring to drilling rigs or even fly out on private planes, he says.
“We sell out daily and we hardly see any locals because the oil field comes and buys us out,” Mr. Campos says. “Locals tell me ‘I won’t even attempt to come to your place,’ and I’m like, ‘sorry dude.’”
Mr. Campos grew up in Pecos, whose population neared 10,000 in 2017, according to the Census. He was recently elected Reeves County commissioner and says that if a bust comes, it just means locals will be able to eat at the restaurant again.
By The Numbers: A Typical Day At Pody’s
25 Briskets (Up From 6 In 2012), Or About 250 Pounds Of Meat
20 Racks Of Pork Spare Ribs, Or About 60 Pounds Of Meat
150 Pounds Of Sausage
50 Pounds Pulled Pork
Boom Town, U.S.A.
A gusher of crude production has transformed the Permian Basin into America’s hottest oilfield, turning what was a remote corner of the country into a prosperous boom town, seemingly overnight.
No Seats At The Bar
When oil field workers want to blow off steam, many head to one of the most popular bars in Odessa, The Shack in the Back. Bar owner April Williams says patrons appreciate the Shack’s laid-back atmosphere and outdoor patio centered on a stretch of grass, uncommon in the area.
It’s so popular that oil companies pay $6,000 or more for tables while the bar is in season, about seven months a year. The bar is only open Wednesday nights, and is otherwise closed for weddings or corporate parties, so the fee works out to around 28 nights. Companies get a guaranteed picnic table on the patio and some employees and guests don’t have to pay the $10 cover. Reserving a table for just one evening costs as much as $100.
The tables are already booked for next season, says Ms. Williams, who opened the bar 15 years ago. It gets slower when oil prices are down, she adds, but she’s not that worried about a bust.
“People drink when they’re happy and people drink when they’re depressed,” she says.
By The Numbers: A Typical Wednesday At The Shack
125 Cases Of Beer
60 Tables Reserved For One Night For Around $100
25 Tables Reserved For The Season
Townhouses For Teachers
The frenzy of money and workers has downsides. Chief among them is a paucity of affordable housing. There’s such a shortage that school districts in the Permian basin are considering building rental homes for teachers as rising housing costs make it increasingly difficult to recruit, even as public school enrollment in the Midland region has jumped 9% in five years, according to the Texas Education Agency.
The median home value in Midland, Texas was $256,600 as of January, according to Zillow Group Inc., up about 30% since oil dipped below $30 a barrel in 2016. Meanwhile, oil and gas workers earning top dollar have scooped up much of the available rental housing.
In Fort Stockton, about two hours southwest of Midland, the boom has exacerbated the already difficult problem of finding teachers willing to move out to the remote town of about 8,000, where new hires stand to earn $42,500. In response, the local school district is looking to build at least six duplexes to rent to teachers. The district already owns land where the homes could be located.
“If we have some keys we can dangle in front of them, it takes one thing off their plate if someone’s trying to move,” says Ralph Traynham, superintendent of the Fort Stockton Independent School District. The project is expected to cost about $2.8 million, Mr. Traynham said.
Not Your Father’s Man Camp
Chief Executive Brad Archer says Target’s facilities, which it calls lodges or communities, are vastly upgraded from the man-camps of years past. They include weight rooms, memory foam mattresses, executive chefs and even swimming pools.
“It’s definitely not my dad or your dad’s oil field,” Mr. Archer says.
Many oil workers live in temporary housing complexes, known as man-camps. Such camps have been a mainstay of oil booms over the last decade, offering frequently spartan, dormitory-like housing for influxes of temporary workers.
But as the man-camp game has become more competitive, some have become more upscale in a bid to win business. Target Lodging is the largest operator of man camps in the Permian basin. It’s invested hundreds of millions in the region and has gone from 80 beds in 2012 to 8,500 beds currently.
Mr. Archer says that the influx of workers to the region, some of whom can make six figures, are requiring creature comforts one wouldn’t typically associate with the oil patch. Target’s customers are oil companies who sign up for long-term contracts to house their workers. The company declined to disclose its rates, but analysts say higher-end man camps can charge $1,500 to $3,000 per month, depending on food and other services included.
Target offers rotating menus from chefs Mr. Archer says have worked in top tier restaurants around the world. At the lodge in Pecos, a worker can eat salmon and fresh vegetables in the dining hall or order wood-oven pizza and watch a football game at the “Frac Shack,” a sort-of sports bar, sans alcohol.
By The Numbers: Food Served By Target In The Permian In 2017
86,525 Pounds Of Bacon
16,200 Pounds Of Potatoes For Hand-Cut French Fries
76,500 Pounds Of Ground Beef
1.8 Million Eggs
32,200 Cases Of Oranges For Freshly Squeezed Orange Juice
26,000 Gallons Of Milk
2.3 Million Bottles Of Water
How To Make The Booming Job Market Work For You
Is Now The Time To Change Jobs, Push For That Raise Or Lobby For A New Assignment?
The job market a decade ago was in such free fall that multiple generations are still feeling the scars of lost income and thwarted career opportunities. By contrast, the demand for workers now is so hot, it’s easy for many job seekers–especially those with sought-after tech skills–to feel almost giddy.
Rule No. 1 Of Today’s Booming Labor Market Remains The Same As Before: Don’t Overplay Your Hand.
Sure, employers need more people. Yes, many are even offering to train recruits on the job. But threatening to bolt if your boss won’t grant you a $10,000 raise? That still isn’t likely a winning strategy.
You can make a hot job market work for you, though—whether you aim to change companies or stay put. A guide to making the most of it now:
Don’t: Be Flattered Into Swapping Jobs
In a labor market this strong, it can be tempting to switch employers, especially when more money is on the table. But money shouldn’t be the sole consideration or even, perhaps, the biggest one. Rather, one of the best reasons to leave a role is when it doesn’t offer the right challenge–or a sense of control, says Daniel H. Pink, author of “When: The Scientific Secrets of Perfect Timing.” A job with a relentless schedule, and few inspiring problems can lead to burnout.
Do: Create A Career Map
Before swapping jobs, consider how a move may steer your career. Dawn Fay, senior district president at staffing firm Robert Half, recommends a career inventory, assessing where you want to go. Some job switchers also swear by elaborate spreadsheets, listing every pro and con of a potential move, from commuting time to growth opportunities. “It’s really, really critical for people to be well thought out about why they’re making a change,” Ms. Fay says. “You never want to change jobs just because everyone else is changing jobs.”
Do: Let Your Current Employer ‘Re-Recruit’ You
Companies don’t want to lose good employees, particularly at this moment, when it may be tougher to replace them. So many are “re-recruiting” workers, finding ways to make roles more attractive by changing responsibilities or offering development opportunities, Ms. Fay says. Brainstorm what your current employer can offer, she says; now may be an opportune time to speak up about an internal assignment you’ve coveted.”
Do: Get Creative In Asking For Benefits
More organizations are now offering student-loan repayment and money for educational expenses. Look for other areas to negotiate, too, says leadership consultant Roberta Matuson. Some of her clients now ask to be reimbursed for work with an executive coach, particularly if they’re entering a stretch role. She also advises workers to negotiate for extra vacation—“discretionary time is really the measurement of wealth,” she says—along with greater flexibility. And if a different title may prove helpful, ask for it. Finally, get everything in writing, Ms. Matuson says; your current boss could also head elsewhere soon.
Don’t: Ask For A Raise Unless You Can Show Results.
A tight labor market alone likely won’t convince your boss to fork over more cash. You’ll still need a strategy to clinch a raise, says Donna Morris, chief human-resources officer at software maker Adobe . Start by focusing on your own performance, delivering unquestionably good results, she advises. A discussion with your boss is also in order. She recommends asking: “If I want the top raise this year, what am I going to have to do?” The conversation should be ongoing, with regular check-ins.
Don’t: Bring Up A Counteroffer Without A Strategy
If you’re going to present your boss with an offer for a higher salary from another company, do so in the context of a broader discussion over your career prospects. Emphasize what you value about your current job, but express concerns about foregoing a higher salary. Don’t bring up a job offer you’re not willing to take. If your employer calls your bluff, know what you plan to do next.
Inside The Hottest Job Market In Half A Century
A look at who’s getting ahead, who could be left behind and how long the boom can last.
The job market doesn’t get much better than this. The U.S. economy has added jobs for 100 consecutive months. Unemployment recently touched its lowest level in 49 years. Workers are so scarce that, in many parts of the country, low-skill jobs are being handed out to pretty much anyone willing to take them—and high-skilled workers are in even shorter supply.
All sorts of people who have previously had trouble landing a job are now finding work. Racial minorities, those with less education and people working in the lowest-paying jobs are getting bigger pay raises and, in many cases, experiencing the lowest unemployment rate ever recorded for their groups. They are joining manufacturing workers, women in their prime working years, Americans with disabilities and those with criminal records, among others, in finding improved job prospects after years of disappointment.
There are still fault lines. Jobs are still scarce for people living in rural areas of the country. Regions that rely on industries like coal mining or textiles are still struggling. And the tight labor market of the moment may be masking some fundamental shifts in the way we work that will hurt the job prospects of many people later on, especially those who lack advanced degrees and skills.
But for now, at least, many U.S. workers are catching up after years of slow growth and underwhelming wage gains.
One face of the red-hot job market is Cassandra Eaton, 23, a high-school graduate who was making $8.25 an hour at a daycare center near Biloxi, Miss., just a few months ago. Now she earns $19.80 an hour as an apprentice at a Huntington Ingalls Industries Inc. shipyard in nearby Pascagoula, where she is learning to weld warships.
The unemployment rate in Mississippi, where Huntington employs 11,500 people, has been below 5% since September 2017. Prior to that month, the rate had never been below 5% on records dating back to the mid-1970s. In other parts of the country, the rate is even lower. In Iowa and New Hampshire, the December jobless rate was 2.4%, tied for the lowest in the country. That’s helped shift power toward job seekers and caused employers to expand their job searches and become more willing to train applicants that don’t meet all qualifications.
“It’s amazing that I’m getting paid almost $20 an hour to learn how to weld,” says Ms. Eaton, the single mother of a young daughter. When she finishes the two-year apprenticeship, her wage will rise to more than $27 per hour.
It’s no surprise to economists that many people who were previously left behind are now able to catch up. It’s something policymakers have been working toward for years. Obama administration economists debated how to sustain an unemployment below 5%. Now Trump administration officials are considering how to pull those not looking for jobs back into the labor force.
“If you can hold unemployment at a low level for a long time there are substantial benefits,” Janet Yellen, the former chairwoman of the Federal Reserve, said in an interview. “Real wage growth will be faster in a tight labor market. So disadvantaged workers gain on the employment and the wage side, and to my mind, that’s clearly a good thing.”
This was one of Ms. Yellen’s hopes when she was running the Fed from 2014 to 2018; keep interest rates low and let the economy run strong enough to keep driving hiring. In the process, the theory went, disadvantaged workers could be drawn from the fringes of the economy. With luck, inflation wouldn’t take off in the process. Her successor, Jerome Powell, has generally followed the strategy, moving cautiously on rates.
“This is a good time to be patient,” Mr. Powell told members of Congress Tuesday.
The plan seems to be paying big dividends now, but will it yield long-term results for American workers?
Two risks loom. The first is that the low-skill workers who benefit most from a high-pressure job market are often hit hardest when the job market turns south. Consider what happened to high-school dropouts a little more than a decade ago. Their unemployment rate dropped below 6% in 2006 near the end of a historic housing boom, then shot up to more than 15% when the economy crumbled. Many construction, manufacturing and retail jobs disappeared.
The unemployment rate for high-school dropouts fell to 5% last year. In the past year, median weekly wages for the group rose more than 6%, outpacing all other groups. But if the economy turns toward recession, such improvement could again reverse quickly. “The periods of high unemployment are really terrible,” Ms. Yellen said.
The second risk is that this opportune moment in a long business cycle might be masking long-running trends that still disadvantage many workers. A long line of academic research shows that automation and competition from overseas threaten the work of manufacturing workers and others in mid-skill jobs, such as clerical work, that can be replaced by machines or low-cost workers elsewhere.
The number of receptionists in America, at 1.015 million in 2017, was 86,000 less than a decade earlier, according to the Labor Department. Their annual wage, at $29,640, was down 5% when adjusted for inflation.
Tougher trade deals being pushed by the Trump Administration might help to claw some manufacturing jobs back, but economists note that automation has many of the same effects on jobs in manufacturing and the service section as globalization, replacing tasks that tend to be repeated over and over again.
Andrew McAfee, co-director of the MIT Initiative on the Digital Economy, said the next recession could be the moment when businesses deploy artificial intelligence, machine learning and other emerging technologies in new ways that further threaten mid-skill work.
“Recessions are a prime opportunity for companies to reexamine what they’re doing, trim headcount and search for ways to automate,” he said. “The pressure to do that is less when a long, long expansion is going on.”
With these forces in play, many economists predict a barbell job market will take hold, playing to the favor of low- and high-skill workers and still disadvantaging many in the middle.
The U.S. is adding jobs in low-skilled services sectors. Four of the six occupations the Labor Department expects to add the most jobs through 2026 require, at most, a high-school diploma. Personal-care aide, a job which pays about $11 an hour to help the elderly and disabled, is projected to add 778,000 jobs in the decade ended in 2026, the most of 819 occupations tracked. The department expects the economy to add more than half million food prep workers and more than a quarter million janitors.
Those low-skill workers are reaping pay gains in part because there aren’t a lot of people eager to fill low-skill jobs anymore. Only about 6% of U.S. workers don’t hold a high school diploma, down from above 40% in the 1960s, according research by MIT economist David Autor.
James O. Wilson dropped out of high school in the 10th grade and started selling drugs, which eventually led to a lengthy incarceration. When Mr. Wilson, 59, was released in 2013 he sought out training at Goodwill, where he learned to drive a forklift. Those skills led him to a part-time job at a FedEx Corp. facility at an Indianapolis, Ind., airport. He was promoted to a full-time job in 2017, and is now earning more than $16 an hour. He has a house with his wife and enjoys taking care of his cars, including a prized Cadillac.
“I wanted to show FedEx you can take a person, and he can change,” he said. “I want FedEx to say, ‘Do you have any more people like him?’”
Skilled workers in high-tech and managerial positions are also benefiting from the high-pressure labor market, particularly in thriving cities. Of 166 sectors that employ at least 100,000 Americans, software publishing pays the highest average wages, $59.81 an hour in the fourth quarter of 2018. Wages in the field grew 5.5% from a year earlier, well outpacing 3.3% overall growth in hourly pay. The average full-time employee in the sector already earns more than $100,000 a year.
More Jobs, More Money
Last year was a good time to be an employee—or become one—in most industries. Nearly three-fourths of 166 sectors the we reviewed saw gains in employment and earnings last year. Only four experienced a drop in both.
Other technical industries, scientific research and computer systems design, were also among the five best paying fields. Some of the hottest labor markets in the U.S.—including Austin, Texas; San Jose, Calif.; and Seattle—have more than twice the concentration of technical jobs as the country on average.
Analysis of Moody’s Analytics data found Austin to be the hottest labor market in the country among large metros. It ranked second in job growth, third for share of adults working and had the sixth-lowest unemployment rate last year, among 53 regions with a population of more than a million. San Jose, the second-hottest labor market, had the lowest average unemployment rate last year and the second-best wage growth.
While a strong economy is conveying benefits to a broad swath of Americans, those in rural areas aren’t experiencing the same lift from the rising tide.
In metro areas with fewer than 100,000 people and in rural America, the average unemployment last year was a half-percentage point higher compared to metro areas with more than a million people, according to analysis by job search site Indeed.com.
“Finding work can be challenging for rural job-seekers because rural workers and employers both have fewer options,” said Indeed economist Jed Kolko. “Many rural areas have slow-growing or shrinking populations.”
Bradley Cox lives in Vevay, Ind., a rural community of fewer than 2,000 people. The 23-year-old graduated with a bachelor’s degree in business administration and liberal arts from Indiana University East in December, but said he had found opportunities limited in his region.
After years working in hourly positions at a casino, he took a job last summer as a cashier at a CVS Health Corp. drug store, making about $12 an hour. He hoped to work at a bank, or perhaps in a traveling sales role, making use of his business degree. “But to be honest, for me to do that, I would have to move to one of the cities or commute to one of the cities, at least,” he says. “I don’t have the opportunity around where I live.”
Other workers are employed—but need to string together two or more jobs to make ends meet.
Michelle Blandy, 48, had a full-time digital marketing job in Phoenix, but hasn’t been able to find steady work since moving to Harrisburg, Pa., to be closer to her family. Instead she’s pieced together some freelance projects, occasionally drives for Lyft and sells refurbished jewelry boxes on Etsy. “I have applied for full-time jobs, I just didn’t have any luck,” she said. “Harrisburg is tiny compared to Phoenix. There’s not as many tech companies or big companies here that are hiring.”
The good news is this long run of low unemployment could last for a while. Economic theory holds that when unemployment is very low, it stirs inflation, which causes the Federal Reserve to raise short-term interest rates and short-circuit growth and hiring. That kind of cycle ended the 1960s period of low unemployment, but inflation in this period remains below the Fed’s target of 2%.
That’s allowed the Fed to keep rates low. By January 1970, when the unemployment rate was 3.9%, the Fed had raised its target short-term interest rate to more than 8% to fight inflation. By contrast, when the jobless rate fell below 4% last year, the Fed kept its target rate below 2.5% thanks to low inflation.
“It may turn out that lower unemployment proves to be more sustainable than it was in the 1960s,” says Ms. Yellen. “I think we don’t know yet.”
Here Are The U.S. Cities With The Highest Growth In Job Openings And Wages
The analysis was carried out by Glassdoor based across major metro areas.
The U.S. job market is still strong, but some cities appear to have more pep than others.
The top three cities for the most job openings are Boston (up 8.4% year over year in September with 152,683 open jobs), Philadelphia (up 6.4% over the same period with 112,692 open jobs) and Atlanta (up 5.5% with 192,889 open jobs), according to Glassdoor’s latest job market report. That compares favorably to an overall growth of 3.5% in job openings annually in September, with total open job openings nearing 6 million.
