Companies eager to open their doors to capitalize on vaccinated and eager customers are having trouble finding workers — which means consumers should expect longer wait times, delays in service, and higher prices overall, labor economists warn.
The worker shortage is hitting everyone from restaurants to travel to manufacturers, as they try to hire back after historic layoffs during the pandemic lockdown and downturn, and are now struggling to meet surging consumer demand.
Expect “worse service in affected industries: wait times at restaurants, retail, housing renovations and the like,” Austan Goolsbee, economics professor at the University of Chicago Booth School of Business and former economic adviser to President Barack Obama, told NBC News in an email.
Job seekers say the wages being offered by employers in the post-lockdown job market are simply too low.
“They can’t literally scoop up folks at the end of their rope without assuming anything beyond bare minimum pay,” said Atlanta resident John Huston, 59, a former senior marketing associate. “The reason that there are so many openings is that they do not pay a living wage.”
Huston said he’s been having trouble finding work in his field after he and a colleague were edged out of their positions and replaced by three entry-level workers.
“I can’t find anything that pays close to what I had before,” said Huston, who has an MBA. “Once they see me on Zoom, I’m suddenly overqualified or they insist I’d be bored at the job.”
All he can find are entry-level manual labor positions. One job offer he rejected paid $12 an hour delivering auto parts, using his own car and paying his own expenses. The other paid the same, lifting heavy loads in a refrigerated warehouse. He might consider them, however, if the hourly pay were at least $15 and covered expenses.
Data released Thursday by the Department of Labor shows that first-time weekly jobless claims fell for the second week, hitting the lowest level since the pandemic began. However, more than 9 million people in the U.S. remain without work, even though open job listings are higher than before the pandemic hit.
“The participation rate fell much more sharply than usual during the recent downturn, suggesting there are millions of workers waiting for the end of the pandemic — or the emergence of job opportunities — to jump back into the labor market,” Justin Wolfers, Professor of Economics and Public Policy at the University of Michigan, said in an email.
One way to help fix that, economists say, is to raise the pay.
“The worker shortage will go away because wages will rise,” Jeffrey Miron, director of economics studies at theCato Institute, a Washington, D.C.-based libertarian think tank, said in an email. “And then consumer prices will follow.”
Factories expect wages to rise by 2.5 percent over the next year, according to the latest survey from the National Association of Manufacturers. That would increase the average manufacturing worker’s hourly pay from $17.13 to $17.55. Unlike a “restructuring” sort of economic recovery, manufacturers are not looking to trim headcount, but to increase hiring.
“Given the tightness of the labor market, wages are going to have to go higher,” said Chad Moutray, chief economist for NAM. Some companies will accept squeezed profits, while others will pass on higher costs where they can, he said.
Manufacturers expect prices will rise slightly faster, hitting 3.9 percent in the next 12 months reflecting higher overheads and increased costs for supplies. Companies have had to raise prices on everything from gloves to bike parts to toilet paper as supply chain snarls, like those seen in the Suez Canal last month, continue to roil global trade.
In March, when the massive Ever Given container ship blocked the crucial waterway for a week, over 85 percent of deliveries at U.S. ports such as Los Angeles and Long Beach were late, said Glenn Koepke, a senior vice president at FourKites, a shipping logistics provider. That means delayed deliveries for everything from auto parts to xylophones.
Meanwhile, some business owners have complained that extended federal unemployment benefits may be making it harder to hire workers who have calculated they can make more money not working than working.
A Yale study on this issue using aggregate data from Homebase, which makes timesheet and scheduling software for small businesses, concluded that the data did not show a proportional decrease in employment after the CARES Act came into effect.
“We find no evidence to support concerns about adverse aggregate labor supply effects of expanded UI generosity in the context of the current pandemic,” the researchers wrote.
Ultimately, once the labor market strengthens and companies meet worker demand for higher wages, that will in turn lead to “more purchasing power for workers,” Wolfers said.
“Much of the gain of economic growth over recent decades has gone to capital rather than labor, and to the highly paid, rather than a broader group of workers,” he said.
“A strong economy — and worker shortages — could help rebalance somewhat, potentially creating gains in purchasing power for a broader swathe of the population.”