Skilled Worker Shortages Are Slowly Starting to Push Pay Upward

Reports from the Federal Reserve say that a shortage of skilled workers in a variety of trades are showing up here and there across the U.S., putting upward pressure on pay.

Employers are having to pay more to attract workers in construction and manufacturing in several parts of the U.S. In parts of the Midwest, mid-Atlantic region, and the Northern Plains states, transportation workers are seeing somewhat higher pay. And in New York the number of workers quitting to take higher paying jobs is on the rise.

That shortages of some professionals exist is nothing new.

Last week Dice reported that unemployment among tech professionals had fallen to an average 2.7 percent in the third quarter. And SHRM’s LINE Report for October said its measure of recruiting difficulty has been going up for seven months straight.

“Difficultly finding qualified workers”

But the Fed’s October 15 “Beige Book” notes that “Most Districts reported that some employers had difficulty finding qualified workers for certain positions.” (The nation is divided into 12 federal reserve districts.)

The Fed says:

Manufacturers in New England have trouble finding machinists;
The lack of skilled construction workers has delayed projects in the area served by the Chicago district;
Delays have also occurred in petrochemical projects in Texas and parts of New Mexico and Louisiana because of a shortage of workers in heavy construction and engineering;
Truck drivers are in short supply in several areas.

Staffing services are seeing increased demand in several districts, the Fed reports. Specifically mentioned were the New York, Philadelphia, Cleveland, Richmond, Chicago, and Dallas districts, covering much of the Northeast and a swath of the Midwest and all of Texas.

A slow but steady broadening of wage pressure

In Pennsylvania in particular, the Philadelphia District said:

Staffing requests have come from a variety of sectors and for business expansions as well as replacements. Staffing firms remained very upbeat about prospects for this year and next.”

The Federal Reserve’s Beige Book is a compendium of reports from businesses and other sources about economic conditions. Wednesday’s Beige Book says there has been no noticeable change in the pace of employment growth since the last report in September. That edition also noted little change since July, when the Fed reported that employment growth had improved in all 12 districts.

Since the March report, which was the first this year to note upward wage pressure, there’s been a slow, but steady broadening in the number of regions reporting wage pressure. The types of jobs has also increased, though only slightly.

This wage pressure has yet to be evidenced in the monthly U.S. Department of Labor reports. September’s report said wage increases nationally averaged just 2 percent.