Government figures provide a deeper dive into actual job growth across 52 major metro areas. Ocean City, N.J. had the largest annual percentage increase in actual job growth (7%) in August, according to the latest data released by the Bureau of Labor Statistics last week, followed by Reno, Nev. (5.5%), and Ogden-Clearfield, Utah (4.6%). Glassdoor’s analysis is based on millions of online jobs and salaries in major metro areas across the U.S. listed on its site.
‘Today’s [jobs] growth is a far cry from the blockbuster job market in 2018. Growth in job openings slowed to 3.5% in September.’
—Glassdoor senior economist Daniel Zhao
The increase in worker pay over the past 12 months fell to 2.9% in September from 3.2%, according to the latest government figures released Friday.
The top cities for pay growth in September are San Francisco (up 3% on the year with a $73,861 median base pay), Atlanta (also up 3% on the year with a $56,059 median base pay) and Los Angeles (up 2.8% with a $63,526 median base pay), Glassdoor said. Warehouse associates saw the fastest pay growth in September (up 6.3% on the year with a $42,864 median base pay).
Unemployment hit a 50-year low of 3.5% in September, according to the government snapshot of the labor market released Friday. The data showed that the economy added 136,000 new jobs last month. Economists polled by MarketWatch had forecast a 150,000 increase. This is the slowest pace of job growth in four months, as businesses grew more cautious about hiring, but employment gains for August and July revised up by a combined 45,000.
“Today’s growth is a far cry from the blockbuster job market in 2018,” said Glassdoor senior economist Daniel Zhao. “Growth in job openings slowed to 3.5% in September, continuing a long-running trend of modest growth in 2019.” That compares to more than 10% this time last year. “Job openings on Glassdoor remain just shy of the 6 million mark, indicating a tight labor market with employers still looking for increasingly scarce workers to fill their open roles,” Zhao said.
“Despite a rocky August with recession chatter near fever pitch, the labor market continues to sustain the economic expansion,” the report said. “Crucially, the Federal Reserve’s decision in September to cut interest rates was in spite of, and not because of, the labor market. Additionally, while the trade war has negatively impacted sectors like manufacturing, consumer spending has been resilient.”
Software developers, physical therapists and physician assistants crop up frequently among the highest-paid and fastest-growing jobs in every U.S. state.
“The risk, however, is that the latest and forthcoming rounds of tariffs on consumer goods could extend the trade war’s impacts to the broader economy,” it added. “For the time being, Glassdoor data suggests that the labor market is shrugging off trade uncertainty and continuing to plow forward and sustain the economic expansion.”
Software developers, physical therapists and physician assistants crop up frequently among the highest-paid and fastest-growing job openings in every U.S. state, according to a separate analysis by CareerBuilder, another jobs and careers site. That site analyzed government data to project the careers most likely to be lucrative and in demand. Most of these jobs require some level of college education.
Software developers had a median pay of $105,590 per year or $50.77 per hour last year, according to the Bureau of Labor Statistics; it says there’s a higher-than-average outlook for job openings (up 24% nationwide between 2016 and 2026). Physical therapists had a median pay of $87,930 per year or $42.27 per hour last year, the BLS said, and also have a higher-than-average outlook for job openings (a projected 28% increase nationwide between 2016 and 2026).
Home-health and personal-care aides were among the lowest paid and the fastest growing job openings in every U.S. state and Washington, D.C., and require a high-school diploma or equivalent. The median pay for these jobs was $24,060 per year or $11.57 per hour, according to the BLS. But the demand for these jobs is projected to increase by 41% between 2016 and 2026.
A separate report by the U.S. News & World Report on the best jobs of the year lists software developers as No. 1. The position offers flexible hours and remote work opportunities, while investing in individuals’ personal and professional development. Like data scientists, software developers have a median annual salary of more than $100,000. They’re employed in computer systems design, manufacturing and finance. Physician assistants were No. 2, followed by dentists.
Drawn by the Salary, Women Flock to Trucking
Truck drivers typically are paid by the mile, regardless of gender. But safety issues remain.
Last year, Rebekah Koon left her job as an assistant manager of a gas station in Fort Bragg, N.C., to train as a truck driver, inspired by watching her uncle hit the road as a long-haul trucker when she was growing up.
“I thought it was really cool, like an extended camping trip,” she says.
Ms. Koon, 28, is part of a new wave of women breaking into trucking. The number of female truckers increased by 68% since 2010 to 234,234 in 2018, though women still account for just 6.6% of the trucking workforce, according to the American Trucking Associations, a trade group.
One Big Reason: Equal Pay.
“There are many different types of driver pay in the industry, including by the mile, per load, hourly, and even salary in some cases,” says ATA economist Bob Costello. “In all cases, there is no distinction between male or female. If you go to a fleet and ask how much drivers are paid, it is by experience level, routes, etc., not gender-specific.”
The median annual wage for heavy and tractor-trailer truck drivers is $43,680, according to the U.S. Labor Dept. Light truck and delivery-service drivers make a median of $32,810.
Ms. Koon’s new gig hauling for Cargo Transporters has tripled her salary, she says. “It’s a great lifestyle.”
The growth in women in the industry comes as demand for transportation workers is high, boosted by the expansion of e-commerce, says Frank Steemers, an economist at the Conference Board, a nonprofit research firm. Amid a tight labor market, employers are turning to new demographic groups to fill these positions, he says.
“The steering wheel knows no gender,” says Deb La Bree, 53, a former cosmetologist who lives in Missouri and has been driving a truck since 2007.
The number of women in trucking has jumped almost 70% since 2010.
Some drivers and women’s advocates say the industry has begun to change to make it more accommodating to women. “New technology and equipment make truck driving a job that’s more geared toward women,” says Lindsey Othmer, 26, who drives for XPO Logistics out of Fife, Wash.
For example, XPO trucks now have a more modern transmission system that makes them less strenuous to drive, says Meghan Henson, chief human-resources officer at XPO, one of the largest transportation and logistics companies in the U.S. And at many companies, drivers, regardless of sex, don’t physically load and unload goods anymore.
“The industry has changed,” says Ellen Voie, president and chief executive of Women in Trucking, a nonprofit that encourages women to join the profession.
But the share of women drivers remains small. “Some trucking companies have put an emphasis on female drivers, but the highest percentage of female drivers we have seen is around 20% for those fleets,” economist Bob Costello says in an ATA report.
And some advocates and industry officials say women face obstacles when it comes to joining—and feeling comfortable in—the industry.
Learning to truck requires many hours on the road with a trainer, and most of them are men. Some companies try to match women with female trainers, but there aren’t always enough, says Ms. Voie.
Then there are on-the-job concerns. A 2017 survey by Women in Trucking asked female drivers how safe they felt at work; the average response was 4.4 out of 10.
One of their main concerns is finding a safe, well-lit place to park overnight when there aren’t enough spots. If truckers arrive at a truck stop at the end of their working day and find it full, they may have to keep driving past their limit or park illegally on the side of the road.
Driver Cecilia Hylton, 24, says her father, who is also a trucker, taught her to loop her seat belt through the door handle and buckle it so the door can’t be opened from the outside while she’s sleeping.
Ms. Voie is optimistic that the industry will find ways to tackle issues such as training because of the shift in attitude she’s witnessed. “Twelve years ago, everyone said, ‘We just want good drivers.’ Now, the carriers are saying, ‘We want more women. Help us do that.’ ”
FedEx Goes Deep Into Mississippi Delta to Find Workers
To fill its vast workforce, delivery giant ferries 200 people four hours round trip to work the night shift at its Memphis hub.
Inside the nearly barren living room of her apartment, Mary Harris slips into a reflective yellow jacket adorned with the FedEx Corp. logo as the sun begins to set.
It is Monday. She won’t be back home until around sunrise on Wednesday.
In between, Ms. Harris will drive an hour northwest to Cleveland, Miss., from where she will make three four-hour round trips curled up on a bus to Memphis, Tenn. In Memphis, she will do two overnight shifts and one day shift—each five hours long—helping to move and sort millions of packages at FedEx’s primary air hub.
FedEx has tapped deep into the Mississippi Delta to find workers for the largest facility in its world-wide supply chain. Lured by the chance to work for a global company and earn hourly wages starting at $13.26, some 200 workers gather in a Walmart parking lot in Cleveland, Miss., five nights a week to board buses bound for Memphis.
“They’re important to the daily operation,” said Barb Wallander, a senior vice president of human resources at FedEx. “We depend on them.”
The connection with Cleveland, a two-hour drive from Memphis, is an unlikely cog in a machine that gets the surge of holiday shipments to homes quickly. FedEx and its rivals are expected to carry more than 2.4 billion global packages between Thanksgiving and the end of the year, or twice as many parcels as they handled in 2013, according to SJ Consulting Group estimates.
The busing program, which runs year-round and is nearing its first anniversary, highlights the lengths delivery giants have to go to staff their operations at a time when unemployment is low, especially around the largest hubs. In Memphis, the unemployment rate is 3.8%, just above the 50-year low of 3.5% nationwide. In Louisville, Ky., where United Parcel Service Inc. runs its main air hub, the unemployment rate is 3.2%.
Ms. Harris said opportunities like the one at FedEx are no longer available in Greenwood, a shrinking rural town that welcomes visitors with a sign that reads “Cotton Capital of the World.”
“It is in my blood to work hard for what I need and want,” said the 39-year-old, who started working for FedEx last December. She drives an hour to get to Cleveland to start her bus commute.
In Bolivar County, where Cleveland is, the unemployment rate stands at 6.8%, according to the Mississippi Department of Employment Security. A drug manufacturer recently closed a factory there, and an auto-parts maker expects to close a plant soon.
The situation drew FedEx to host a job fair in Cleveland in November 2018, just ahead of the busiest period for the shipping industry. The city has a population of 12,000.
Ms. Wallander said FedEx expected not much more than a few dozen attendees. Instead, about 500 people showed up, said Pam Chatman, a retired news director who posted word of the event on her Facebook page. FedEx later staged a hiring center in a church fellowship center, where it did drug screening and orientation.
A major hurdle was how workers would get to Memphis, 115 miles away. Many didn’t have cars.
FedEx committed to providing free bus rides for the workers, part of a three-year pilot program. “If the jobs are not coming to the Mississippi Delta, then we have to take the people to the jobs,” said Ms. Chatman, who reached out to FedEx volunteering to coordinate the initial job fair.
Workers collect around 7 p.m. in the Walmart parking lot on North Davis Avenue, one of two retail corridors that cross through Cleveland. They are easy to spot in their FedEx-issued jackets entering the big-box retailer or adjacent Murphy’s gas station to grab chicken, McDonald’s or other snacks before three Delta Bus Lines coaches pull up.
Kinyuna Cannon, 25 years old, has been working for FedEx for the past four months. The starting wage was well above the $7.85 an hour she earned at her last job at a nursing home. “It is the transportation and the pay,” she said of the appeal of the FedEx job, which are part-time positions that provide health and retirement benefits.
She boards the middle bus, settling into the black leather seats for the ride to Memphis. The caravan of headlights cuts through the rural highway on a moonless night.
Two hours later, the buses pull into an employee parking lot across from the Memphis International Airport. The workers disembark, cross a covered overpass and traverse the security checkpoint. They blend in among the 7,000 workers that night, helping to unload 150 cargo planes, sort their packages and reload them to the next destination.
Walter Kirkeminde, FedEx senior manager of operations, says turnover among the workers coming from Mississippi is lower than the locals, who have more opportunity to switch jobs if the overnight schedule proves unmanageable. He was skeptical of the staying power and initially thought the bus would last a few weeks. “That would be my limit,” he said.
FedEx has since started busing workers for shifts to a sorting facility for its Ground division in Olive Branch, Miss. It has attempted to add buses to other regions with similar demographics to Cleveland. “We haven’t had the same response rate,” Ms. Wallander said.
The Mississippi Delta has ties to the leaders of both FedEx and UPS. FedEx founder Fred Smith was born in nearby Marks, Miss., the son of a bus- company owner, before starting his overnight delivery company in Memphis. UPS CEO David Abney was born in Cleveland and started working at UPS in the city to pay his way through the local college.
Ms. Harris, who grew up in the Delta, recalls past jobs she had in the area, including in fish-processing plants and driving trucks, and how she spent months moving among friends’ houses and for a time in a shelter before she went to the FedEx job fair.
Now, her 21-year-old son, Denzell, also works at FedEx, and she is picking up extra shifts. After the first night, she quickly turns around on the bus to work the day shift in Memphis. Once that is done, she returns back to Cleveland. With not enough time to head home, she makes a brief stop at her son’s father’s house to freshen up.
She has hopes of progressing at FedEx, perhaps working on the aircraft she helps load. “I thought FedEx was a godsend,” she said. “It helped so many people get out of their rut.”
Share Your Thoughts
Have you had to do extra shifts or travel to meet work demands during the holidays? How was that experience?
American Factories Demand White-Collar Education for Blue-Collar Work
Within three years, U.S. manufacturing workers with college degrees will outnumber those without.
College-educated workers are taking over the American factory floor.
New manufacturing jobs that require more advanced skills are driving up the education level of factory workers who in past generations could get by without higher education, an analysis of federal data by The Wall Street Journal found.
Within the next three years, American manufacturers are, for the first time, on track to employ more college graduates than workers with a high-school education or less, part of a shift toward automation that has increased factory output, opened the door to more women and reduced prospects for lower-skilled workers.
“You used to do stuff by hand,” said Erik Hurst, an economics professor at the University of Chicago. “Now, we need workers who can manage the machines.”
U.S. manufacturers have added more than a million jobs since the recession, with the growth going to men and women with degrees, the Journal analysis found. Over the same time, manufacturers employed fewer people with at most a high-school diploma.
Employment in manufacturing jobs that require the most complex problem-solving skills, such as industrial engineers, grew 10% between 2012 and 2018; jobs requiring the least declined 3%, the Journal analysis found.
At Pioneer Service Inc., a machine shop in the Chicago suburb of Addison, Ill., employees in polo shirts and jeans, some with advanced degrees, code commands for robots making complex aerospace components on a hushed factory floor.
That is a far cry from work at Pioneer in the 1990s, when employees had to wear company uniforms to shield their clothes from the grease flying off the 1960s-era manual machines used to make parts for heating-and-cooling systems. Pioneer employs 40 people, the same number in 2012. Only a handful of them are from the time when simple metal parts were machined by hand.
“Now, it’s more tech,” said Aneesa Muthana, Pioneer’s president and co-owner. “There has to be more skill.”
Pioneer, which makes parts for Tesla vehicles and other luxury cars, had its highest revenue last year, Ms. Muthana said. The company’s success mirrors that of other manufacturers that survived the financial crisis.
Improvements in manufacturing have made American factories more productive than ever and, despite recent job growth, require a third fewer workers than the nearly 20 million employed in 1979, the industry’s labor peak.
Manufacturers added 56,000 jobs this year compared with 244,000 jobs through this time last year. Automation and competition from lower-wage countries have contributed to declining U.S. manufacturing jobs.
The industry’s specialized job requirements have narrowed the path to the middle class that factory work once afforded. The new, more specialized manufacturing jobs pay more but don’t help workers who stopped schooling earlier. More than 40% of manufacturing workers have a college degree, up from 22% in 1991.
“The workers that remain do much more cognitively demanding jobs,” said David Autor, an economics professor at MIT.
Looking ahead, investments in automation will continue to expand factory production with relatively fewer employees. Jobs that remain are expected to be increasingly filled by workers from colleges and technical schools, leaving high-school graduates and dropouts with fewer opportunities. Manufacturing workers laid-off in years past also will see fewer suitable openings.
“It’s just not the case that bringing back manufacturing will be good for low-and-middle-skill workers,” said Mr. Hurst, who along with colleagues have studied the increasing demands of factory workers.
Advantage Conveyor Inc. in Raleigh, N.C., spent more than $2 million over the past decade on machines that cut and bend metal and plastics for the conveyor belts it builds. New machines allow technicians to make more parts per worker compared with the era when employees fashioned parts by hand.
Some of the workers were reassigned; others were laid off. “All of that menial labor moved to skilled labor,” said Vann Webb, company president. “You virtually have to have a two-year degree to work in our shop.”
Joshua Dallons, 28 years old, had hoped to become a nuclear engineer, but juggling college classes and a 30-hour-a-week grocery job was too much.
“I had that crisis,” Mr. Dallons said. “Do I want to keep pursuing engineering, or do I want to pursue this sort of job where I can quickly get into the field and quickly start making money?”
He decided to complete a training program in welding and was hired by Advantage in 2014. Mr. Dallons now works at a computer, designing conveyor layouts. He makes more than $25 an hour.
Large manufacturers also are tilting their workforce toward higher skilled, educated employees. Around 70% of new hires this year at Honeywell International Inc. ’s aerospace business have at least an associate degree, said Darren Kosel, a Honeywell plant manager.
The company isn’t a place for factory workers who want to just punch in and punch out every day, Mr. Kosel said: “If you want to be one of those people, you won’t be successful here.”
At a Caterpillar Inc. plant in Clayton, N.C., investments in technology help a single shift of workers produce the small-wheel loaders that four years ago would have taken two shifts.
The Harley-Davidson Inc. ’s engine plant in Milwaukee has robotic arms to ferry motorcycle pieces, taking over the tough, repetitive work formerly done by employees, said plant manager Chuck Statz. The machines have made the workplace safer, he said, mirroring a national trend. In 2018, factory workers were hurt at half the rate as in 2003.
Harley-Davidson employed 2,200 unionized manufacturing workers in 2018, 400 fewer than in 2014, which the company attributed to several factors. Caterpillar reported that it had 10,000 unionized workers at the end of 2018, down from 15,000 in 2007 During the same period, the equipment maker’s revenue climbed 20%.
A recent search of all Caterpillar’s U.S. job posts show that more than four in five require or prefer a college degree. A majority of the company’s production jobs called for a degree or specialized skill.
Ms. Muthana faced a hard choice in 2012: whether to invest millions of dollars in automated manufacturing and training, or to retire and close Pioneer, the company her uncle started 30 years ago.
In the old days, the factory’s oil-sputtering machines were adjusted by two dozen workers wielding foot-long wrenches. At the end of their shifts, they were covered in grease and metal shavings.
