Labor ‘shortage’ may mean more competitive pay

Bill Knight column for Mon, Tues., or Wed., Sept. 28, 29 or 30

It’s a relief to write with hope instead of despair, fear or rage – instead of feeling like (or BEING) a crank.

So, maybe don’t borrow or bank on it immediately, but look ahead at better times.

Yes, economic gains could be ahead for U.S. workers (barring a host of other factors ranging from antagonistic legislatures and courts to environmental disasters and global conflicts, of course).

A greater role for better-rewarded workers in a consumer economy could result from a slump in the growth of the labor force in the country.

That points to the possibility that in the near future employers may have to raise wages to attract and keep skilled workers.
Credit – or blame – changing demographics.

Baby Boomers born between 1946 and 1964 are retiring, and the number of workers between 15 and 24 years old is falling about 4 million each year due to declining birth rates all over the planet, says the International Labour Organization (ILO).

Bottom line: Older workers aren’t being replaced by younger ones.

For the United States as a whole, the labor force has grown just 1.6 percent since the Great Recession technically wound down in the summer of 2009, compared to growth of more than 10 percent in the last decade, the U.S. Labor Department says.

It’s not just the U.S. job market, either. German and Japanese economies also are noticing decreases in labor supply, and even Chinese officials have predicted a tightening of the size of it labor force.

“We will see a massive slowdown in labor supply in the coming years,” ILO economist Ekkehard Ernst told Bloomberg News. “Wage growth will have to accelerate.”

Yes: If employers want to attract and keep workers, they’re going to have to start paying more.

Moody’s Analytics’ chief economist Mark Zandi said, “We’re going from a world of generally too much labor to a world of labor shortages. When we look back 10 years from now, the labor share of income will have hit bottom now.”

Already, there’s a slight uptick in projections for better compensation, according to the Labor Department, which reports that labor’s share of income – of U.S. non-farm businesses – increased to almost 57 percent last year from a 70-year low of 56 percent in 2013. That’s different from the last 15 years, when workers’ share of income fell some 6 percent because employers played U.S. workers against low-wage workers in China, Mexico and elsewhere to achieve concessions or exploit the desperate jobless.

“The U.S. labor market is tightening faster than expected,” said Gad Levanon of the independent Conference Board business research group. “Wage growth will increase, and corporate profits are likely to suffer.”

However, everyday workers eventually may find it easier to become consumers without borrowing.

Yes: Maybe there is an economic pendulum, and its arc is swinging back toward fairness after moving the opposite director for years.

We can hope.