What will it take to persuade potential workers to join the U.S. labor force? American small businesses have never had such a hard time trying to attract new employees. That’s according to the May employment survey from the National Federation of Independent Business, due out later today.
“Strong job growth eased in May as small businesses struggled to find workers to fill open positions,” reports NFIB Chief Economist
He notes that survey respondents with unfilled job openings “increased from 44 percent to 48 percent, seasonally adjusted. May is the fourth consecutive month setting a record high reading for unfilled job openings. May’s reading is 26 points higher than the 48-year historical average of 22 percent.” He adds that the labor shortage is particularly acute in industries like construction, where 66% of surveyed firms reported few or no qualified applicants, an increase of 6 percentage points from the April survey.
It seems that these days good help—and really any kind of help at all—is hard to find. As the economy reopens even in states where governors have practiced a near-religious devotion to lockdowns, the desire to hire almost seems to be on fire. The NFIB economist reports:
The increase in unfilled openings was accompanied by a 2-point increase in the percent that reported hiring or trying to hire in May, 61 percent. Owners have plans to fill open positions, with a seasonally adjusted net 27 percent planning to create new jobs in the next three months… up 6 points from April.
Do the bosses of American small firms think they will be able to add staff without offering greater incentives? They do not, says Mr. Dunkelberg:
Seasonally adjusted, a net 34 percent reported raising compensation (up 3 points), the highest level in the past 12 months. Raising compensation is about the only way owners have to remedy the labor shortage problem. A net 22 percent plan to raise compensation in the next three months, up 2 points.
This is great news for U.S. workers. Of course there is a small catch when those workers start spending the money from their elevated paychecks. Mr. Dunkelberg reports, “Higher labor costs are being passed on to customers in higher selling prices.”
James Freeman is the co-author of “The Cost: Trump, China and American Revival.”
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