Low-wage workers found something unexpected in the economy’s recovery from the pandemic: leverage.
Ballooning job openings in fields requiring minimal education—including in restaurants, transportation, warehousing and manufacturing—combined with a shrinking labor force are giving low-wage workers perks previously reserved for white-collar employees. That often means bonuses, bigger raises and competing offers.
Average weekly wages in leisure and hospitality, the sector that suffered the steepest job losses in 2020, were up 10.4% in May from February 2020, Labor Department data show, outpacing the private sector overall and inflation. Pay for those with only high school diplomas is rising faster than for college graduates, according to the Federal Reserve Bank of Atlanta.
“It’s a workers’ labor market right now and increasingly so for blue-collar workers,” said
Becky Frankiewicz,
president of staffing firm
ManpowerGroup Inc.’s
North America operations. “We have plenty of demand and not enough workers.”
Lower-wage employers are boosting pay and offering gift cards to applicants who show up for interviews, along with sign-on and retention bonuses, and sometimes immediate employment before drug screenings and background checks, she said.
While benefiting workers, higher labor costs can have consequences for employers in the form of narrower profit margins and missed sales if a restaurant section remains closed or orders can’t be filled quickly because of a staffing shortage. And when they do raise wages, employers are attempting to pass some of the higher costs on to customers, which could be contributing to the current upsurge of inflation. All those factors act as a potential brake on what is expected to be rapid economic growth in the second half of 2021.
Kyle Mathews,
27 years old, is among the workers benefiting. He had worked at a large grocery store in Grand Rapids, Mich., for about four years in various positions. He said he was frustrated by the pay of about $14 an hour, the top of the store’s pay scale, and the long hours. Plus, Mr. Mathews said he felt uncomfortable last year serving the public during a pandemic.
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Read More: Tight Labor Market Returns the Upper Hand to American Workers