Marianas Variety

Last updateWed, 16 Oct 2019 12am

Headlines:

     

     

     

     

     

    Monday, October 14, 2019-7:49:47A.M.

     

     

     

     

     

Font Size

Settings

OPINION | Labor shortage may imperil growth

GOOD help is hard to find — and increasingly so in today’s economy. According to a monthly survey by the National Federation of Independent Businesses, “a record percentage of small business owners reported having difficulties finding qualified workers in August.” It’s been the top problem in the survey since January 2018. Policy makers need to listen.

Fifty-seven percent of last month’s respondents, including 89 percent of those “hiring or trying to hire,” found “few or no qualified applicants for the positions they were trying to fill.” The construction industry had the highest share of owners reporting hiring difficulties at 68 percent; manufacturing was second at 59 percent. With the unemployment rate near a 50-year low and a record 157.9 million Americans employed, there are simply fewer workers available.

Partly as a result, average monthly job growth as reported by the Bureau of Labor Statistics has slowed, from 223,000 last year to 158,000 so far this year. Some experts have seized on this decline as evidence that the longest economic recovery on record is losing steam.

And it’s true that a global economic slowdown, the Fed’s actions on interest rates, and concerns about the trade war with China have dampened the recovery. But the tight labor market is the elephant in the room.

Employers are still hiring and the demand for employees remains high, indicating both underlying economic strength and confidence in the future. Yet a shortage of employees inevitably affects economic growth. A business won’t open a new factory or restaurant if it can’t staff the ones it already has. Labor shortages also can hold back capital spending. What good is a new truck if you can’t find someone to drive it?

When President Trump took office, there were 1.9 million more people unemployed than job openings. Thanks to tax cuts, regulatory rollbacks and a focus on domestic energy production, that comparison has flipped. For the past 17 consecutive months, job openings have exceeded the number of unemployed. In July, the most recent month for which we have data, job openings stood at 7.2 million — nearly 1.2 million more than the number of unemployed.

This is great news for employees, as it’s putting upward pressure on wages. Through August, year-over-year wage growth has met or exceeded 3 percent for 13 consecutive months. A worker with a 40-hour-a-week job making the average hourly wage from August 2017 (when it was $22.11) through August 2019 ($23.59) would have seen an annual salary increase from about $44,000 to $47,000.

Last week the Census Bureau reported that the poverty rate fell 0.5 percentage point in 2018 to 11.8 percent, the lowest level since 2001. Contrary to Sen. Elizabeth Warren’s insistence that the economic boom benefits only “a thinner and thinner slice at the top,” inequality has fallen as incomes rise. The share of income earned by the top 20 percent fell in 2018 more than it has in a decade, while those in the 20th to 40th percentile— the second-lowest income quintile—“experienced the largest increase in average household income among all quintiles” at 2.5 percent, according to the White House Council of Economic Advisers.

Heightened competition for employees is improving economic circumstances for working Americans better than any government program or mandate ever could. But for the tight labor market to persist, the economy must continue growing. Paradoxically, if economic growth is to continue driving the current demand for workers, at some point the economy will need more workers to meet that demand.

That means job training is increasingly important, particularly for discouraged workers who want to re-enter the labor force. The Trump administration has taken action such as encouraging companies to make training available, but with congressional support more can be done. Higher levels of merit-based legal immigration — as opposed to immigration based on distant family connections — could also relieve some of the pressure.

Both business owners and jobs data tell us the same thing: To sustain the recovery, the U.S. needs more workers.

Mr. Puzder is a former CEO of CKE Restaurants and author of “The Capitalist Comeback: The Trump Boom and the Left’s Plot to Stop It.”