Pioneer’s biggest clients, makers of heating and cooling systems, switched to cheaper foreign suppliers, Business fell 90% in one year. And the company owed more to suppliers than its outstanding orders could cover.
Ms. Muthana sat in the company parking lot on October 15, 2012, looking at the cars of her employees. “If I closed my doors, where were they going to go?” she recalled thinking.
Rather than close the plant, she hired Pioneer’s first salespeople. They found vehicle makers that needed complex metal components that Pioneer could make more profitably than the parts for heaters and air conditioners.
The problem was that Pioneer’s old machinery couldn’t make the parts fast enough. So Ms. Muthana sought machines that could be programmed to precisely cut and drill the intricate parts in a single operation.
Pioneer had little experience with such advanced equipment, Ms. Muthana said, but she persuaded suppliers to help her install and set up the machines, as well as train employees to use them.
“We put a lot of money on her floor at one time with minimal guarantees that we were going to get that money back,” said Dave Polito, owner of her main machine supplier. Ms. Muthana said she has now spent more than $6 million on new technology, largely for machines and software.
The machines can make one complex part every six minutes, compared with 45 minutes of work on multiple machines once needed to produce a single part. Learning how wasn’t easy for longtime Pioneer employees.
Fernando Delatorre, who operated the older machines at Pioneer for 14 years, struggled to memorize the codes used to program the new machines.
“I wasn’t into computer things, learning all these numbers,” said Mr. Delatorre. He earned $16.50 an hour when he left Pioneer in 2017 for a construction job that paid more.
For Ms. Muthana, losing or firing longtime employees was the toughest part of her factory’s transition. About 10 of the company’s 40 workers remained. Just one of them operates a special grinder that hasn’t been computerized.
“I saved those jobs, and I gave them the opportunity,” she said, “but then most of the team is no longer here anyway.”
On a recent morning, Pioneer workers inspected parts that the automated equipment had made on their own overnight. They took digital measurements to make sure the parts matched customer specifications. A screen overhead detailed how efficiently each machine was operating.
A yellow light on one machine caught the eye of technician Stacy Czyzewski. A cutting tool was due to be replaced. She opened the machine’s enclosure, which seals in the oil and metal scraps. Using a small Allen wrench, she popped out the worn part and replaced it.
She punched codes on the machine’s keypad from memory and marked the repair on her iPad. Ms. Czyzewski wiped her hands on a towel. Her black polo shirt, emblazoned with Pioneer’s logo, was spotless.
Ms. Czyzewski had previously worked five years cleaning equipment at an Altria Group Inc. chewing tobacco plant. When it closed in 2017, a grant helped Ms. Czyzewski pay for a four-month training program where she learned to operate the machines used at Pioneer.
In a room at the center of the Pioneer factory, Rachith Thipperi converts customer orders into 3-D blueprints that are used to program machines. He started work at Pioneer as an intern while studying for a master’s degree in mechanical engineering at the University of Illinois at Chicago. Mr. Thipperi saw a future in the modern American factory.
“There are people who are stuck in old manufacturing,” he said, “but there is also this innovative and growth aspect of it.”
Production workers at Pioneer start at $14 an hour and rise to $27 an hour with experience. Before investing in modern machinery, worker pay started near minimum wage, which was $8.25 an hour around the time the company was transforming in 2010.
Inspirational inscriptions decorate the walls of the Pioneer factory. “The most dangerous words are we’ve always done it that way,” one said. The boss has lunch with her 40 employees each quarter. Half are women.
Ms. Muthana attends college career fairs to find workers with skills and a desire to learn. “I’m willing to give you the opportunities,” she said. “But if you’re not willing to change, and you’re not willing to get out of your comfort zone, there’s nothing I can do.”
Five Cities Account for Vast Majority of Growth in Tech Jobs, Study Finds
The forces that prompt this clustering effect among tech firms is widening the skills divide within U.S.
The forces that are driving the nation’s top technology talent to just a handful of cities have intensified in recent years, leaving much of the nation behind as the U.S. becomes a more digital economy, according to a new study.
Just five metropolitan areas—Boston; San Diego; San Francisco; Seattle; and San Jose, Calif.—accounted for 90% of all U.S. high-tech job growth between 2005 to 2017, according to the research by think-tank scholars Mark Muro and Jacob Whiton of the Brookings Institution and Rob Atkinson of the Information Technology and Innovation Foundation.
The nation’s 377 other metro areas accounted for 10% of the 256,063 jobs created during that period in 13 high-tech industries such as software publishing, pharmaceutical manufacturing and semiconductor production. Among the smaller cities that gained tech jobs were Madison, Wis.; Albany, N.Y.; Provo, Utah; and Pittsburgh.
The result is increased concentration of high-tech resources in just a few places and a strengthening of economic forces that are dividing the nation.
Tech industries find they are most productive when they have resources clustered in few places. Such clustering—which economists call “agglomeration”—allows for the fast spread of new ideas and a concentrated talent pool from which businesses recruit. The forces of agglomeration, economists say, run counter to the idea that technology might allow people to work from anywhere, even in remote places.
The trend is creating problems for the cities that have these concentrations of workers and for those places that don’t. High-tech cities like San Francisco and Boston are becoming increasingly unaffordable as home prices soar, while cities outside of these high-tech hubs are missing out on the dynamism that technology creates, Mr. Muro said.
“The superstar places are becoming extremely expensive, choked with traffic and struggling with big social costs like inequality gone wild and homelessness,” Mr. Muro said.
The authors looked at industries with high concentrations of research and development spending and high concentrations of workers with degrees in science, technology, engineering and math.
Some big cities were left behind. Combined, the Washington, D.C., metro area; Dallas; Philadelphia; Chicago; and Los Angeles lost more than 45,000 high-tech jobs between 2005 and 2012, according to the study. Many small cities across the heartland also lost tech jobs.
Mr. Muro noted that the Washington area will likely make up for the loss with the addition of an Amazon. com Inc. headquarters, but others run the risk of falling further behind in the race for tech talent.
“Whole portions of the nation may now be falling into ‘traps’ of underdevelopment,” the report said.
The report calls for a national effort to support technology investment in areas outside of the big centers, featuring federal government spending of $100 billion on research and development, workforce development, tax benefits and other programs over 10 years in the nation’s heartland.
“There are tremendous inefficiencies with the status quo,” Mr. Muro said.
The Demographic Threat To America’s Jobs Boom
As fertility falls and immigration tightens, the U.S. is losing its demographic advantage over other countries.
The U.S. job market continues to blow through expectations, generating 200,000 new jobs month after month and driving unemployment far below what economists thought a decade ago was the lowest possible level.
The main reason is that the economy tends to keep creating jobs until interrupted by a recession. The current expansion has now lasted a record 10-plus years. So long as the usual recession triggers—rising inflation and interest rates, or financial excess—remain absent, job creation should continue.
Yet eventually it will hit a constraint: The U.S. will run out of people to join the workforce. Indeed, this bright cyclical picture for the labor market is on a collision course with a dimming demographic outlook. While jobs are growing faster than expected, population is growing more slowly. In July of last year, the U.S. population stood at 327 million, 2.1 million fewer than the Census Bureau predicted in 2014 and 7.8 million fewer than it predicted in 2008. (Figures for 2019 will be released at the end of the month.)
The U.S. fertility rate—the number of children each woman can be expected to have over her lifetime—has dropped from 2.1 in 2007 to 1.7 in 2018, the lowest on record. From 2010 through 2018, there were 3 million fewer births and 171,000 more deaths than the Census Bureau had projected in 2008. Death rates, already rising because the population is older, have been pressured further by “deaths of despair”—suicide, drug overdoses and alcohol-related illness.
Aging doesn’t spell economic doom: Germany’s population is flat and Japan’s is falling, yet both boast lower unemployment than the U.S. But in the long run, job creation is constrained by the number of people of working age, which is why the International Monetary Fund puts Germany’s long-run growth rate at 1.3% and Japan’s at 0.6%, both lower than the U.S. at 1.9%.
The latest employment data underscore these dynamics. In the 12 months through November, the number of people working rose 1.2% from the prior 12 months, according to the Labor Department. That was slightly faster than 1% growth of the labor force—the number of people working or looking for work—and thus the unemployment rate fell. Labor-force growth was in turn faster than the 0.6% growth in the working-age population. As a result, the share of working-age people who are in the labor force, known as the labor-force participation rate, rose.
Unemployment is already as low, and possibly lower, as many economists think can be sustained in the long run.
While the participation rate, at 63.2%, is lower than its 1990s peak of 67%, Stephanie Aaronson, head of economic studies at the Brookings Institution, said most of the decline is demographic and won’t easily reverse. More of the working-age population is over 60 and has thus retired—or will soon.
Young adults are staying in school longer. Participation of prime-age women, those aged 25 to 54, is already back to historic highs. The participation of prime-age men, especially those without a college education, has been trending down for decades. Low unemployment could keep drawing people into the labor market and maintain participation over 63%, but she doubts it can go higher without big changes in government policies.
The U.S. has had two longstanding demographic advantages over other countries: higher fertility and immigration. Both are eroding. Since 2008, the U.S. fertility rate has gone from well above to roughly in line with the average for the Organization for Economic Cooperation and Development, a group 36 mostly developed economies.
Mark Mather, a demographer at the Population Reference Bureau, said analysts initially blamed the drop in births on the recession, and expected it to bounce back as people felt more economically secure. In fact, he says it started before the recession as young adults delayed marriage and children, which will likely result in fewer children over their lifetimes. “We don’t expect to see a bounce back any time soon.”
Meanwhile, the inflow of foreign migrants to the U.S. has been trending flat to lower, while trending flat to higher in other countries. Last year, the foreign-born population expanded by a historically low 200,000, according to the Census Bureau. The exact reasons are unclear. The illegal immigrant population had stopped growing before President Trump took office. Legal immigration remained above 1 million through 2018.
Mr. Trump has proposed keeping legal immigration levels constant, while shifting the composition more toward skills and away from family reunification. But that still implies a declining rate of immigration relative to overall population. And his administration has moved to discourage some legal immigration, such as those who might need federal benefits.
Demographic trends aren’t etched in stone. Japanese labor-force participation, in particular by the elderly, has risen in recent years and German fertility is on the rise, though still quite low. A prolonged expansion could have similar effects in the U.S., and indeed there is some evidence fertility stabilized this year. Political cooperation could one day pave the way to more immigration.
But until then the U.S. cannot assume it is immune to the demographic downdraft holding back Germany and Japan.
Stimulus Checks And Unemployment Insurance Keep Job Seekers On The Sidelines
The Job Market Is Tighter Than You Think.
Solid wage growth and unfilled openings point to much less slack than after previous recession.
One set of numbers shows a labor market in dire straits. Total employment, despite March’s jump, is still down 8.4 million from its pre-pandemic peak, on a par with the worst point of the 2007-09 recession and its aftermath.
While the unemployment rate at 6% is lower than in 2009, it is above 9% when people not counted as unemployed because they dropped out of the labor force or were misclassified are added back, according to the Federal Reserve. In short, the labor market seems awash in slack, with job seekers swamping demand for workers.
Weirdly, that isn’t what a different set of numbers suggests. It shows a labor market starting to look, well, tight.
Consider wages. In a truly bad labor market, desperate workers would accept much lower pay, dragging down earnings growth. That hasn’t happened.
The Labor Department’s widely followed average earnings data are distorted by the disproportionate drop in low-wage work, so you need to consult measures that filter out these compositional effects. One, median wage growth as tracked by the Federal Reserve Bank of Atlanta, was 3.4% in February, barely changed from before the pandemic.
Another, the Labor Department’s employment cost index, shows earnings up 2.8% in the fourth quarter of 2020, compared with 3% a year earlier. In 2010, both measures of wage growth fell below 2%.
Another sign of a tightening labor market: employers having trouble staffing up. In October 2009, businesses contacted for the Fed’s beige book, an anecdotal survey of economic conditions, overwhelmingly described the labor market as weak and wage pressures as subdued.
By contrast, this month’s beige book reported shortages of drivers; entry-level, low-wage and skilled workers; child-care and information-technology staff; specialty trades; and nurses. “A homebuilder related that a landscaper had hired 20 laborers in early February and none showed up for work,” the latest beige book said. “One restaurant had begun offering $1,000 if workers stayed for at least 90 days.”
One shouldn’t put too much weight on anecdotes, but these are corroborated by data. Some 7.4 million jobs were open in February, above the pre-pandemic level. By contrast, job vacancies plummeted by half in 2007-09. A mismatch might be at work: sectors and regions unscathed by the pandemic want to hire, but the available workers are in the wrong place or have the wrong skills. Nonetheless, job vacancy rates are above pre-pandemic levels in most sectors, even leisure and hospitality.
So why does one set of numbers suggest the labor market is slack while another suggest it is tight? The discrepancy goes back to how this recession was fundamentally different from the previous one. The 2008-2009 financial crisis wiped out wealth and dried up credit.
That sapped demand for goods and services as consumers stopped spending, and for workers as employers stopped hiring. By contrast, the pandemic clobbered both demand for workers as businesses closed, and the supply as workers withdrew to look after their children or their health.
As businesses reopen and stimulus checks juice sales, the demand for workers is now recovering, but the supply of workers, not so much. Adjusted for population growth, the labor force—people working or looking for work—is roughly five million smaller than before the pandemic.
Only a small share of those labor market dropouts want a job. Covid-19 is keeping most of the others out of the job market. A Census Bureau survey in late March found that 2.6 million people weren’t working because they were sick or caring for someone who was, and 4.2 million were afraid of catching or spreading the virus.
(The two groups might overlap.) Indeed, fear might be the single most important difference between this recession and its predecessors. Millions are also caring for children, but it wasn’t clear how many were because of Covid-19 closures.
Stimulus checks and unemployment insurance, which has been extended to gig workers and made more generous, might also have kept potential job seekers on the sidelines. Several studies found that the aid didn’t depress employment last year because there were no jobs to be had. That may be changing as demand for workers ramps up.
All in all, while unemployment is indeed elevated, the job market isn’t as “loose” as the 8.4 million shortfall suggests. This partly undercuts the rationale for the aggressive fiscal and monetary stimulus injected into the economy: to fuel spending that soaks up all of those out-of-work people. Many simply aren’t available to be hired.
That is likely to change. As vaccination spreads, the virus-related obstacles to working should recede and economists expect the labor force to rebound. That is a Goldilocks scenario: historically high levels of employment and the sort of robust wage growth workers, especially the lowest-paid, were enjoying pre-pandemic.
But what if workers are slow to return? As stimulus-stoked demand for labor meets stubbornly reduced supply, the result should be even faster wage gains for those who do work, and one more reason to worry about inflation.
How The Crypto Workforce Changed In The Pandemic
“I see my team blossoming in this lockdown. They are more honest about what they can and cannot do. And it’s my role as CEO to support them.”
The pandemic has put hundreds of thousands of businesses out of action, saw others fold and decimated great swathes of the economy.
But, crypto thrived in this distributed environment. As the world clamped down and everyone was forced to decentralize, the crypto world shone.
Perhaps crypto, born of a crisis, is most at home in one. Working from home is where we all have spent most of this crisis.
Gaurang Tovekar is the CEO and co-founder at Indorse, a blockchain-powered enterprise SaaS platform.
He says the company was perfectly placed to ride out the upheaval as the entire team has never been in the same physical location since the company’s inception.
“Although the pandemic accelerated remote work and the adoption of decentralization in the workforce globally on an unprecedented scale, it was already a norm within the crypto industry well before the pandemic struck.”
He points out that although the company once had offices in Singapore and London, he’d already swapped them out for hot desks in co-working spaces before the pandemic.
“That way, those of us who want to meet up once or twice a week and bond socially can still do so in the office while working from home the majority of the time.
“We have adapted our work styles and got used to this new normal in the last year and a half. I am sure that we as a company will not lease swanky office spaces any time soon, but rather provide better flexibility and other perks that make working from home more pleasurable for our team,” he concludes.
Office As A Luxury?
Stefan Rust, the former CEO of Bitcoin.com and now CEO and co-founder of Sonic Capital, is taking a different approach to remote working. He’s just signed a lease on a “swanky office” in Hong Kong – but at a substantial discount. He intends to use this real estate luxury as a perk to benefit his mostly remote workforce.
“I plan on creating large open plan spaces with sofas, TVs, screens and hot desks. I want people to be able to come in and relax, enjoy time with their co-workers, conduct meetings or just chill. The new office has to be a place where people want to come — it’s about choice,” explains Rust.
So, perhaps as pandemic restrictions wind back, an office will be seen as a luxury perk for tech and crypto companies, a central clubhouse that people use how and when they want.
Ramadan Ameen, CFO for privacy startup Panther Protocol, reflects that his international team was put in place during the pandemic in Jan. 2021. Not only has his team never all been in the one location, but the majority of the twenty staff also have never met each other in person. For Ameen, a team meetup and bonding session are significantly ahead of company offices, for now.
“The co-founders have met, but the team is spread out across North and South America, Asia and Europe.
We are looking forward to a team meetup in the fall, depending on Covid restrictions. Right now, our choices are limited, so we are still deciding among a few central locations.”
The Latest Boom In Cryptocurrencies Is Happening In The Job Market
Even as regulators tighten their oversight of cryptocurrencies and related businesses, hiring in the industry is reaching a fever pitch.
On many employment websites such as Indeed.com, crypto searches are more than double year-ago levels. On LinkedIn, paid U.S. job postings with keywords like “cryptocurrency” and “blockchain” were up more than 600% from the previous year as of Aug. 1 and almost 400% compared with the same date in 2019. One popular jobs board, CryptocurrencyJobs.co, saw nearly 1,500% growth in paid listings since last year.
The hiring frenzy is happening just as China bans cryptocurrencies — again — and U.S. regulators pursue actions against related businesses big and small. The Commodity Futures Trading Commission said on Tuesday that it fined the exchange Kraken $1.25 million to settle allegations that it let Americans illegally trade margin products.
A number of agencies are probing exchange Binance. Coinbase Global Inc. recently axed its upcoming lending product after receiving a Wells notice that said the Securities and Exchange Commission was threatening to sue the company over it.
