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Why the biggest wage boom is blue collar workers

Companies are in desperate need of workers across the country as the economic resumption clashes with the tight labor market, but the boom in manual labor wages precedes the pandemic.

Donna Kaufman, co-owner of a landscaping design and construction company in Colleyville, Texas, said her starting salary was up to $ 13.75 per hour compared to previous year’s low wages due to tight labor markets. He said he was pushed up.

Economic forecasters like Gary Schilling have seen wages for blue-collar and manual services rising over the past few years, growing faster than wages for white-collar jobs, and have been done over the last three decades. The trend has been reversed. According to data from the US Bureau of Labor Statistics.

“In general, at the blue-collar level, you’ll probably see higher real income,” Schilling recently told CNBC.

Shilling refers to the “labor share” (the amount of GDP paid for wages, salaries, and benefits). Declining For decades, “capital share” (the amount of national income from invested capital) has been on a downward trend, while it has been on an upward trend.

For workers in blue-collar industries such as construction, transportation and manufacturing, and workers in the manual services sector such as food services, leisure, hospitality, beauty and healthcare services, they have seen the highest rise in wages in recent years. It was. These wages continue to increase after the pandemic.

On July 7, 2021, a “Now Hiring” sign was posted on a drive-through at a McDonald’s restaurant in San Rafael, California.

Justin Sullivan | Getty Images

According to Gado Lebanon, director of the Conference Board’s Labor Markets Institute, the economy will rely on manual labor jobs to resume, and recent wage increases have continued as the country continues. Faced with the effects of an ongoing pandemic, which is due to supply constraints on workers in these industries.

June Non-Agricultural Employment Report Show off the rise With an average hourly wage in all industries, leisure and hospitality jobs have increased employment by 343,000, more than half of whom are workers in the food service industry. However, employment in areas such as construction, transportation and manufacturing remained low.

Lebanon says it is taking time to find workers in these industries, despite rising wages. These occupations are usually filled with low socio-economic workers who continue to be affected by the pandemic. These jobs require face-to-face interactions and practical abilities that pose potential health risks to workers, many of whom have inaccessible childcare and ongoing federal unemployment benefits. Due to such factors, I cannot return to work or I cannot return to work.

The debate over why workers do not return to work remains highly controversial. Some say unemployment allowances discourage workers, others say Benefits do not play a role. Some say that increasing vaccination rates will bring workers back, but others feel that the risk remains high among vulnerable people.

US Bureau of Labor Statistics

Some experts say that wage increases Stay here, And as more workers come back, it’s up to the company to offset the cost of wages.

“America is, first and foremost, a service economy,” said Daniel Jao, senior economist at Glassdoor. “Therefore, we anticipate an increase in demand for face-to-face services as the economy resumes, which is a factor in the role of services and the boom in work.”

Sports apparel company Under armor Supporting that Minimum hourly wage Retail and distribution workers cost $ 10 to $ 15, McDonald’s And Chipotle pepper is Raise their wages, And in April, The number of white houses has increased The minimum wage for federal contractors, including construction workers and mechanics, is $ 15.

Zhao says that when companies like McDonald’s and Chipotle raise the minimum wage, that means they perceive. Labor shortages and wage inflation as long-term problems.

“If they think this is a temporary pandemic shortage, they will just rely on one-off bonuses or employment bonuses,” Zhao said. “But the fact that they are raising wages shows that there are these employers who believe that the challenge of finding workers will last for quite some time.”

Workers willing to do diminishing manual work

Currently, all industries are suffering from labor constraints, but Kaufman said he has seen a steady decline in the number of workers who are willing to work in the field over the last two decades.

According to the report, 44% of companies are currently recruiting for skilled workers. June survey From the National Federation of Independent Business, 66% of construction companies reported that they did not have enough skilled or qualified workers to hire.

Gregory Dako, chief US economist at Oxford Economics, said one of the reasons workers aren’t returning to these jobs right away is because of their bargaining power. Employers must continue to meet higher wage requirements and employment conditions in order to bring these workers back.

Members of the Ironworkers Local 7 Union installed steel beams on a skyscraper under construction during the summer heat wave in Boston, Massachusetts, on June 30, 2021.

Brian Snyder | Reuters

According to Lebanon, the labor market for manual labor has shrunk since the years before the pandemic began, with older people retiring and fewer people doing these jobs. This trend will continue in the future.

“The retired baby boomers are the less educated people who work in these blue-collar and manual services,” Lebanon said. “And most of the younger generations who are replacing them are more educated and unwilling to work in those types of work.”

According to Kaufman, her landscaping company hired either high school students or young adults who didn’t go on to college, but gradually high schools in her area began to push college to more students, farming. The education program has begun to close. Lost potential workers.

Daco says workers’ desire to perform these tasks is a problem, but there are more direct reasons for labor shortages and rising wages in blue-collar and manual service jobs. On average, there are enough people to do these jobs, according to the June Non-Agricultural Employment Report, he says.

Skill gaps and lack of jobs located where workers live contribute to employment difficulties.

“You have workers, but they may not be in the right place at the right time,” Daco said. “There may be rural areas where you need to work in the areas of service, leisure and hospitality, but fewer people want to live there.”

Infrastructure spending can boost wages

Bipartisan to strengthen physical infrastructure across the country, including the addition and expansion of roads, bridges and highways, while discussions continue within Congress and the White House on interim federal spending and infrastructure bills. Assistance should keep demand for blue-collar jobs and wages high. Pressure on employers.

The details of the specific plans passed by Congress are important, but Lebanon says companies will continue to face very difficult hiring barriers for construction and manual workers.

As federal spending plans become clearer, Daco expects more pressure to push up wages to fill these jobs, but not suddenly. He predicts a more modest increase near mid-2022 as infrastructure planning becomes a reality. And while current wages are the starting point for the future, he doesn’t see them as the starting point for the long-term surge in blue-collar wage booms.

“I don’t think this is the beginning of the wage inflation spiral. Wages will continue to rise indefinitely,” he said.

— —CNBC’s MacKenzie Sigalos contributed to this report

Why the biggest wage boom is blue collar workers

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