Extensive Labor Shortages Leading to Pressure on Wages

September 16, 2021 – The Labor Department reported that 332,000 Americans have filed new claims for state unemployment benefits. This is the lowest level for initial claims since March 14, 2020, when it was 256,000.  The previous week’s level was revised up by 2,000 from 310,000 to 312,000. The four-week moving average was 335,750, a decrease of 4,250 from the previous week’s revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week’s average was revised up by 500 from 339,500 to 340,000.

“Unfortunately Delta appears to have left workers uncomfortable returning to the workforce,” said Bank of America economist Michelle Meyer. “All eyes are on whether the broader expiration of UI [unemployment insurance] benefits will prompt greater labor participation in the coming weeks.”

The Federal Reserve on Wednesday said job creation around the country “ranged from slight to strong” from July through August. In its periodic Beige Book report of regional economies, the central bank also noted “extensive” shortages of available workers and said companies were raising wages to try to fill positions. The Fed said growth overall “downshifted slightly to a moderate pace” for the period.

During the week, 47 states reported 5,487,233 continued weekly claims for Pandemic Unemployment Assistance benefits and 47 states reported 3,805,795 continued claims for Pandemic Emergency Unemployment Compensation benefits. The highest insured unemployment rates in the week were in Puerto Rico (4.5), California (3.7), New Jersey (3.4), District of Columbia (3.3), Illinois (3.1), New York (3.0), Rhode Island (2.9), Connecticut (2.8), Georgia (2.8), and Hawaii (2.6). The largest increases in initial claims for the week were in Louisiana (+7,664), Michigan (+5,318), California (+1,209), Kansas (+528), and Nevada (+420), while the largest decreases were in Missouri (-6,949), New York (-3,020), Florida (-2,482), Tennessee (-1,923), and Georgia (-1,814)

Looking Forward

Employers in 32 percent of U.S. businesses surveyed expect an increase in payrolls during the next three months, while three percent expect to trim payrolls and 63 percent anticipate no change, according to the latest “Employment Outlook Survey,” released by ManpowerGroup. “Employers are ready to bring their workers back as restrictions lift and America gets ready to work,” said Becky Frankiewicz ManpowerGroup president, North America. “Yet childcare challenges, health concerns and competition mean demand still outstrips supply which is dampening the ‘big return’ of the American workforce. It’s a worker’s market and employees are acting like consumers in how they are consuming work – seeking flexibility, competitive pay and fast decisions.” Now is the time for employers to get creative to attract talent, she said, “and to hold onto the workers they have with both hands.”

According to the study, payroll gains were expected in all 12 U.S. industry sectors during the third quarter of 2021: leisure and hospitality (+41 percent), wholesale and retail trade (+29 percent), education and health services (+27 percent), transportation & utilities (+26 percent), durable goods manufacturing (+25 percent), nondurable goods manufacturing (+25 percent), professional and business services (+21 percent), construction (+19 percent), information (+18 percent), other services (+16 percent), financial activities (+15 percent) and government (+15 percent).

Related: Major Paradigm Shifts Coming Out of the Coronavirus Crisis

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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