“Everyone is hiring right now across roles,” Daniel Adler, founder of CryptocurrencyJobs.co, said in an email. “At the beginning of the year, some teams were looking to double in size. Some already have, and are looking to grow further. Hiring is highly competitive. And it’s the strongest I’ve seen since launching Cryptocurrency Jobs in 2017.”
Top companies hiring in recent months have included Kraken and Coinbase, as well as more traditional firms like Accenture, KPMG, PayPal Holdings Inc. and JPMorgan Chase & Co., according to LinkedIn. Decentralized-finance projects — those that let users trade, borrow and lend coins without using centralized middlemen — drove hiring on CryptocurrencyJobs.co, Adler said.
“You’ll find most opportunities within the Ethereum ecosystem,” where many DeFi projects live, he said. “Other ecosystems have also emerged and are contributing to the demand, such as Solana. You’ll also find more non-crypto companies looking for crypto talent. This is in contrast to previous years when demand for crypto talent was (almost only) limited to crypto startups.”
Many employers not only are offering hefty salaries and bonuses, but also allocations of tokens, Adler said. And people who get the jobs are coming from all walks of life.
“You will find former high school teachers, financial services professionals from Wall Street, college dropouts, lawyers, academics, folks straight out of college, from across tech and industry,” Adler said. “The other great thing about crypto is that it doesn’t matter whether you’re in Silicon Valley, India or Nigeria, or what your background and credentials are.”
Amazon Boosted Workforce by 75% During Covid — And It’s Still Hiring
Amazon.com Inc.’s global workforce surged almost 75% during the pandemic to help keep up with torrid demand, and the e-commerce giant is still facing shortages of workers, particularly in the U.S.
The company’s latest quarterly results underscored the magnitude of Amazon’s hiring since the onset of the Covid-19 crisis, with the number of employees increasing by 628,000 to more than 1.4 million from March 2020 to September this year.
In spite of its process utilizing technology in its warehouses, the Seattle-based company needs more labor. It is actively recruiting, including more than 150,000 people in the U.S. to handle the surge in holiday shopping.
To find workers in the tight U.S. job market, Amazon has increased salaries. The average starting wage is now over $18 per hour, with an additional $3 depending on shifts in many locations, Chief Financial Officer Brian T. Olsavsky said on an earning call with analysts.
Labor shortages have hit the bottom line, along with global supply-chain bottlenecks. They will continue to weigh on profit this quarter, Amazon said.
“In the fourth quarter, we expect to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs,” Chief Executive Officer Andy Jassy said in a news release.
Macy’s Boosts Its Hourly Wage To $15 Amid U.S. Labor Crunch
* Department-Store Operator Also Offers New Education Benefit
* Higher Minimum Pay Will Go Into Effect Companywide By May
Macy’s Inc. became the latest retailer to offer employees higher pay and sweetened benefits as U.S. companies struggle to attract needed workers.
The department-store chain will raise its minimum pay rate to $15 an hour across the company by next May. Macy’s is also starting an education benefit program for workers that covers the cost of tuition, books and fees, according to a statement from the company released Monday.
Once the higher pay goes into effect, Macy’s average base pay be more than $17 an hour, the company said. The education program, which will cost $35 million over the next four years and will be offered in partnership with Guild Education, will cover bachelor’s degrees, high-school completion courses, English-language classes and professional certificates, among others.
“In the job market people have choices. They can be choosy about who they work with and how long they work at a particular company,” Danielle Kirgan, Macy’s chief transformation and human resources officer, said in an interview. “We recognize that choice. We want to make sure we’re attracting a colleague that wants to be able to improve their skills.”
Kirgan added that the educational program doesn’t require employees to continue working for Macy’s after the degree has been completed.
She said the moves will help Macy’s achieve its Polaris plan, which is the retailer’s strategy to boost its performance via online sales, an expanded loyalty program and higher-margin private labels. That’s because the higher pay and new benefits, which also include an additional paid day off, will increase worker motivation, Kirgan said.
Earlier during the pandemic, Macy’s announced plans to slash thousands of back-office jobs and furloughed most of its workers amid mandatory lockdowns for nonessential retailers. U.S. companies have struggled to bring back the workers they lost during the period.
“This is not just a reaction to the tight labor market, although to be sure, this is a difficult market to hire in,” Kirgan said. “This is more of our signal to our colleagues that this is really how we operate — investing back in our colleagues in a variety of ways.”
Wages Are Heading Up, But They’re Not Pushing Inflation
The pay increase is nice, but it will have to be a lot higher before it contributes meaningfully to faster price growth.
After decades of low wage growth, U.S. workers are finally getting a meaningful raise. Hourly wages rose 5.8% in October from a year earlier, the third highest year-over-year wage growth since the early 1980s. The employment cost index, a broad measure of wages and benefits, rose 1.3% in the third quarter, the biggest one-quarter jump since the index’s inception in 2001.
That’s good news for workers, but inflation watchers worry that higher wages will push prices higher, too. It’s not a coincidence, they say, that annual inflation is rising faster than at any point since the mid-2000s, more than double the Federal Reserve’s inflation target of 2% a year.
Those inflation fears aren’t groundless. Higher wages give workers more spending power, which stimulates consumption and allows companies to offset higher labor costs by raising prices. That’s pretty much how the last six decades have gone. Wages, personal consumption and inflation have moved in nearly perfect step since the 1960s, according to data compiled by the U.S. Bureau of Economic Analysis. All three grew substantially during the 1960s and 1970s and have declined ever since.
Growth in wages, consumption and inflation have declined in lockstep during the past four decades.
But recent wage gains have not yet meaningfully reversed that trend. Consider that from 1959 to 1990, wages grew 7.8% a year, or about 2% a quarter on average, closely tracking consumption growth of 8.2% a year during the period. Since 1991, however, wages have risen 4.4% a year, again closely tracking consumption growth of 4.7% a year.
Even after the third quarter, the employment cost index is up just 3.7% over the last year, still well below the muted wage growth in recent decades.
Low wage growth has gradually eroded workers’ spending power, and it’ll take a much bigger raise to catch up. Hourly earnings for workers in leisure and hospitality, for example, rose a whopping 12.4% in October over the previous year. And yet their average weekly earnings amount to just $417, or about $21,000 a year based on a 50-week work year.
Wages are rising at the fastest pace since the early 1980s.
And they’re not alone. Average annual wages amount to roughly $50,000 or less in most industries the Labor Department tracks, which barely supports a single person living in the most affordable places, never mind families or workers residing in big cities.
Without sustained and robust wage growth, consumption is unlikely to grow at levels capable of pushing prices persistently higher. In simplest terms, workers can’t spend what they don’t make.
That may explain why the bond market and the Fed don’t seem concerned about inflation. The bond market is signaling prices will rise 2.6% a year over the next decade, roughly in line with inflation growth over the past 100 years.
And while Fed Chair Jerome Powell acknowledged during a press conference last week that inflation is running hotter than the Fed would like, he added that the Fed sees “little evidence of wage increases that might threaten excessive inflation.”
In fact, disinflation, or declining inflation below the Fed’s target, may be the bigger concern. Consumer spending accounts for roughly two-thirds of the U.S. economy, so it’s probably not a coincidence that wages, consumption, inflation and the broader economy have struggled to grow for much of the past two decades.
Eventually, savings accumulated during Covid-19 lockdowns will be spent and pandemic-era fiscal and monetary stimulus will have run their course. It will then be up to consumers to keep the economy growing, and they’re ill equipped for the task.
No one really knows where inflation is headed, and many factors could push prices higher, such as energy shortages, continuing kinks in global supply chains or even a burgeoning class of newly rich cryptocurrency investors. But it would take a much bigger pay raise than the one workers have received so far for wage growth to join the list.
Wages Are Going Gangbusters In The U.S.—Elsewhere, Not So Much
Pay growth remains anemic in Australia and Japan despite labor shortages, easing pressure on their central banks to raise interest rates.
Yoichi Akimoto’s pay has barely grown since he joined a Tokyo apparel company five years ago. He isn’t expecting that to change, even as wages accelerate elsewhere in the world.
“I’m fortunate. I’m still employed,” Mr. Akimoto said. “I know the company is not profitable. It’s only natural that our wages do not increase.”
U.S. workers are getting their largest pay bumps in three decades, while wages in the U.K. are outpacing inflation. But for employees in some large Asia-Pacific economies, it is the opposite experience. Many are struggling to negotiate a wage increase—if they can get one—that covers higher consumer prices.
It is a stark divergence as the global economy recovers from the Covid-19 pandemic, with implications for how quickly central banks tighten monetary policy in response to price pressures, including through raising interest rates.
In the U.S., wages rose 4.2% in the three months through September from a year earlier, the fastest increase since 1990 as labor shortages in a widening range of industries prompted employers to raise pay. Companies could attempt to pass on higher labor costs to customers, driving inflation, which hit a 31-year high in October.
The inflation surge is complicating the Federal Reserve’s strategy for unwinding the easy-money policies the central bank imposed early in the pandemic.
In contrast, Australian pay raises remain below the 3% annual increase that the country’s central bank has indicated as a key threshold for raising interest rates from a low of 0.10%. The average wage in Japan stood at the equivalent of $39,000 in 2020, an increase of only 4% over three decades.
Many of the headwinds driving up wages in the U.S. are buffeting the Asia-Pacific region. Clogged supply chains have driven up the cost of raw materials for manufacturers, while making imported goods more expensive as shipping rates rise. Energy prices are on a tear as the global economic recovery stimulates oil demand. Industries including construction and healthcare say they are short of workers.
The Omicron variant of Covid-19 could intensify those pressures by further disrupting supply chains, while some governments are already reintroducing border controls and slowing reopening plans.
Still, policy makers point to differences that help to explain why wage growth is weaker in Japan and Australia than the U.S. They include the participation rate—the share of the population aged 16 years or older either working or looking for work.
More than a year and a half into the pandemic, the U.S. is still missing about 4.3 million workers. In September, the U.S. participation rate was 61.6%, having stood at 63.3% in February 2020 before the pandemic hit.
In Australia, however, the participation rate hit a record 66.3% this year, before an outbreak of the highly contagious Delta strain of Covid-19 in June triggered lockdowns in Sydney.
“This has also been the experience in several countries in Asia, including Japan, where workers remained attached to their employers throughout the pandemic and where labor-force-participation rates remained close to record highs,” Philip Lowe, governor of the Reserve Bank of Australia, said in a recent speech on inflation trends.
Australia has recorded about 210,000 coronavirus cases and more than 2,000 deaths since the pandemic began, compared with more than 48 million infections and 780,000 deaths in the U.S.
That relatively low case count could have made Australians less fearful about returning to work, particularly in jobs such as retail and hospitality that require face-to-face interaction with customers, Mr. Lowe said. He also said the closure of U.S. schools likely squeezed the workforce there.
Shane Oliver, chief economist at Australian wealth manager AMP Capital, said higher minimum wages than many other countries and the success of government measures to prevent mass layoffs early in the pandemic, including a $64 billion wage subsidy, likely played a role in keeping Australians employed or at least looking for work.
Some economists say pandemic programs to stave off job losses, including widespread furloughing of workers, could also be playing a role in restraining pay raises in Europe.
Europe’s statistics agencies have yet to release wage data for the three months through September, but recent pay deals that have been made public suggest there hasn’t been a strong pickup, despite a surge in inflation.
With many wage deals negotiated in the early months of the year, some economists expect to see a rise as workers seek to protect their real incomes following a jump in inflation that has been driven by energy prices.
“I don’t think we’ve seen the beginning of that yet given typical lags between inflation and negotiated wages,” said Paul Hollingsworth, chief European economist at BNP Paribas. “So really, let’s see where we are in the middle of next year, to see if this really starts to feed through.”
Lauren Whelan, a 37-year-old store manager at a retail-travel business in Sydney, stayed working even as the shutdown of airline travel ate into her income. “Due to sales being at zero for the majority of the pandemic I have been down to base only, which is some 30% to 50% less than my usual income,” she said. Still, that hit followed weak annual increments to her base salary for several years before, she said.
Australia’s unemployment rate jumped to 5.2% in October from 4.6% in September as the number of people seeking work rose with the easing of Covid-19 lockdowns in the country’s most populous state. The RBA expects it to moderate to 4.75% by the end of 2021 before drifting lower to 4.0% two years later.
During the pandemic year of 2020, the jobless rate in Japan rose to 2.8% from 2.4% a year earlier. Yet the level is lower and the change is much smaller when compared with the U.S., where the jobless rate shot above 10% in the early stages of the pandemic and remained at 6.7% in the fourth quarter of 2020.
In Japan, job security is more important than pay raises, a mind-set ingrained in both managers and workers after the collapse of the economic bubble 30 years ago, said Tomohisa Ishikawa, an economist at the Japan Research Institute, a unit of Sumitomo Mitsui Financial Group Inc.
Prime Minister Fumio Kishida made sharply improving pay a key plank of his successful campaign in September to become head of the ruling party, but the idea seems to have already died down.
“I would say, ‘Why don’t you do it, if you could?’ ” to Mr. Kishida, said Shu Shiratsuchi, who works at a restaurant for $12 an hour. Mr. Shiratsuchi, 28 years old, said he is struggling financially because he is only getting 70% of the shifts he got before the pandemic.
Japanese are shy about negotiating wages owing to the culture that frowns on appearing greedy, business consultants say. A 2020 survey by Recruit Co., a company that helps match employers and workers, found that when joining a company, 62% of Japanese workers didn’t negotiate over their wages, whereas most Americans did.
But it isn’t just culture that hinders wage increases. Consumer spending hasn’t grown much over the years, the flip side of stagnant wages, Mr. Ishikawa said.
More than 30% of company unions in Japan didn’t ask for a wage rise this year, according to labor ministry data, but there are early signs of friction in Australia’s labor market. Workers at seven Australian distribution centers owned by logistics company Toll Group spent two days on strike last month before securing an agreement that included an annual 3% pay raise for three years.
The ability of workers to secure outsize pay increases could depend on how quickly countries that have kept Covid-19 cases low can reopen their borders and encourage immigration. An influx of foreign labor would put downward pressure on wage growth.
The Omicron variant is already slowing reopening plans. Australia on Nov. 29 postponed by two weeks the planned reopening of its international border to fully vaccinated skilled workers, because it wanted time to better understand the new variant. The same day, Japan said it would close its borders to foreigners, including business travelers, until the end of the year.
Foreign labor in Australia accounted for about 500,000 workers before the pandemic, but that has dropped to fewer than 90,000 workers, said Paul Bloxham, chief economist for Australia at HSBC Holdings PLC.
The Japan Research Institute’s Mr. Ishikawa believes that wages in Japan are likely to rise in the near future, owing to emerging labor shortages. But Japan’s record on wages could be a deterrent to foreign workers, who often fill jobs such as taking care of the elderly or farming. Most of the country’s foreign labor comes from China, Vietnam and the Philippines.
He said low prices in Japan are also reaching their limit.
Matsuya Foods Co, which operates chain restaurants, raised the price for a bowl of beef and rice—its flagship product—by 19% to 380 yen, equivalent to $3.37, at the end of September. The company, which lost customers when it raised the price by 26 cents three years ago, carefully timed this price increase to coincide with the lifting of a pandemic state of emergency.
“Customers are returning to the pre-pandemic level,” a company spokeswoman said. As for wages, “They’re not rising, but not going down either,” she said.
Companies Plan Big Raises For Workers In 2022
Conference Board report says companies have budgeted more money for pay increases than at any point since 2008, with many citing higher inflation as a reason.
Companies are planning for steeper wage increases next year than at any point since the 2007-2009 recession, according to a new report, amid a tight labor market and the highest inflation in three decades.
A survey by the Conference Board set for release Wednesday finds that companies are setting aside an average 3.9% of total payroll for wage increases next year, the most since 2008.
The survey also shows that companies are planning on raising salary ranges, which would result in higher minimum, median and maximum salaries. That suggests pay raises could be broad-based and affect workers across a company’s pay scale.
The results are a sign the recent acceleration in private-sector wages is likely to carry over into 2022.
Such a sustained rise in wages could push consumer prices higher, as companies raise prices to compensate for pay increases.
The dynamic of higher wages and prices could further stoke inflation and increase the chance of a spiral of rising wages and prices feeding on each other that could be difficult to stop.
Roughly 39% of respondents to the survey said inflation factored into their decision to set aside funds for wage increases next year.
“The impacts of wages on inflation and of inflation on wages are now stronger than they have been in recent decades,” said Gad Levanon, chief economist at the Conference Board.
In earnings calls, some companies have said that they plan to raise wages next year. Jonathan Ramsden, chief financial officer of Big Lots Inc., a retailer, told analysts Friday the company would face higher costs next year due to “inflationary wage and other pressures.”
The clothing retailer the Gap Inc. has also included higher pay in its outlook, executives told analysts last month.
“We are definitely seeing average hourly rate pressure, primarily in our distribution centers, but in our stores as well,” said Katrina O’Connell, the company’s chief financial officer.
And Mark Kalvoda, chief financial officer at Titan Machinery Inc., which sells farm and construction equipment, told analysts in a Nov. 23 earnings call that it was also planning for higher compensation.
“We are realizing inflationary cost pressures in areas like fuel, wages and employee benefits and expect those pressures to intensify in future quarters,” he said.
The Conference Board, a think tank, surveyed 229 U.S. companies from a variety of sectors in November. More than half the firms had more than 10,000 employees. The Conference Board began conducting the survey annually in 1998.
How long the recent high levels of inflation will last is one of the driving questions of economic policy makers.
Federal Reserve officials in recent weeks have acknowledged new uncertainty over how prices will behave in the coming year. That is a shift from their previous position that this year’s accelerating inflation was likely to be temporary as the economy adjusted to supply-chain disruptions and a temporary labor shortage brought about by the Covid-19 pandemic.
“It now appears that factors pushing inflation upward will linger well into next year,” Fed Chairman Jerome Powell said in congressional testimony last week.
Now officials are laying the groundwork to act more forcefully to curb inflation next year if necessary. Mr. Powell suggested the Fed could hasten the pace with which it is pulling back support from the economy when it meets next week.
Officials are likely to announce plans to stop their bond-buying program by March instead of June, as they had previously anticipated. That could set the stage for raising interest rates beginning next spring.
