Newly hired Americans are getting record wage increases, even as American employers try to minimize wage increases, according to reports from the 12 federal reserve banks.
“The average full-time offer wage received in the past four months displayed a notable jump to a … high of $66,415 in March, up from $58,035 this past November,” said a report by the Center for Microeconomic Data, at the Federal Reserve Bank of New York. That 14 percent jump is the biggest jump since the survey began in November 2014. The survey is taken every four months and it includes comments from roughly 1,000 contacts.
But employers are working hard to minimize pay raises, according to the recent economic surveys collected by the 12 federal reserve banks and posted in their Beige Book. For example, companies are hiring sidelined people and offering bonuses and benefits to keep their employers from jumping to rival companies, the reports said.
In general, companies try to avoid increasing wages because it is expensive, painful to reverse during the next economic slowdown, and it prompts protests from stock experts and oversight groups on Wall Street.
But the Beige Book also shows that many employers are short workers, giving employees the opportunities to jump from job to job in search of better salaries.
This worker shortage, which is also called a “tight labor market,” is only possible because President Donald Trump has stuck with his “Hire American” economic policy. Other presidents, including President George W. Bush and Barack Obama, prevented wage increases by providing extra foreign workers to employers via both legal and illegal immigration routes. For example, Obama created the Deferred Action for Childhood Arrivals (DACA) amnesty in 2012 and printed 800,000 work permits for illegal migrants.
Still, federal data shows there are at least 12 million Americans who want jobs but do not have jobs.
But Trump’s decision to oppose legal immigration increases has let wages rise — after almost 20 years of flat wages — and may give him a big boost in November 2020.
Around Boston, the Beige Book survey showed:
Wage increases were moderate. One retailer reported that merit pay increases for 2019 would average 3 percent … No manufacturing contacts complained of wage pressures. Software and IT services contacts indicated that headcounts were growing steadily at a slow-to-moderate pace with no changes in the turnover rate. These contacts reported raising wages approximately 3 percent to 5 percent over last year.
Goldman Sachs says Trump's tight labor-market policy (AKA 'Hire American') gave 4% raise to blue-collar/middle-class in 2018. But upper-income graduate salaries lagged – maybe b/c of 1.5 million visa-worker graduates who work for spaghettiOs & green cards https://t.co/g6jtv9BS81
— Neil Munro (@NeilMunroDC) March 14, 2019
In the New York region, the survey showed:
With tight labor markets, wage growth has been steady in recent months. One major employment agency in New York City noted that salaries have not risen as much as one would expect given the tightness of the labor market. Two employment agency contacts noted a large and widening gap between salary demands and salary offers, noting that this has led some employers to miss out on good candidates. Manufacturers, in particular, were said to be holding the line on wages, while service firms have become somewhat more flexible.
One staffing firm noted that firms struggled to staff extra shifts. Another contact reported that restaurants had lost workers who had returned to their home countries. While most manufacturing firms also noted difficulty in finding labor, two firms said it “just takes longer,” two more reported successfully attracting employees and reducing turnover by increasing wages and other benefits, and another firm noted that Pennsylvania has good labor availability.
Wage growth continued at a moderate pace, with reports of wage and benefit cost increases averaging about 3 percent. The share of nonmanufacturing contacts who reported increases in wage and benefit costs edged up to 45 percent. However, several contacts noted that the pace of wage growth had slacked off a bit.
Wages increased moderately across industry sectors and education levels. Retailers increased wages for both store and warehouse employees, citing increased competition for both. Manufacturers and freight haulers increased wages for their hourly staff to aid retention efforts, pointing to wage increases by competitors. A contact in robotics development noted that he had lost out on several candidates for new hires because competitors offered higher salaries, so he has increased his offer in turn. Construction companies preemptively offered bonuses and raises to certain office staff members, such as key engineers, for the purpose of retention. Staffing agencies noted their clients were offering higher pay for temporary and permanent hires.
Biz lobbyists keep insisting 2 media that immigration doesn't hurt wages. But biz CEOs say they're paying higher wages because of the labor shortage. The media is finally waking up – & may even check migration's impact on their peers' post-college salaries https://t.co/JXz3rAUhWy
— Neil Munro (@NeilMunroDC) April 5, 2019
District firms noted that annual wage increases, on average, remained around 3 percent, though much higher for in-demand and difficult-to-fill positions (e.g., medical professionals, engineers, drivers, skilled laborers, IT professionals, and executives). Some employers shared that although wage growth had successfully helped secure staff, there was little appetite for significant upward movement in 2019.
In the Chicago area:
Many manufacturing contacts said that difficulty in finding labor was the primary factor preventing them from increasing output. Wage growth remained modest overall. Contacts were most likely to report wage increases for professional and technical, administrative, and production workers. Many firms reported growing benefits costs.
Wage pressures generally remained elevated, and one energy sector contact noted that they were having to pay hot oil truck drivers $130,000 annually to retain them.
In San Francisco:
Wage growth continued to pick up broadly. Contacts across the District noted persistent upward compensation pressures due to brisk labor demand and labor shortages. Contacts emphasized that wage growth was stronger for higher-skilled workers, though the higher minimum wages in California and Oregon continued to put upward pressures on wages for lower-skilled workers. Contacts continued to report enhanced bonus structures and benefit offerings to better attract and retain experienced workers.
Trump's 'Hire American' policy is forcing investors to pay record wage gains to American voters. So CEOs are demanding a special pipeline of cheap foreign replacement workers. Trump says he is flip-flopping from voters to CEOs: But what do polls say? https://t.co/fFQlRMmdOq
— Neil Munro (@NeilMunroDC) March 9, 2019
Each year, roughly four million young Americans join the workforce after graduating from high school or university.
But the federal government then imports about 1.1 million legal immigrants, refreshes a resident population of roughly 1.5 million white-collar guest workers, in addition to approximately 500,000 blue-collar visa workers, and also tolerates about eight million illegal workers and the inflow of hundreds of thousands of illegal migrants.
This policy works by shifting enormous wealth from young employees towards older investors, even as it also widens wealth gaps, reduces high-tech investment, increases state and local tax burdens, hurts children’s schools and college education, pushes Americans away from high-tech careers, and sidelines millions of marginalized Americans, including many who are now struggling with fentanyl addictions.