In 2019, surging labor costs and slower revenue growth will likely lead to a decline in corporate profits in both the U.S. and other advanced economies, finds a new study on labor market trends.
Article continues below
Conducted by The Conference Board, the analysis says companies in the U.S. that may experience the biggest losses are those employing many blue-collar workers, who now command higher pay due to their scarcity.
The research also points out that, because America's economy has far more available jobs than available workers, companies are changing their recruiting strategies.
This includes lowering educational requirements and increasing telecommuting.
Companies that may see their bottom line suffer the most are those that employ many blue-collar workers, an increasingly scarce yet high-in-demand group.
Examples include companies in the manufacturing, food service, and transportation industries.
As unemployment rates plummet, wage growth is finally becoming visible.
Moreover, as a result of acute labor shortages for blue-collar workers, their labor costs are rising much faster than for their highly educated white-collar counterparts.
After decades of rising wage inequality, in recent years the gap has shrunk.
Surging wages for blue-collar workers has played the primary role in narrowing the gap.
During the financial crisis and in the two to three years following it, the share of workers with a BA or some postsecondary education increased among new workers.
But since 2012 and 2013, this trend of upskilling has mostly reversed.
These results suggest that, in recent years, as the pool of available workers became depleted, employers have hired less qualified workers for a given job opening.
The rate at which people are voluntarily leaving their jobs is growing, while the unemployment rate is declining.
These are among the factors that help to explain why, in this tight labor market, labor quality recently ranked as the number-one concern among independent businesses.
High-skilled, white-collar occupations account for most of the acceleration in the rise of teleworking.
Among those occupations, there has been a rapid acceleration in telecommuting among computer and mathematical occupations.
While employers can use teleworking to broaden the pool of potential workers, labor shortages have been more severe in occupations where teleworking has been less adopted, such as jobs in healthcare, education, and construction. ■