The Fed cut rates to near zero and launched an asset purchasing program in 2020 to help the U.S. economy weather the pandemic. Removing such accommodation would likely slow the pace of growth and hold down inflation.
On Friday, the Labor Department reported that private-sector hourly wages rose 4.8% in November from the year before, on par with October. Wages have risen by more than 4% year-over-year for five consecutive months. By contrast, wage increases averaged 3.3% in the year before the pandemic arrived in the U.S. in February 2020.
A separate measure of compensation that includes both wages and benefits rose a seasonally adjusted 1.3% in the third quarter from the previous quarter, the Labor Department said in October, the fastest pace on record.
Higher inflation readings have accompanied the rise in compensation. The consumer-price index rose 6.2% in October from the previous year, according to the Labor Department, the fastest pace in three decades. Economists surveyed by The Wall Street Journal expect it accelerated further, to 6.7%, in November. The CPI report will be released on Friday.
Many economists had expected that the expiration of unemployment benefits in September and the reopening of schools in the fall would have eased the labor shortage by now. Instead, government data suggests employers continue to struggle to find workers.
In September, there were roughly 2.8 million more job openings than unemployed workers, according to Labor Department data. The department will report October job-opening data on Wednesday.
In response, companies have been offering higher salaries to new hires. Those who switched jobs between August and October saw a median wage increase of 5.1% versus 3.7% for those who stayed in their current jobs, an unusually large gap, according to the Atlanta Fed.
That could lead to higher wages for existing employees in the coming year, Mr. Levanon said. If the pay gap between new and more experienced workers shrinks too much, it could prompt experienced workers to look for higher-paying jobs.
“The faster wage growth is more institutionalized now,” he said.
Fed’s Dual Mandate In Crosshairs With Wages Lagging Inflation
* Average Hourly Earnings Decline Once Again As CPI Soars
* Strikes, Unionization Create Dislocations In Labor Market
Rising inflation is eating away at what the average American is taking home, putting the twin pillars of the Federal Reserve’s mandate — inflation and employment — in direct conflict with each other.
Today’s Chart of the Day illustrates the impact through real average hourly earnings growth going back to 2007. As inflation has risen on a year-over-year basis by the fastest annual rate since 1982, wages haven’t kept up. November data shows real average weekly earnings fell 1.9% from 2020.
That eats into Americans’ purchasing power. It’s a dynamic not seen since 2011, after the 2008 global financial crisis, which was also met with rising inflation in a post-recessionary recovery. But prices haven’t risen this fast for decades.
So how are workers reacting to this? With strikes across various industries. Deere & Co. recently resolved a work stoppage that was the largest since 1986. Kellogg Co. employees picketed in October. And unionization is coming back into vogue, with a New York Starbucks Corp. restaurant voting to unionize, which could spark similar movements at additional stores.
For companies, costs remain an issue as prices for raw materials and freight keep rising. But it’s the labor situation that’s getting even trickier. At McDonald’s Corp., commodity costs were up 4% in the company’s third quarter earnings report, while wages rose 10%. Automation may be a solution, as the fast-food chain has created more digital kiosks in many locations. Even Nestle SA has automated its logistics site in the U.K. as part of an effort to offset supply chain issues.
At its core, this all comes down to the Fed’s dual mandate. Monetary stimulus has continued to support the economy, but at the same time accelerating inflation has also made it harder on the average worker.
The question from corporate America is if the Fed addresses rising prices by tapering bond purchases and eventually hiking interest rates rate, will an eventual rise in real wages that discourage hiring? The answer could be a key to economic growth in 2022.
Tech Workers Arm Themselves With Salary Data
Grassroots efforts and new laws are breaking employers’ monopolies on knowing how much everyone makes.
Taylor Poindexter had been working as a software engineer for about a decade when she began amassing a dataset of salary information from other people in the industry last year.
“I thought I was well-paid until I started talking to my peers,” says Poindexter, who in 2016 helped found the Black Code Collective, a community for software engineers of color. “I realized that, as a woman and a person of color, maybe I’m not as well-paid as I could be.”
Online tools such as Glassdoor Inc. are designed to show people how much they can make at a given job, but Poindexter says she thought she could get better data on her own. She reached out to people she knew and posted publicly on Twitter, asking engineers to send her information about their compensation.
Over several months she collected thousands of responses, which she anonymized, added to a spreadsheet, and started sharing. A friend organized the figures into an array of charts and graphics, arranged by city, specialty, experience level, and size of organization.
The numbers show, for example, that most respondents were commanding salaries well over $100,000 a year, that people in larger companies tend to be paid higher average salaries than those in smaller ones, and that for many people, pay levels out after about a decade of work.
Exercises such as Poindexter’s are unfolding in one way or another across the technology industry, which, for all its rhetoric about the power of shared data, is often hostile to the idea of open discussions about how much employees make.
In California, where many of the big U.S. tech companies are based, it’s illegal to bar employees from talking about pay. Even so, workers in the industry say their employers get peeved when they do it.
More than 60% of respondents in a 2019 survey by Blind, a professional network that lets users remain anonymous, said they’ve been discouraged by management or human resources from discussing compensation with other employees.
In 2015 a group of workers at Alphabet Inc. began gathering salary and bonus information on about 1,200 U.S. employees. Their findings showed that women were paid less than men at most job levels at Google in 2017. Google said at the time its own analysis found no significant gap in pay based on gender.
Apple Inc. spent part of this year embroiled in a conflict with employees who accused it of trying to stymie talk about pay transparency.
They say it barred employees from operating a chatroom on Slack to discuss pay equity; in a September complaint with the National Labor Relations Board, one of the employees involved in the Slack group, Cher Scarlett, alleged that management had interfered with employee efforts to gather wage data.
Scarlett later left Apple after reaching a settlement with the company but has since said that Apple has reneged on the terms. An Apple spokesperson said the company takes such concerns seriously, but it doesn’t discuss situations regarding specific employees.
At least seven U.S. states have passed legislation in recent years aimed at forcing employers to be more transparent about compensation.
Some states have also limited a company’s ability to ask for pay history, a practice that’s been associated with gender and racial pay gaps. In one of the most expansive laws, Colorado in January began requiring recruiters to disclose the pay range of a position in the job posting itself.
In California, employers must provide salary or hourly wage ranges to applicants who have completed an initial interview. Starting this year, California employers with at least 100 employees nationwide are also required to file annual reports on compensation to the California Department of Fair Employment and Housing.
The laws are designed to protect job candidates from wage discrimination and, in practice, can give applicants an advantage in bargaining.
“Employers will often anchor negotiations based on the first offer the employee makes,” says David Lopez, a professor at Rutgers Law School and former general counsel of the U.S. Equal Employment Opportunity Commission. If you lack data on pay, “you’re negotiating from a position of weakness.”
Researchers say transparency requirements could help reduce long-standing gender- and race-based pay inequities, chronic problems within the tech industry. “The idea is that if you’re not transparent about what people are being paid, you can’t smoke out gender-based differentials,” Lopez says.
In January, a few months after embarking on her pay project, Poindexter left her company—a startup focused on helping grassroots political campaigns—for a brief sabbatical. When she was ready to rejoin the workforce a few months later, she began posting reflections about her job search on Twitter and was quickly inundated with messages about openings.
So she made an unconventional choice: She posted her compensation requirements on her Twitter profile, based on what she had gleaned about her market value from the spreadsheet she created. On her wish list: a base salary of $185,000, plus equity, at a midsize to large company and qualities such as “work-life balance,” and “psychological safety.”
In October she started a job as an engineering manager on the advertising team at Spotify Technology SA. The initial offer exceeded her salary requirements. But “I followed my general rule of thumb,” Poindexter says, “and negotiated for a bit more.”
FedEx Finds If You Pay Them, They Will Come
The package-delivery giant was flooded with job applications after it offered better wages and benefits. Who could have guessed?
FedEx Corp. has cracked the code on how to hire in today’s tight labor market: higher wages, better benefits and more flexibility. Who knew?
After offering those three things, the company received more than 111,000 job applications last week, the most in history and up from 52,000 in the week of May 8, Chief Operating Officer Raj Subramaniam said on Thursday afternoon after the package-delivery giant reported better-than-expected quarterly results. The benefits included increased paid time off and tuition reimbursement.
The company has hired more than 60,000 frontline workers since mid-September. Higher wage rates and network disruptions tied to labor shortages resulted in $470 million in additional costs in the three months ended Nov. 30, but the company expects those cost pressures to moderate in the second half of its fiscal year.
This projected easing doesn’t reflect expectations that wage rates will drop back down; higher pay is “here to stay,” Chief Financial Officer Mike Lenz said on the company’s earnings call. Rather, the relief will come from a return to more normalized operations and a plan to hold onto more seasonal hires than normal after the holiday peak to keep up with robust demand.
“The whole problem was our networks were inefficient,” Subramaniam said. “Even as we speak, we are rerouting packages back to where [they] should be in the first place, and that’s what’s going to make the difference.”
There were 11 million job openings across the U.S. economy as of October, and workers are still quitting their positions at a near-record rate, according to Labor Department data. Myriad theories have been offered for why that might be, from a wave of early retirements and Covid health concerns to a lack of child-care options and increased competition in a recovering economy.
The real answer might be a mix of all of these, but the pandemic also seems to have inspired a rediscovery of self-worth, particularly among lower-income laborers.
Few workers proved more essential to the functioning of the U.S. economy than the FedEx and United Parcel Service Inc. delivery drivers and warehouse workers who kept goods flowing to households when many were wary of venturing into physical stores.
Their efforts helped drive record sales and reinvigorated the delivery companies’ pricing power. It’s normal that FedEx is paying its workers more — and it can afford to do so.
Revenue per package jumped 9% in FedEx’s Ground unit in the most recent quarter and 20% on a composite basis in the Express segment, reflecting the company’s ability to push through price increases and surcharges. FedEx said on Thursday that it now expects the U.S. parcel market to swell to 134 million pieces a day by the end of 2026, up 70% from 2020.
The company boosted its adjusted earnings guidance for the year to as much $21.50 a share, returning to a previous range that it had trimmed in September after getting blindsided by higher labor costs.
The results have been so strong during Covid that FedEx reinstated a cash bonus plan for its executives that it had previously scrapped earlier in the pandemic because of the economic uncertainty. It also kept in place special stock grants that were meant to compensate for the lack of a cash bonus.
All in, Chief Executive Officer Fred Smith made $14.3 million in the year ended May 2021, while Subramaniam pocketed $8.2 million and CFO Lenz, who took the role halfway through the fiscal year, took home $4.5 million, according to FedEx’s proxy filing. The median FedEx employee, as defined by the company, was paid $46,171, including $8,609 in employer-provided health benefits.
The dynamic is reminiscent of the record net income that Deere & Co. reported one week after reaching a deal for higher wages and benefits for more than 10,000 members of the United Auto Workers union that staged the first strike at the company since 1986.
In fact, a Bloomberg News analysis found that despite all the hand-wringing about higher labor costs, U.S. corporations outside of the finance industry enjoyed their fattest profit margins since the 1950s over the past two quarters.
This suggests there’s plenty of buffer — at least among the larger public companies — to raise compensation for workers or improve their quality of life without kicking off the kind of wage-price spiral that could sink the economy.
Surging Inflation Has Workers Demanding Bigger Raises. Could It Lead To A Wage-Price Spiral?
Wage increases prompted by higher prices could protect workers while potentially fueling inflation, economists say.
The COLA is making a comeback.
Higher prices, a worker shortage and a revitalized labor movement are bringing about the return of pay increases tied to inflation, known as cost-of-living adjustments, or COLAs.
On Tuesday, striking workers at food maker Kellogg Co. ratified a contract that included a COLA, the second major labor agreement in recent weeks to feature such pay adjustments. Analysts say COLAs could spread in future negotiations between employers and unions.
Under a COLA, a worker’s pay rises to compensate for the increase in consumer prices. The idea is to protect wages in times when consumer prices are rising rapidly and unpredictably.
The provisions were often part of union contracts 40 or 50 years ago when inflation was high. Starting in the 1990s, as inflation slowed to more modest levels, COLAs became less prominent.
Now, resurgent inflation is leading some workers to ask for higher wages. Annual inflation in November accelerated to 6.8%, the Labor Department reported, the fastest in 39 years.
Economists and Federal Reserve officials have acknowledged they don’t know how high inflation will get nor how long it will last. Such uncertainty could make COLAs more attractive, said Harry Katz, an economist at Cornell University specializing in labor relations.
“COLAs exist not primarily because inflation is higher, it’s because there’s uncertainty about inflation,” he said. The provision “provides a way of basically sharing the risk.”
COLAs thus offer one avenue through which workers could be protected from the surging cost of living. But COLAs could also themselves contribute to inflation. Raising wages to compensate for higher prices could lead to a situation in which companies raise prices to recoup higher wages, which causes workers to ask for yet higher wages, causing the two to feed off each other.
“While understandable from the point of view of workers, the danger of widespread use of COLAs is they institutionalize inflation and contribute to a wage-price spiral,” said Michael Walden, professor emeritus at North Carolina State University.
Such a wage-price spiral emerged in the 1970s and was broken only by tighter monetary policy, Mr. Walden said. A wage-price spiral could reoccur if the Federal Reserve doesn’t raise interest rates significantly more than it has signaled, he said.
Some economists see less reason to worry. COLA clauses were only a small contributor to higher inflation in the 1970s and 1980s, which was propelled by other factors including oil crises, said Mr. Katz, the Cornell economist.
Further, a much smaller share of workers are in a union today, and COLAs are rarer, reducing the likelihood of a wage-price spiral, Mr. Katz said. Roughly 6.3% of private sector workers belonged to a union last year, down from 16.8% in 1983, according to the Labor Department.
Last month, members of the United Auto Workers at Deere & Co. ended a five-week strike by ratifying a contract that, among other pay and benefit increases, would adjust wages every three months to match inflation.
Tuesday’s five-year contract between Kellogg and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union gives employees pay raises and quarterly cost-of-living adjustments. The agreement means that roughly 1,400 union members who had been on strike since Oct. 5 will go back to work.
Union members aren’t the only workers getting pay increases tied to inflation.
Minimum-wage workers will see pay increases reflecting the higher cost of living in several states including Arizona, Colorado, Maine, Minnesota, Montana, Ohio, Washington and South Dakota, according to an analysis by the National Conference of State Legislatures.
In Arizona, for example, minimum-wage workers will see their hourly pay rise 5.3% to $12.80 at the start of next year from the current $12.15. The minimum wage rose 1.3% at the beginning of this year, reflecting lower inflation at the onset of the pandemic.
A shrunken labor force, combined with a strong demand for labor, has given workers greater bargaining power. That could prompt more unions to ask for COLAs. A number of major union contracts expire next year, including between West Coast dockworkers and the companies that operate marine terminals. The International Longshore and Warehouse Union declined to comment.
“We’re going to see more efforts to get COLAs in the contracts, no doubt about that,” said Michael Lotito, co-chair of the Workplace Policy Institute at Littler, an employment law firm.
Thousands of striking workers at snack-food maker Mondelez International Inc., and commercial-truck manufacturer Volvo won wage increases in new contracts earlier this year. And healthcare workers recently averted a strike by ratifying a union agreement with Kaiser Permanente that would cover about 50,000 employees.
So far, nonunion workers have seen their wages rise faster than union workers whose pay increases tend to be set in multiyear contracts. In the third quarter, nonunion wages for private-sector workers rose 4.7% from the same quarter a year ago, compared with 3.5% for union wages, according to the Labor Department.
“If history is any guide, I expect we’ll see significant wage pressure in the union part,” said Gad Levanon, chief economist at the Conference Board.
The Wall Street Journal wants to hear from you. Has your pay changed recently? Did you switch jobs or get a raise in your current role?
In Hot Job Market, Salaries Start To Swell For White-Collar Workers
Professionals toward end of 2021 see compensation jump at fastest rate in nearly 20 years, with law and finance reaping significant gains
Salaried employees are joining hourly workers in getting hefty raises, thanks to the hot job market and inflationary pressures that are also boosting pay for workers including waiters and warehouse staff.
U.S. professionals toward the end of this year saw their compensation jump at the fastest rate in nearly 20 years, federal data show. Hanging over bigger paychecks is the specter of inflation running near an annual rate of 7%, the highest in 39 years, meaning rising prices will cut into and in some cases decimate the real value of wage gains.
Wages for all private-sector workers grew 4.6% year over year in the third quarter, according to federal data, with the biggest gains going to workers in service occupations and industries such as retail and hospitality.
For management, business and financial occupations, wages rose 3.9% in the quarter, slower than overall wage growth but still the fastest pace on record since 2003 for this bucket of workers.
A survey from the Conference Board earlier this month found that employers are setting aside an average 3.9% of total payroll for wage increases next year, the most since 2008.
“Candidates are turning down our offers or wanting to negotiate more aggressively than they did in the past,” said Kathie Patterson, chief human resources officer at Ally Financial Inc. The Detroit-based lender is raising its salary and bonus pools, and increased its contribution to employee 401(k) accounts.
For many college-educated workers, 2021 will close with big bonus payouts and raises in sectors such as finance, law and technology. That group has enjoyed rising pay for decades as wages for workers without degrees stagnated or lost ground, according to academic research drawing on government data.
Pay for entry-level analysts at major investment banks moved into the six figures earlier this year, and associates at dozens of corporate law firms got pay increases after Milbank LLP lifted salaries in June for new lawyers to $200,000 from $190,000.
In finance, “There’s been so much pressure on pay,” said Alan Johnson, managing director of Johnson Associates, a compensation-consulting firm focused on financial services. “My clients are understaffed. With Covid, they curtailed hiring, and now with a spike in the economy and markets, they’re working people very, very hard,” he added.
All of that, Mr. Johnson said, heightens employees’ expectations that they will be well-compensated for the added stress and work. Banks are paying up with salary adjustments along with bonuses that are 10% to 35% higher than last year, according to a study by Johnson Associates.
Economists are concerned about a wage-price spiral in which employers raise pay, then pass along the increased costs to customers in the form of higher prices, leading workers to ask for higher pay to offset rising prices, and so on. Yet compensation experts and human-resources executives say the current increases are driven primarily by traditional labor-market dynamics and secondarily by inflation.
