Bloomberg: Blue-Collar Wages Are Going Up

Employers are being forced to pay unexpectedly higher wages to recruit during the coronavirus crash, despite high unemployment numbers, says a September 6 report by Bloomberg.

Under the subheadline, “Factory Owners Hiking Pay to Lure Workers Even With Jobless Rate,” Bloomberg reported September 6:

Staffing firm Hire Dynamics, based in a north Atlanta suburb, has orders to fill more open jobs than at any time in its history, Chief Executive Officer Billy Milam said. Many of his clients have introduced $2-an-hour pandemic bonuses on top of the usual $12 wage, with one offering a $5-an-hour hike for a short period to recruit workers.

In Pennsylvania, workers are refusing to sign up until they are paid higher wages to work in warehouses:

Haley Marketing, a consultant to the staffing industry, recently studied warehouse jobs in eastern Pennsylvania and found that applicants responded to high pay even during the pandemic. Jobs paying $12-$14 an hour received 45% fewer applicants from May to July than they did during the same period last year, but positions paying $17 an hour got 25% more response from a year ago.

The economists cited by Bloomberg are scratching their heads about the wage pressure amid high unemployment.

However, Bloomberg does not mention one obvious possibility.

Before the coronavirus hit, President Donald Trump’s policies combined curbs on immigration with economic growth, so boosting wages for blue-collar Americans. Those Americans may not want to give up their hard-won expectation for higher wages.

The widespread demand for higher wages will have a long-term impact, one economist told Bloomberg:

“Ultimately it’s going to be a permanent change that these lower-end workers are going to get more money,” said Mike Skordeles, an economist with SunTrust Banks Inc. People won’t relocate or travel great distances for a low-paid job, so wages will have to rise, he said.

Unless, of course, Joe Biden gets elected and floods the labor market by implementing his campaign promise to roll back border enforcement and to also raise the inflow of foreign refugees, visa workers, and legal immigrants.

Read the Bloomberg report here.