Robust consumer demand for a range of products including holiday gifts, mortgages and appliances has amplified the need for workers. At the same time, the supply of workers has dropped because of a high rate of retirements and millions of people sitting on the sidelines of the workforce because of burnout, Covid-19 fears and child-care issues, among other reasons.
Amanda Richardson decided this year to give 10% raises to all U.S. employees at CoderPad, a software company. The increase, for around 40 staffers, will be divided into two 5% increases, one in April 2022 and the other in October, “so it feels like you’re continuously getting a raise,” said Ms. Richardson, CoderPad’s chief executive. Last year CoderPad gave employees two 3% increases.
She settled on 10% after her finance chief attended a gathering with peer companies. When the subject of compensation came up, a consensus quickly emerged among attendees that 10% raises were needed to keep up with both inflation and the demands of highly sought after tech talent. Her first reaction:
“That’s crazy.” Then, “We put it in the budget,” she said. “If we’re in a peer group where companies are talking about 10%, our employees will get it somewhere else if we don’t give it,” she added.
Beth Klem, a CoderPad employee, moved with her daughter from the San Francisco Bay Area to North Carolina early in the Covid-19 pandemic to be closer to family, saying she thought she would also benefit from a lower cost of living.
Some of her expenses today are higher than she expected, such as her food bill. A 10% increase is “significant enough to feel like it has an impact on my budget,” said Ms. Klem, 45 years old.
Pressure on wages surged late in the year, said Irina Konstantinovsky, chief human resources officer at Horizon Therapeutics HZNP -1.87% PLC, an 1,800-person biotechnology company with U.S. headquarters in Deerfield, Ill.
She initially asked her board’s compensation committee to approve a 5% increase in next year’s salary budget for raises, pay adjustments and promotions, but upped that request to 6% after gathering new data on inflation and market pay rates.
Horizon has also increased its 401(k) match and gives every employee equity and a bonus. Though turnover is low, Ms. Konstantinovsky said, “It’s a risk for every company right now, so we can’t fall behind.”
Still, many workers nationwide won’t see their paychecks stay ahead of inflation this year. For one thing, “Companies don’t respond to market demands on a dime,” said Diane Burton, academic director of the Institute for Compensation Studies at Cornell University’s ILR School.
‘If we’re in a peer group where companies are talking about 10%, our employees will get it somewhere else if we don’t give it.’
— Amanda Richardson, CoderPad Chief Executive
Most companies go through an extensive salary-planning process once a year, limiting their abilities to adjust to short-term conditions. Cost-of-living adjustments were once common in collective-bargaining agreements and have been making a comeback in union contracts and minimum-wage laws.
Many firms are reluctant to adjust salaries based on a volatile factor such as inflation since salary increases are nearly impossible to roll back. Instead, employers report using variable pay, such as sign-on bonuses and spot allowances, to provide a temporary income lift without incurring the continuing costs of inflation-driven salary increases.
Some companies have already determined that inflation, which until this year was mostly between 1% and 3% annually over the past decade, won’t drive salary decisions. In early December, Google’s parent, Alphabet Inc., GOOG -3.64% already known as a company paying at the top end of local market rates for talent, said it wouldn’t give workers across-the-board adjustments to account for inflation.
The railroad company Union Pacific Corp. is planning raises averaging around 4% to 6% for nonunion staff, according to a person familiar with the situation. Union Pacific declined to comment.
“What we see typically is that employers set wages based on the cost of labor, which is based on supply and demand for roles,” not based on inflation, said Lauren Mason, who advises clients on talent and employee management as a senior principal at the consulting firm Mercer.
Companies Call In Better Pay And Perks For Contact Center Workers
Investments in benefits and overhauled onboarding programs aim to recover call center labor shortages, and fast.
Working in a call center was a trying job even before the Covid-19. But the disruptions caused by the pandemic saw call volumes increase—and callers grow more frustrated.
So more customer service agents, tired of spending their days alone on the phone with angry customers, quit.
The average number of live job openings in call, contact and customer care centers advertised on Ziprecruiter.com in February was more than double that of the average the year earlier before the pandemic, according to the recruitment platform.
The number of average job postings in November, meanwhile, was more than five times that of February 2020, according to the jobs board, which declined to disclose specific figures.
Contact center bosses now are trying to reduce attrition rates by better cushioning the human impact of what can be a stressful, thankless job. Like their peers in hospitality, they are also raising wages, improving benefits and speeding up training.
“A lot of call centers have been really rethinking the way that they measure employees, but also the environment that they provide for them,” said David Brodeur-Johnson, a principal analyst at Forrester Research Inc. “In a time when being able to find and hire people is so competitive, they’ve had no choice but to.”
For T-Mobile US Inc., the worst came in the July and August, when its customer teams’ annualized attrition rate—a measure of how many employees leave over a year—reached 65%, up from around 20% before the pandemic, said Callie Field, the carrier’s chief customer experience officer.
Agents were working remotely at the same time that the company was trying to expand contact-center operations following its April 2020 merger with Sprint Corp.
Many outgoing agents were leaving within a few months of joining, some because they had been on furlough from other companies that eventually pulled them back to work. But others were simply burned out from doing the job alone at home, Ms. Field said.
“Doing that job by yourself day after day after day in that climate was exceptionally challenging,” she said.
In a bid to make things easier, T-Mobile this year added an extra 15-minute break to daily staff schedules and doubled the amount of professional counseling sessions agents could sign up for, from five per topic each year to 10, Ms. Field said. The company reopened its customer experience centers to vaccinated new hires and leadership teams in May, and to vaccinated employees who wanted to work from the office in June.
It later offered contracts that combined office and remote work, all of which have helped bring annualized staff attrition back down to pre-pandemic rates, she said.
T-Mobile in August increased base pay to $20 an hour from $15, and raised wages by an average of 19% for existing customer care staff.
Others have made similar moves.
The financial services company United Services Automobile Association, or USAA, in October raised its minimum wage to $21 from $16, and expanded its perks to include coverage of some adoption, surrogacy and fertility-treatment fees, said Pat Teague, the company’s chief human resources officer.
It also decided that it would let staff, including new hires, continue working from home in some capacity even after its offices fully reopen.
“There was definitely a resistance to applying for jobs if we did not offer them remote, or some form of flexibility,” Ms. Teague said.
Alorica Inc., which provides third-party customer service support, offers different pay scales dependent on location, last year raised average minimum wages between 15% and 20% when it saw companies in other service industries do the same, said Colleen Beers, the company’s president of North America and Europe operations.
It also enlisted a TikTok employment influencer to drum up interest among younger potential recruits. To avoid losing staff in the first 90 days—typically the period when the most workers leave—the company directed managers to check in with new hires more often and via more channels than before, Ms. Beers said.
“Whether it’s the phone, or on chat or email, I basically have to meet my employees where they want to be met,” she said.
The tight call-center labor market cannot purely be attributed to resignations. Companies including Alorica and trading platform Robinhood this year expanded their contact centers or opened new ones to handle increased customer-service demand.
Delta Air Lines Inc., meanwhile, spent this year recruiting new employees to replace some 3,500 agents—around 50% of its care and reservations team—who took the company’s offer of early retirement as part of its plan to prevent furloughs and mitigate pandemic losses last year.
The airline, which has been criticized alongside its rivals for long telephone wait times, hasn’t had a problem recruiting, said Tori Forbes-Roberts, senior vice president for reservation sales and customer care. But its call centers are still currently being run by around 25% fewer agents than it employed pre-pandemic, and won’t be fully staffed until March 2022.
That is because the role of the booking agent requires months of in-person training, and physical classroom sizes continue to constrain the amount of agents Delta can safely onboard at one time, Ms. Forbes-Roberts said. The company has, however, made some changes to speed up the process.
Successful candidates attending final interviews are offered the job on the same day, and can begin the pre-employment process that same day too. Training schedules have been rewritten to include virtual modules, and staff now begin working on the phones three weeks in; before, it would take three months.
And Delta has cut training that is now superfluous—such as memorizing airport city codes, Ms. Forbes-Roberts said.
“There’s this thing called the internet where you can look this stuff up,” she said.
Apple Aims To Prevent Defections To Meta With Rare $180,000 Bonuses For Top Talent
* Tech Rivals Such As Meta Have Been Luring Away Employees
* Bonuses Come In Form Of Stock Grants That Vest Over Four Years
Apple Inc. has issued unusual and significant stock bonuses to some engineers in an effort to retain talent, looking to stave off defections to tech rivals such as Facebook owner Meta Platforms Inc.
Last week, the company informed some engineers in silicon design, hardware, and select software and operations groups of the out-of-cycle bonuses, which are being issued as restricted stock units, according to people with knowledge of the matter. The shares vest over four years, providing an incentive to stay at the iPhone maker.
The bonuses, which came as a surprise to those who received them, have ranged from about $50,000 to as much as $180,000 in some cases. Many of the engineers received amounts of roughly $80,000, $100,000 or $120,000 in shares, said the people, who asked not to be identified because the program isn’t public. The perk was presented by managers as a reward for high performers.
A representative for the Cupertino, California-based company declined to comment.
Apple is waging a talent war with companies in Silicon Valley and beyond, with Meta emerging as a particular threat. Meta has hired about 100 engineers from Apple in the last few months, but it hasn’t been a one-way street: Apple also has lured away key Meta employees.
The two companies are likely to become fierce rivals in augmented- and virtual-reality headsets and smartwatches, with both planning major hardware releases over the next two years.
The payouts aren’t part of normal Apple compensation packages, which include a base salary, stock units and a cash bonus. Apple sometimes awards additional cash bonuses to employees, but the size of the latest stock grants were atypical and surprisingly timed, the people said. They were given to about 10% to 20% of engineers in applicable divisions.
The bonus program has irked some engineers who didn’t receive the shares and believe the selection process is arbitrary. The value of some of the bonuses equaled the annual stock grant given to some engineering managers. And their value stands to increase if Apple’s stock price continues to rise. The shares are up 36% this year, putting the company’s market capitalization at nearly $3 trillion.
Meta, meanwhile, has stepped up efforts to poach engineering talent from Apple’s augmented reality, artificial intelligence, software and hardware engineering divisions. The social media giant, which operates Facebook, Instagram and WhatsApp, has dangled significant salary raises as it looks to refocus around hardware and the so-called metaverse.
A talent drain also has hit other areas, including Apple’s self-driving car team. The company needs to maintain its engineering prowess as it works on several next-generation devices, including the car, VR and AR headsets, and future versions of the iPhone.
At the same time, Apple’s drumbeat to return to the office has jarred some employees, leading to engineering defections. Though the company has delayed its deadline for staff to come back, it’s taking a harder line on in-person work than some of its technology peers.
Apple has said it expects corporate employees to work from the office at least three days per week, while hardware engineers will be required to log four or five days a week. Meta and other companies intend to be more lax with their policies.
But Apple acknowledged this month that workers will likely stay at home for the foreseeable future. After scrapping its office-return deadline, Apple said it would issue $1,000 bonuses to all corporate, retail and technical-support employees so they can purchase home equipment.
How Early Access To Wages Could Be A $11 Billion Fintech Opportunity
Two-thirds of Americans are living paycheck to paycheck. Here’s how fintech companies are providing workers to access their wages early, to make ends meet and to avoid high interest rates and fees.
Workers Should See Job Gains Even Amid the Latest Covid-19 Wave
Employers are still hiring despite the Omicron variant’s expected hit to economic growth, forecasters say.
Economists say they expect the U.S. labor market to strengthen in the months ahead, despite the surge in Covid-19 cases due to the fast-spreading Omicron variant, because employers still need a lot more workers.
The Labor Department’s latest employment report, to be released Friday, is projected to show employers added 405,000 jobs in December and the unemployment rate ticked down to 4.1%, according to economists surveyed by The Wall Street Journal.
The report comes as forecasters are lowering their estimates of economic growth amid rising coronavirus cases that have prompted some consumers to stay home and some businesses to close temporarily.
“Businesses know on the other side of the wave, their biggest problem is going to be getting workers,” said Mark Zandi, chief economist at Moody’s Analytics, who cut his projection for first-quarter growth in U.S. gross domestic product to a 2.2% annual rate from 5.2% due to Omicron.
Mr. Zandi pointed to the earlier experience of the Delta variant of Covid-19 that gripped the U.S. in the summer: It slowed third-quarter economic growth but had a relatively small impact on hiring.
The strength of the labor market, alongside rapidly rising inflation, will be key to Federal Reserve policy makers’ deliberations about when and how much to raise short-term interest rates from near zero.
In mid-December, the Fed set the stage for interest-rate increases beginning in the spring, with most central-bank officials penciling in at least three quarter-percentage-point rate increases in 2022 amid concern about the potential for inflation to stay high.
Central bankers worry that rather than simply threatening to curtail economic growth, a surge in Covid-19 cases could also prolong high inflation by adding to supply constraints. But data out of South Africa and the U.K. suggest Omicron might cause less serious disease than previous strains, prompting some economists to hope the current wave of infections could peak in the early weeks of the year.
Fed officials aren’t expected to raise interest rates at their next policy meeting, scheduled for Jan. 25-26. But some economists and investors think the policy makers could consider lifting borrowing costs as soon as their subsequent meeting in March.
“By the time the Fed sits down in mid-March, hopefully [the Omicron surge] will be over,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, adding that central-bank officials will be “looking forward, not back.”
Workers in the U.S. are quitting jobs at record rates, leaving roles for better working conditions and pay. Employees resigned from 4.2 million jobs in October, just shy of September’s record of 4.4 million quits.
That has left employers struggling to find and retain staff. A December survey of business executives by the Federal Reserve Bank of Dallas found that the most commonly cited factor restraining firms’ revenues is a lack of workers due to difficulty hiring, absenteeism and Covid-19 infections or quarantines.
About 45.8% of respondents cited staffing shortages as a key restraint on sales, up from 21.4% in July 2020.
Debra A. Johnson, CEO of the Denver metro-area transit system–the Regional Transportation District–said the shortage of workers is particularly acute as many workers are now seeking remote work and flexibility, which many front-line positions don’t offer.
“The whole world seems to be short-staffed,” she said. RTD began offering hiring bonuses for the first time in November, of $4,000 for jobs like bus operators, engineers and mechanics, alongside referral and other bonuses for some staff. Once the impact of government subsidies wanes, she expects a “more lucrative market” for new hires but said there’s still “tons of uncertainty.”
Economists studying Friday’s employment report will be looking closely at whether more people are working or looking for a job after months of school closures and government support. A recent survey by the jobs site Indeed found that the main factors keeping unemployed workers from urgently searching for a job were employed partners, care responsibilities and financial cushions.
Economists say businesses and workers are gradually learning to live with successive waves of the pandemic, each causing a little less damage than the last. Also, fresh government stimulus and enhanced unemployment benefits look unlikely, which could prompt more workers to rejoin the labor force.
“Appetite for shutdowns and harsh measures is very low right now” among politicians and the general public, said Joshua Shapiro, an economist at consulting firm Maria Fiorini Ramirez Inc. “People are starting to say enough is enough.”
Big Raises Are Coming In 2022, So Make Your Game Plan Now
Do Your Research, Focus On Your Contributions And Be Willing To Walk Away
With employers gearing up to boost spending on pay in 2022, there has rarely been a better time to go after a raise.
Companies are setting aside an average 3.9% of total payroll for wage increases in 2022, the largest increase since 2008, according to a new report from the Conference Board, a private research group.
Organizations are planning on raising salary bands, resulting in higher minimum, median and maximum salaries for certain job titles—which suggests that savvy negotiators at every professional level could see a bump this year.
Inflation is a big reason more money is earmarked for raises this year, but the rising cost of groceries and rent—among other things—doesn’t necessarily mean across-the-board pay increases are on the way. But bosses may be more open to negotiation.
Here’s how to be one of the people who gets a raise this year—from your current employer, or your next one.
Negotiate based on your skills, not inflation.
It is rational to cite rising costs as justification for a higher salary, but compensation experts advise that the most persuasive arguments emphasize your skills and achievements as an individual, not the outside forces affecting everyone.
“Talk about who you are, who they are and what you’re going to be able to do together,” said Alexandra Carter, director of the Mediation Clinic at Columbia Law School and author of a recent book on negotiation.
Frame your ask around your value as an employee, not your costs outside of work, she said. (After all, she added, when everybody is paying more for groceries, gas and rent, you don’t stand out.) Instead, appeal this way: “Pay me more because I deserve more—here’s why.” You are less likely to hear your employer counter that they, too, are contending with rising inflation-related costs for materials and other business inputs.
Don’t be the first to say a number.
If you’re interviewing for a new job, putting a number on your salary expectations can backfire, said David Buckmaster, a seasoned compensation executive and author. You risk boxing yourself into a lower salary range before knowing what the company is willing to pay.
When asked about salary ranges, Mr. Buckmaster recommends volleying back to the company by saying something like, “I don’t know enough about your company’s approach to pay to give you a confident number. I trust the company to evaluate me relative to others and place me appropriately in your pay range.”
If a job offer comes in at a lower-than-expected salary, that is the point where Mr. Buckmaster recommends indicating your expectations and that you anticipated that the company’s range for the role would be higher.
“It’s the responsibility of the company to pay you fairly, not for you to guess what you think is fair pay for you,” he said.
Do due diligence.
Tools like Glassdoor and Payscale display typical salaries for certain roles, but career coaches and compensation consultants suggest those figures should be used only in combination with research among current or former employees of a company.
Reach out to contacts to ask if they know anyone at a company, said Lindsey Pollak, a workplace consultant whose clients have included Goldman Sachs, Aetna and Estée Lauder Cos.
In addition to typical questions, such as “Here’s what I’m thinking of asking for—does that sound realistic?”, she suggests seeking company-specific insight into how raises and salary negotiations are handled and whether the organization is setting aside more money for pay increases this year.
Be prepared to secure—and take—another offer.
Workers who stuck with their employer last year and were successful often have room to say, “I’ve helped to shepherd the company through this pivotal time, and I want to see that reflected in my paycheck,” Ms. Carter said. The strategy also works when seeking more flexibility or perks, such as time off or additional staff support, she added.
Some employers will expect workers to secure a job offer from another company before they will negotiate a raise. That approach carries risk for both parties, Ms. Carter said: Your current employer may not counter as you would hope, so be prepared to accept the other offer.
Similarly, companies need to understand that if an otherwise-satisfied employee has to draw an outside offer to get a raise, they may ultimately choose to leave for a new job at a company ready to pay them what they want, she added.
“People want to see their value reflected in their paycheck, but also in the enthusiasm with which their requests are met,” Ms. Carter said. “They want to see that management truly values them, wants to keep them, is asking them, ‘How can we help you succeed?’”
Hunt For Cheap Labor Gets More Expensive For Corporate America
* Real Average Hourly Earnings Accelerate In Lower Wage Sectors
* Labor Demand And Costs Are Eating Into Corporate Bottom Lines
Low-earning workers are getting recruited at higher rates than other income brackets, which is pushing up wages and raising costs for businesses.
Today’s Chart of the Day shows the difference between average hourly earnings for all employees and those in non-management roles on a year-over-year basis, illustrating how employers are increasing their hiring of laborers.
The pandemic has played a major role in the move, as have supply-chain disruptions. But the bottom line is as demand rebounded in 2021, much of Corporate America struggled to keep up, with workers demanding better wages and benefits and improved safety conditions.
“What’s interesting is that wage growth is strong…but it’s only outpacing inflation in the low wage-paying sectors because that’s where we’ve got the most shortage of labor. People are having to pay up to get people to work,” Ellen Zentner, Morgan Stanley’s chief U.S. economist, said in a Bloomberg TV interview. “As inflation comes down, and wages remain strong, we should get real wages growing across all income segments.”
The phenomenon is best seen at Walmart Inc., the biggest employer in the U.S. The retailer’s average wage nationwide is $16.40 per hour with some starting salaries as high as $17 per hour. Walmart’s average wage was around $14 an hour in February. And it still trails what workers at rivals Costco Wholesale Corp. and Target Corp. make.
As a result, the rising demand for labor is eating into bottom lines at some of America’s biggest companies. In its third quarter earnings, McDonald’s Corp. said it expected 2021 wages to rise 10% from 2020 compared with a 4% increase in commodity costs.
Meanwhile, Amazon.com Inc., Starbucks Corp. are facing pushes for unionization, and Deere & Co. recently resolved it’s biggest worker strike in decades.
VW Gives U.S. Plant Workers 10% Pay Bump Amid Omicron Pressure
* Company Reported 15% Jump In 2021 U.S. Sales Led By Atlas SUV
* Automaker Launching U.S. Production Of ID.4 EV In Second Half
Volkswagen AG is giving workers at its assembly plant in Chattanooga, Tennessee, a 10% pay raise as the Covid-19 omicron variant stretches an already-tight labor market, the head of its U.S. business said.
The German automaker on Friday reported U.S. sales of 375,030 vehicles for 2021, a 15% jump from the prior year. The performance was led by the Atlas, its three-row SUV made in Chattanooga, and the Tiguan midsize SUV. VW delivered 16,742 units of its electric ID.4 SUV, which it plans to begin building in Chattanooga in the second half of 2022.
Across the industry, U.S. auto sales will likely be stuck at 15.5 million this year because of tight supplies of semiconductor chips, Scott Keogh, chief executive officer of VW’s U.S. unit, said on a call with reporters Friday. At the same time, the auto industry is grappling with higher rates of absenteeism because of the spread of the virus.
“Will there be challenges in the ecosystem of suppliers and factory with absenteeism caused by omicron? 100%,” Keogh said. “But if you have more chips, you will gain share, and if you gain share, you’ll gain competitive advantage.”
VW’s Chattanooga plant has been closed for the holiday and because of chip shortages, but will resume production Jan. 10. It’s not running at full capacity due to chip scarcity, though Keogh still expects to hit internal sales forecasts. EVs will get first dibs on chip supplies, he said.
Volkswagen will reveal the European version of the I.D.Buzz, an electric iteration of its iconic hippie-era microbus, on March 9. A three-row version of that vehicle won’t come to the U.S. until 2023 or 2024, and it will be imported, Keogh said.
Americans Say They Need To Earn $128,000 To Feel Financially OK
The average amount adults said they’d need to earn to feel in good financial shape is far higher than the median U.S. household income.
Feeling financially healthy means pulling down a six-figure salary, according to a survey by Personal Capital and Harris Poll.
The average amount American adults said they’d need to earn to feel in good financial shape was $128,000, the survey showed. That’s far from the median U.S. household income in 2020 of $67,521, according to the U.S. Census Bureau.
The survey of more than 2,000 people found Americans with “a dwindling sense of financial confidence.” In 2021’s final quarter, 34% of respondents said they felt financially healthy, compared with 48% in early 2021.
Pandemic aid programs that wound down last year likely stripped away some financial comfort, but higher prices also play a part.
“With rising inflation eating up some of the reported wage gains from 2021, Americans also say that the top barriers to financial health are not getting paid enough and constantly increasing expenses,” the survey said. Of those surveyed, 30% agreed that “expenses are constantly piling on,” a jump from 23% who agreed with that in 2021’s first quarter.
Nearly half of those surveyed said that their debt is “unmanageable,” and 37% said a surprise $100 expense would make them anxious.
In a sign of the times, while the leading financial topic respondents said they wanted to learn more about was retirement planning, it was followed by cryptocurrency and “concern over the security of my financial accounts.”
Tracking Pay And Jobs Is About To Get Harder Thanks To Census Bureau Changes
* Economists Call The Census Survey Move ‘Frustrating’
* Atlanta Fed Relies On Data For Widely Watched Wage Tracker
Changes in U.S. Census population surveys that come into effect this month are jeopardizing the way economists dig below the main employment data to track more detailed wage and job figures.
The Census Bureau said it decided to publish fewer details from its Current Population Survey — which polls households monthly to generate the Labor Department’s unemployment and labor-force participation rates — to protect the confidentiality of respondents. Economists say the move will likely impede data analysis, including a wage growth tracker from the Atlanta Federal Reserve that is widely watched by Wall Street.
“It’s very frustrating,” said Brad Hershbein, economist at the Upjohn Institute. It will render it infeasible to link individuals from one month to the next to observe their job changes, he said.
Tracking data in real time has become crucial in the pandemic era, when official indicators published monthly often fail to provide a full picture of fast-moving events. The economic hit from the recent wave of the highly contagious omicron variant was just the latest example.
The Atlanta Fed, which relies on the Current Population Survey for its wage tacker, said that the change will hinder its ability to match data to the previous year and to track wages over time.
“We are assessing what this means for the Wage Growth Tracker and exploring options for continuing to provide important wage data,” the regional Fed said by email.
Fed Chair Jerome Powell has cited the Atlanta Fed wage tracker as an important way to gauge inflationary pressures. The tracker had shown how incomes for the bottom quartile had risen in recent quarters.
“It is going to be infinitely more difficult to track the economic recovery from the Covid-19 pandemic,” Brookings Institution researcher Lauren Bauer said in a tweet.
Nick Bunker, chief economist at online job-listing firm Indeed Inc., also said understanding wage growth trends will be hampered.
Yes, that means at a time when understanding wage growth trends will be vital, one of the most cited metrics of wage growth might not be available.— Nick Bunker (@nick_bunker) January 12, 2022
To Protect Privacy, The Census Bureau Made Three Main Changes:
* Suppress Details At The Geographic Level, Making Data Available Only In Areas With Populations Greater Than 250,000 — Up From 100,000
* Households Are Interviewed For Eight Months For The Survey. Their Identification Number Changed Starting This Month, Which Means They Will No Longer Match 2021 Data
* Additional Changes Concern Incomes, Particularly At The Top Level, To Protect Respondent Confidentiality
Dimon Vows to Pay What It Takes to Win as Talent War Heats Up
Jamie Dimon sees competition everywhere. And the JPMorgan Chase & Co. boss is pledging to pay what’s necessary to come out ahead in Wall Street’s war for talent.
The billionaire ticked off a long list of rivals on Friday’s fourth-quarter earnings call.
“There’s global competition, there’s non-bank competition, there’s direct private-lending competition, there’s Jane Street competition, there’s Citadel competition, there’s fintech competition, there’s PayPal competition,” Dimon said. “It’s a lot of competition. And we intend to win. And sometimes that means you got to spend a few bucks.”
Dimon didn’t stop there: “We want to be very, very competitive on pay,” especially for “top bankers and traders and managers, who, I should say, by the way, did an extraordinary job in the last couple of years.” If all of that “squeezes margins a little bit for shareholders, so be it.”
The Wall Street giant isn’t alone in paying up for staff. Citigroup Inc. increased salaries for junior bankers in the U.S., boosting base pay to $110,000 for first-year analysts and $125,000 for those in their second and third years, according to a person with knowledge of the matter.
“There’s a lot of competitive pressure out there on wages and pay,” Chief Financial Officer Mark Mason said Friday.
You’ll Soon Get To See Pay On NYC Job Postings
New law requires nearly all companies hiring in the city to list expected pay on job listings as of May 15; business groups oppose it.
New York City will require employers to list the minimum and maximum salaries on job postings starting this spring, a mandate that is already drawing opposition from business groups.
Under a new city law that takes effect May 15, companies will need to disclose the expected salary range that an employer “in good faith” believes it would pay for each advertised job, promotion or transfer opportunity.
Nearly every employer hiring in the city would be covered by the law; only those with fewer than four employees or staffing firms hiring for temporary workers are excluded. Companies that don’t comply could be fined or face other civil penalties.
The measure, aimed at addressing gender-pay gaps and providing more transparency on pay, is the latest step in a broadening of pay-disclosure requirements that are also being implemented in states like Rhode Island and Connecticut.
It comes amid a continuing labor shortage in the U.S. and could give employees even more leverage when many already have an improved position in job options and negotiations.
In response to a similar law in Colorado that went into effect last year, employers from Johnson & Johnson to commercial real estate giant CBRE Group Inc. specified in postings that remote jobs were closed to people living in the state, allowing the companies to sidestep disclosure requirements.
Employment specialists say New York’s law may be more significant because of the size of the city’s economy and the number of major U.S. companies operating there. Banks such as Goldman Sachs Group Inc. have hundreds of open jobs in the city, as do hedge funds, law firms, media companies and giants such as Alphabet Inc.’s Google and Estee Lauder Cos.
Besides giving job seekers a better understanding of what a role could pay, the rule would enable existing employees to compare their pay with the stated ranges in open roles while giving companies insight into the pay practices of rivals.
“It is a big deal,” said Ian Carleton Schaefer, chairman of the New York employment and labor practice at the law firm Loeb & Loeb. “Companies are going to have to very quickly get very comfortable with how they’ve been making pay determinations along equity lines.”
The new law has surprised some employers, say legal and business experts. The New York City Council passed the legislation in December, and it was enacted in January after Mayor Eric Adams declined an opportunity to veto it. It amends the city’s administrative code to make it an “unlawful discriminatory practice” to not include pay ranges in job postings.
Business groups like the Partnership for New York City, whose members include companies such as JPMorgan Chase & Co. and International Business Machines Corp. , oppose the law, even as they say they support efforts to promote greater pay transparency and gender equity.
Kathryn Wylde, chief executive of the Partnership for New York City, said the measure adds to the perception that New York is unfriendly to business. Many employers worry that the salary disclosures will be burdensome and time-consuming to implement, she said, since not all companies have pay bands for each job category.
“It’s just the wrong solution,” Ms. Wylde said. “It should never have been allowed to go through.”
The Partnership plans to push for the city to delay implementation of the law. A spokesperson for Mayor Adams didn’t respond to requests for comment on the measure’s timing.
New York City in 2017 banned private employers from pressing job seekers to disclose their salary history, and states such as California, Washington and Colorado have enacted similar pay-equity laws in recent years.
The New York City Commission on Human Rights, which enforces human-rights laws, said it plans to initially help businesses and employees understand the city’s new salary provision.
“Our immediate goal is not to penalize, but to educate and work together with the city’s business community, while still ensuring that individuals who have experienced discrimination are able to receive damages,” said Sapna V. Raj, deputy commissioner of the commission’s law-enforcement bureau, in a statement.
The commission will take complaints from the public about whether job postings meet the law’s requirements, and will conduct its own tests and investigations to examine potential violations, Ms. Raj said.
Ms. Raj said the law requires that employers post realistic salary ranges, and that the commission could take steps to ensure they do. The law doesn’t define a realistic range.
Some employers have already begun disclosing pay to applicants. Textio Inc., a company whose software analyzes job postings and recruiting materials to make recommendations to improve them, began including compensation information in every one of its external job listings this year. The company’s employees work remotely from nine states, including New York.
The company wanted to “lead the way” on transparency internally and within its industry, said Jackye Clayton, vice president of talent acquisition and diversity, equity and inclusion at Textio, in a statement.
Some who have applied for jobs in recent years say they welcome upfront information on potential pay.
Michael Tjaden, a 26-year-old who lives in New York, said he applied for hundreds of jobs last year, and often found the process inefficient.
In one case, an employer didn’t disclose salary information until the end of a multistep interview process, offering a job that paid about half of what Mr. Tjaden had expected. “Had I known the range, I would have not wasted my time, both of our times,” he said.
Mr. Schaefer, the labor attorney, said he also expected existing employees to look at open positions at their companies to judge where their pay falls within a salary band. That could then put pressure on managers, with employees asking, “‘Why am I not at the high end of the range?’” he said.
Although many companies conducted pay audits in recent years, Mr. Schaefer said he expected New York’s measure and others like it to cause companies to reassess whether they feel comfortable about their pay ranges, and where people fall on them.
“It’s all out there,” he said. “The curtain has been pulled back.”
The New Benefits Employers Could Offer To Make You Stay
Five management experts give advice on how companies can reinvent ways they compensate and manage workers to stay competitive in a post-pandemic world.
The Future of Everything covers the innovation and technology transforming the way we live, work and play, with monthly issues on transportation, education, well-being and more. This month is Work, online starting Feb. 2 and in print Feb. 10.
During the pandemic, many workers have shown they aren’t afraid to head for the exit. That’s causing employers to rethink work policies and management styles, looking for ways to keep employees on board and attract new ones.
The problems are daunting. There’s the existential angst felt by some employees stuck at home toiling on tasks they see as being of little value. Burned-out workers are seeking healthier work-life balance, demanding companies provide more flexible arrangements.
Managers are struggling to adapt their styles after a sudden and unexpected experiment in remote work. On top of that, the sluggish pace of demographic growth in the U.S. means that the pool of working-age labor is shrinking, compounding worker shortages.
Management and human-resources experts say that in order to be competitive and become more fulfilling workplaces, companies will need to reinvent how they compensate employees, rethink who they invest in and start offering new benefits. Here, a look ahead from five of these experts.
In many cases, the only thing standing between an employee staying and leaving is a really good manager. There needs to be a disproportionate emphasis placed on identifying managers who actually prioritize company culture and excel in making people feel part of a team. That is going to become essential as we enter a post-pandemic reality where people are often not spending a lot of time in the office.
Emotionally aware managers will be rewarded and promoted, and transactional managers who may have coasted by in the past will now need to learn new skills or else risk their people leaving in droves. Smart companies will arrange more training and coaching in this area, because the consequences in terms of morale and employee retention may be significant.
In practice, this will take the form of obvious things like setting effective communication protocols and also more “soft skill” issues, such as how to think strategically about employees’ individual needs.
—Dorie Clark, marketing-strategy consultant and author of “The Long Game”
Teams Decide Compensation
The entity called a team is where we live [professionally]. In the past, the team could do fine if one piece wasn’t working, but the team took no accountability for that. Now, there’s been a shifting of the social contract from the hub-and-spoke [paradigm] to team competencies, where we own each other’s success and failures. Five years from now, there could be a greater shift to shared compensations and rewards around common goals.
The reason we don’t do that today is that the leader wants a single accountable party for each component. But compensation could be rewarded against a shared mission that we’ve achieved, not around the maximization of our individual goals within that mission.
We’re going to see a leaning toward a significantly more transparent and shared sense of ownership of compensation, where a team is actually weighing in on the decision of individual compensation.
Why would compensation only be predicated on someone’s ability to manage their bosses’ expectations when that person’s being a jackass to their peers?
— Keith Ferrazzi, founder and chairman of Ferrazzi Greenlight, a global consulting firm based in Los Angeles, and co-author of “Competing in the New World of Work,” coming Feb. 15.
A Gray-Collar Strategy
The future of work hinges on understanding that talents and labor aren’t young. Where training dollars go predominantly is the 25-to-35 age bracket, but people are living longer. Talent pipelines are drying up, people aren’t having children the way they used to, and we’ve limited immigration.
Meanwhile, highly-skilled mature workers sit on the bench because they’ve either aged out of their former companies or opted out of conventional employment. Companies that are going to be best positioned in the future to take advantage of talent will realize that they need a gray-collar strategy.
That means really thinking about upskilling, reskilling and continuing continuous learning, but not just for young workers. Leading organizations are not just looking at Gen Z and Millennials—they’re also adding more skills to the older workers’ palette through either reverse mentoring or through formal educational reimbursement.
They’re also looking at taking someone who has worked maybe 25 years in finance and giving them opportunities through secondment to go work in human resources or logistics.
—Laurie Ruettimann, Raleigh, N.C.-based HR consultant and author of “Betting on You”
Better Time Off
I think the most advanced companies will give people a lot more flexibility in terms of the cadence of their careers. Benefits that you’ll see sticking around more will be related to giving employees more structured time off.
Historically, companies have said, “Here’s our vacation policy, take it when you need it.” But if I just give you a vacation, your boss still emails you, you’re checking on your team, and you can’t actually recharge.
But there’s something powerful about giving everyone time off at the same time, during the workweek. That allows people to do things like go to the grocery store when nobody else is there, or not have to wait in line at the post office or take their car in for service.
When you make time off predictable and structured and make it on a workday, it actually has a disproportionate benefit.
— Laszlo Bock, chief executive and co-founder of human-resources startup Humu and former HR chief at Google
More Than Just A Holiday Party
If you think about how socialization happens in organizations and culture is built, a lot happens just through spending time observing what the norms of behavior are—what is rewarded and tolerated. In a remote work environment, companies may want to use scarce days when people are in the office to build community and have serendipitous encounters.
We saw even prior to the pandemic that company-sponsored events are good predictors of satisfaction with the workplace. Companies that do a good job of organizing these events have lower attrition during the first six months, and that’s been true during the Great Resignation as well. That’s something that organizations really need to think about more: If you only have your employees in the office for two or three days a week, how in a time-efficient manner, to build that sense of camaraderie.
—Donald Sull, senior lecturer at the MIT Sloan School of Management
How Crypto Can Power The Future Of Work For People Of Color
In the United States, an estimated 63 million Americans are unbanked, underbanked or lack access to the traditional financial system. That is a stain on our democracy and economic structure. Today, urban, rural and native communities that continue to be locked out of centralized finance are looking to cryptocurrencies as a pathway to economic empowerment.
Recent data shows that Black and Latinx communities are driving national mainstream adoption. A Harvard-Harris poll noted that “while only 11% of white Americans report owning cryptos, 23% of Black Americans and 17% of Hispanic Americans own such assets.”
The more options individuals have, the more inclusive money becomes.
This is a positive trend, but it also signals a greater need for financial literacy and skills training. The rising interest in new technological instruments is an opportunity to prepare key demographics for the next-gen workforce.
Federal, state and local governments must be more proactive when it comes to future-of-work strategies to position historically disadvantaged groups to compete in the global innovation economy and foster digital equity.
Black and brown communities see the value of a decentralized Web 3 that provides greater protections for users. Creative industries are leveraging non-fungible tokens (NFT) to fuel today’s more diverse, more entrepreneurial marketplace.
Need For Training
Seizing on the momentum around cryptocurrencies, we should invest in training, given there are various jobs in emerging technologies that do not require coding experience or a college degree. Consumer enthusiasm in the growth of the digital asset economy has already resulted in non-technical individuals acquiring new skills.
Injecting blockchain and cryptocurrency into the future-of-work toolbox is as common sense as the government working to expand access to economic opportunity. We must do everything at our disposal to dismantle barriers, build an inclusive innovation workforce, and promote entrepreneurship to spur the nation’s economy.
Emerging technologies offer alternatives to tackle financial exclusion and empower individuals to take control of their financial future. Already, fintech platforms are opening access to employees who do not have traditional bank accounts.
In 2020, Square (now Block) launched a platform that enabled consumers to deposit their COVID-19 stimulus checks into their Cash App accounts to purchase bitcoin.
Paychecks For Crypto
We should encourage employers to allow employees to direct deposit portions of their paycheck into cryptocurrency accounts.
NYDIG Offering Allows Participating Companies To Pay Employees In Bitcoin
It may be too early to directly pay people in cryptocurrencies. Even the mayors of Miami and New York City faced challenges after announcing they wanted to be paid in bitcoin.
America’s working class also want options, and direct deposit can be a start. Stablecoin companies like Circle are exploring products and services that could make this future of work prospect a reality.
As adoption among communities of color deepens, there will be greater demand for trusted crypto-specific solutions that could be linked to a stablecoin to offset concerns around price fluctuations of crypto markets. The nation’s leaders need to be more intentional about tackling financial inequity and must consider decentralized options.
A federal mandate could be helpful. In November, U.S. senators Chris Coons (D-Del.), Raphael Warnock (D-Ga.), and John Hickenlooper (D-Colo.) sent a letter to Treasury Department Secretary Janet Yellen and Deputy Secretary Wally Adeyemo urging the creation of a Presidential Commission on Financial Inclusion – a national, interagency financial inclusion strategy with the goal of providing all people with the ability to access, utilize, and reap the benefits of financial products and services.
The federal government should also show flexibility with the implementation of bipartisan Infrastructure Law. Federal grants are often structured for traditional, centralized businesses and innovators and entrepreneurs leveraging emerging technologies often do not qualify because the requirements are so hard to meet.
That is not to say the crypto tax provision embedded in the policy that inexplicably expands the definition of broker, imposing an undue burden on innovators of color, is the correct approach.
But the law does allocate significant funding towards workforce development and skills training, and also earmarks $50 billion for the National Science Foundation to invest in research and development and the technologies of the future.
Blockchain entrepreneurs and startups should also have access to this funding as they build and innovate to solve long standing inequities for America’s unbanked in El Paso, Texas; Detroit; Bronx, N.Y.; Oakland, Calif.; Columbus, Ohio; and other local municipalities, such as those in the Mississippi Delta and Appalachia.
There’s also a festering gender divide to address in the United States. Professional women are a casualty of COVID-19 – women of color to a large degree. And the “great resignation” is a grave economic crisis.
All solutions must be on the table! Blockchain and cryptocurrencies are here for good and can jump-start future-of-work strategies that can prepare, train and strengthen America’s workforce.
Novogratz’s Galaxy Accelerates Hiring As Bankers Turn To Crypto
* Hiring Pace Is Not Slowing, Crypto Platform’s Jen Lee Says
* Last Year, The Firm’s Headcount Expanded By More Than 200%
Galaxy Digital Holdings Ltd., the crypto platform run by billionaire Mike Novogratz, is accelerating its pace of hiring to capitalize on a boom of talent moving into digital assets.
The company’s headcount expanded more than 200% last year to almost 285 people, said Jen Lee, Galaxy’s chief people officer who joined in recent months from BlackRock Inc. That number doesn’t include the staff of BitGo, the custodian firm it agreed to acquire in 2021. Galaxy has expanded headcount by another 45 people this year.
“The pace isn’t stopping,” Lee said in an interview with Bloomberg Television.
Galaxy’s new hires have come from from banks such as Goldman Sachs Group Inc. to people who have learned much of the trade from other crypto firms. The firm also announced a new entry-level hiring program this week that includes a plan to add more than 30 analysts in a “first-of-its-kind hiring sprint,” according to a memo sent to staff.
“There’s no traditional path when it comes to crypto,” said Lee. “We would love to see people who are self taught in crypto, but we would also like to see people who have a traditional background from a bank, or even a tech firm.”
Workers Don’t Feel Quite As Powerful As They Used To
Fears of an economic downturn are shaking some people’s career confidence, driving them toward stable jobs—and even back to offices.
Becca Smith will be back to work in no time.
Laid off from her sales position at a startup a couple of weeks ago, she says she’s received more than a dozen inquiries from recruiters in response to a LinkedIn post about her job loss.
Yet something has changed since the 40-year-old Indiana mother started at her former employer last summer. Back then, she was determined to work from home—and felt sure she could get her way. She also had the confidence to join a fledgling business amid a roaring economy.
“I will give priority to larger, more-established companies for this job search,” says Ms. Smith, whose old company was venture-funded and cut about one-third of the team to conserve cash. She adds she’ll consider reporting to an office part time.
She’d also like her next job to involve selling a product customers need even in bad times, rather than a luxury that could get cut from the budget when money is short.
Though the labor market remains tight and many people still have leverage to negotiate high salaries and remote accommodations, some are bracing for a day when things won’t be so great.
As unemployment claims tick higher and business leaders like Elon Musk try to reassert their in-office dominance, workers are showing a little less swagger and looking for more stability than they did just a few months ago.
It’s a strange limbo. Working conditions are about as good as they’ve ever been for many people, and office workers’ complaints can seem petty by historical standards. (Imagine your 2019 self griping about being required to work in an office a few days a month.) Yet a loss of total remote freedom, coupled with sobering economic forecasts, can make it feel like workers’ power is slipping away.
Some companies sense the change and are wresting back more control over how much they cater to employees.
Boston Properties Chief Executive Owen Thomas says his tenants are growing bolder about office callbacks. The national office occupancy rate hit 44% last week, according to an estimate by Kastle Systems, which tracks building-access-card swipes. That’s the highest since the onset of the pandemic.
Employers’ fear that workers will flee for other jobs if told to return to their desks is beginning to subside.
“Some companies are doing layoffs, and that puts pressure on people to get back to the office and stay closer to the senior leaders,” says Mr. Thomas, whose firm is among the largest commercial landlords in several major cities.
Treasury Secretary Janet Yellen has said repeatedly that she doesn’t expect the U.S. economy to fall into another recession. Such reassurances wouldn’t seem necessary if not for credible concerns, however, and it might not take the R-word to spook workers.
Career coach Phil Rosenberg says his calendar is filling up with clients who worry it’s now or never—or not for a while, at least—to snag a job with the pay and flexibility they want.
“People are trying to land before the next downturn,” he says.
Luis Caballero, one of Mr. Rosenberg’s clients, says he’s relieved to be starting a new position as a marketing executive next month.
He left a large company in late 2020 with a big enough severance package to support his family for two years, by his estimate, and initially wasn’t in a hurry to find his next long-term fit. Why would he have been?
“Companies were desperate for senior leadership,” says Mr. Caballero of the record numbers of workers who have quit or switched jobs over the past 12 months. “Several friends of mine were writing their own ticket.”
Mr. Caballero, 50, took what he describes as a short-lived “rebound” job last year but quit in February. Searching anew, he says the market “was not the gold mine I had heard about.” Many high-level roles paid less or had heavier workloads than he anticipated.
Mr. Caballero says he accepted an offer that met his expectations—with one major compromise. He’ll drive 10 hours round-trip from his home in Arizona to an office in California, staying over a night or two, to satisfy a requirement to work in person a couple of days a week.
Taking a new job can be risky in the event of a downturn. Some businesses take a last-in-first-out approach to downsizing. As the pandemic fades, companies that grew quickly when people were mostly homebound could cut back as life normalizes. Peloton, Netflix and Carvana already have laid off staff this year.
“If I’m a job seeker these days and I’m smart, I’m considering the business: Is it a business that just developed because of Covid?” says Stacie Haller, a career counselor at ResumeBuilder.com.
For now, though, the labor market still favors workers, especially in certain industries, she says.
Competition for talent remains intense in biotechnology, with candidates often able to pick among several offers, according to Jean Sabatini, head of staffing at Tango Therapeutics in Cambridge, Mass.
Tech workers, too, enjoy considerable bargaining power, though some have been humbled by the sector’s volatile stock-market performance and shrinking venture-capital pool in recent months, says Allan Jones, founder of an HR software startup in Los Angeles.
The hiring dynamic for most of the past two years has been “bonkers,” he says; prospects frequently Zoomed into job interviews with a confidence bordering on arrogance and scoffed when told that Mr. Jones’s company, Bambee, is office-centric.
Lately, the conversations have changed.
“Now, what candidates are asking is if the company has the financial posture to survive a recession,” he says. “It’s quite telling. They’re thinking about security over flexibility.”
Fed’s Inflation Battle To Strip Workers Of Rare Bargaining Power
* Tight Pandemic Labor Markets Made Employers Offer Better Deals
* But Cure For Soaring Prices May Mean Higher Unemployment Too
Samara Lambright started a new job last fall at a call center for a big national bank. She’s making $18 an hour — much more than she used to, even though everything costs more nowadays, too.
On the downside, the hours aren’t great for spending time with her two-year-old daughter, or finding daycare. Lambright works shifts that end at 8:30 pm, and at least one day each weekend.
“It’s a good job, but at the end of the day it’s hard,” she says. “Sometimes it feels like they’re not willing to accommodate working moms or single moms.”
Her story shows how the reassessment of work that’s under way in hot pandemic labor markets, putting pressure on employers to offer a better deal, has plenty of room to run. It also illustrates the dilemma for the Federal Reserve — which is tasked with ensuring that jobs are abundant, but also that inflation doesn’t eat into the wages of people like Lambright.
On Wednesday the Fed took the unusual step of forecasting a rise in unemployment over the next two years, as it stepped up the pace of interest-rate hikes to rein in soaring prices. Fed Chair Jerome Powell said the high level of job vacancies points to a “real imbalance” in wage bargaining.
Wages aren’t the only thing workers are bargaining for. After decades in which they held almost all the cards, employers are having to accommodate millions of Americans for whom the workplace just hasn’t been a good fit. That means not only higher wages, but also better benefits and working conditions.
Companies are embracing remote work. Many have gotten to better understand the life that mothers and fathers live outside the office, after getting a glimpse of kids and homes on video calls. There’s even talk of four-day work weeks.
For the Fed, which has “maximum employment” written into its mandate, it should be a moment of table-pounding cheer. But it isn’t.
Inflation is running at a 40-year high. What Powell has called an “overheated” labor market has become part of the story about how to get it down.
Higher interest rates are the tool, and more unemployment one of the consequences — an outcome that would allow companies to revert to old habits of using job insecurity to hold down wages and rebuff workers pressing for better conditions.
‘Lot Less Attractive’
In the Fed’s best-case scenario, a steady rise in interest rates suppresses demand just enough to reduce job openings, but not enough to raise unemployment excessively. Powell said that’s the path the Fed wants to pursue — and also one that’s become more challenging as inflation remains stubbornly high, partly due to outside shocks.
“It is unlikely that we are going to get inflation completely down to the 2% target without some upward movement in the unemployment rate,” says Matthew Luzzetti, chief U.S. economist at Deutsche Bank Securities.
Inflation is a distributional nemesis, eating up the purchasing power of those least able to bargain their wages up, which is one reason why the Fed has a mandate to ensure stable prices. But a sustained tight labor market — the other side of the Fed’s mission — pushes employers to offer a better deal.
That’s not something that US business has done well in recent years. In one of the ironies of the great workplace rethink, companies are slowly realizing that if there’s a shortage of labor supply, they are partly to blame.
“Work is just a lot less attractive for people in the United States than it should be,” says Paul Romer, a Nobel laureate who is now a professor of Economics at New York University. “This is the cumulative effect of years of pressure on wages.”
‘The Whole Self’”
In a striking example, men in the prime working years of 25-34 have seen a steady decline in labor-force participation. More than 94% of them had a job, or were looking for one, at the start of the 1990s. Today, the number is 89%.
The share of the US population that’s part of the labor force remains well below pre-pandemic levels, let alone the highs of the 1990s.
The pandemic shone a spotlight on every corner of the labor market. Millions of women dropped out of the workforce. Employees from grocery-store staff and garbage men to nursing aides were labeled “essential” workers — raising hope that America’s labor contract was changing.
Recruiters say they are seeing real change in the form of better benefits for workers — both the traditional kind and some newer ones such as personalized career coaching or stipends for remote offices.
“There absolutely has been a shift,” says Camille Fetter, founder of Talentfoot Executive Search & Staffing, a recruitment firm specializing in digital business. “We now see and know the whole self of the employee. We have a broader understanding of who they are and what they need from an employer.”
This may sound abstract, but it is showing up in government data. Benefits to private-sector workers, which include paid leave and supplemental pay, rose in the first quarter by the most since 2004, according to the Labor Department. The 1.9% jump was almost triple the average increase over the past 20 years.
It’s an encouraging trend for workers, but there are big question marks around its staying power.
Precarity isn’t just low pay. It can show up in job insecurity, poorly designed workplaces, and outright negligence about the needs of employees. It can take years to change workplace culture.
Sarah Sperry is a college graduate with an MBA, and a mother of three. She liked her job and her boss — but there was still something about it that didn’t comprehend all areas of her life, and she soon found out that scores of women felt the same way.
(She had previously worked for Bloomberg LP in sales from 2007-2014).
Sperry resigned from Franklin Templeton in June 2020, worn out mentally and physically. She certified as a health coach and started her own company called Sperry Wellness that works mainly with women and mothers trying to manage burnout. One in five US women between the ages of 40 and 59 take antidepressants, almost triple the rate of men.
“Everyone has a similar story,” Sperry says. “Most women I talk to have gone through multiple health care providers and chronic stress.”
The incentives for employers to address the demands and needs of their staff depend on the job-market conditions engineered by the Fed.
Powell in May 2020 called the hot labor market of 2019 “tantalizingly good” as low-income communities began to make gains. Black unemployment touched 5.4% that year, a record low. Today the rate is 6.2% — and while Powell has praised the rise in wages, he also calls the labor market “unsustainably hot.”
For a long time, economists — at the Fed and beyond — wrapped employment into prices, which boils down to saying that too many employed people are an inflation threat. The claim ignores the still large amount that companies could do to bring in, or bring back, more labor supply with higher pay and workplaces that are a better fit.
James Galbraith, who as a congressional staff member worked on the Humphrey-Hawkins Act of 1978 which enshrined the maximum-employment goal, says there’s an “old instinct of the central bank to ensure that there is a long queue of people at the gate.”
It’s an approach the Fed has backed away from in recent years. But Galbraith, now a professor at the University of Texas, says he’s concerned that a hard landing in the economy will again reinforce job insecurity up and down the income spectrum.
He points to countries like Germany, Japan and Sweden where in modern times labor has been treated like a partner — providing workers some protection from the volatility of job markets, and delivering higher productivity as a result.
“The notion that labor is a short-term market relationship is a profoundly dysfunctional way of thinking,” he says.
Amazon To Raise Wages For Delivery Drivers Amid Tight Labor Market
E-commerce giant looks to ensure sufficient staffing for peak holiday season.
Amazon.com Inc. said it is planning to raise pay and benefits for its delivery partners, as the e-commerce giant gears up for the peak holiday season amid a persistently tight labor market.
The company will invest $450 million to fund wage increases and other benefits for delivery drivers employed by members of its Delivery Service Partners network, it said in a release.
The company started the program in 2018, encouraging entrepreneurs to start their own fleets of drivers with initial investments of as little as $10,000.
Other benefits as part of the new initiative include up to $5,250 a year for drivers to pay for educational programs, and financial support for a 401(k) investment plan for drivers.
The announcement comes as Amazon starts hiring for the all-important holiday season, when orders for deliveries hit monthslong highs. It also comes as Amazon has been restructuring the logistics network after it grew too quickly during the pandemic, leading executives to slash planned warehouse capacity to cut costs.
Amazon in recent years has rolled out similar benefits for its warehouse workers as it expanded the logistics network, which is the backbone of its vast e-commerce operation, while trying to fend off union organizers who have started to make inroads in its workforce.
Amazon has invested more than $7 billion in its Delivery Service Partners network since 2018, the company said. While it also uses outside delivery companies, it has increasingly relied on the network to help ship packages in the last miles of transport to a customer’s home.
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