Rising Wages Set to Drive New Opportunities—and Uncertainties—Over the Next Decade

Rising Wages Set to Drive New Opportunities—and Uncertainties—Over the Next Decade    

 Thus far in 2021, wages in the US have grown at the fastest pace in over 20 years, fueled by a rapid economic reopening in the wake of COVID-19 vaccinations. Why Wages Are Growing Rapidly Now—And Will Continue to in the Future,a new report from The Conference Board, details how this surge is likely to challenge organizations’ recruitment, retention, and compensation strategies in the near term—and over the next decade as pandemic uncertainties fade and long-run demographic factors come to the fore.

“The rapid wage growth currently underway in the US is a result of temporary—albeit, severe—labor shortages, especially in blue-collar and manual services jobs, said Gad Levanon, Head of The Conference Board Labor Market Institute. “While we expect wage growth to slow a little in 2022, in the coming decade a tight labor market that drives wage pressures will be the norm. This will largely be due to the sizable generation of Baby Boomers continuing to retire, without enough people to replace them to meet the growing demand for workers.”

The report maps out three distinct phases in the outlook for US wages:

Heated Wage Growth in Spring and Summer of 2021

  • According to the Employment Cost Index, wages and salaries for private industry workers rose 4.3 percent (annualized) over the six-month period ending June 2021—much higher than the average of 2-3 percent over the past two decades.
  • Heated wage growth continued through summer 2021, especially for blue-collar and manual services jobs. These workers were in high demand as the economy reopened, even as pandemic concerns (e.g., fear of infection, lack of childcare) continued to keep many out of the workforce.
  • Faster wage growth could have a significant impact on consumer and producer price inflation. If higher costs are passed through to consumers, this could lead to a longer period of high inflation.

Wage Growth Cools in 2022

  • Wage growth should cool heading into 2022, settling closer to the long-run average of 2.5-3 percent by next year.
  • This cooldown reflects the resolution of demand-and-supply mismatches as more workers reenter the labor market. However, another significant wave of coronavirus infections that limits in-person instruction in schools could reduce the willingness to work among some unemployed persons and delay the beginning of the slowdown in wages.
  • The acceleration in wages for new hires in 2021 could lead to a unique situation, where new hires earn more than current employees with more experience. Such inequity could lead to higher labor turnover of more experienced workers, who can easily find new jobs at higher wages in this tight labor market.
  • Inflation is emerging as a downside risk for employers. After being a non-issue in wage determination for several decades, strong inflation in 2021, and perhaps 2022—if households’ long-term expectations rise—is likely to push wages higher. In a more extreme and less likely scenario, high inflation and severe labor shortages could lead to a wage-price spiral, where higher prices and wages feed each other, leading to faster growth in both.

Demographic Trends Accelerate Wage Growth Again in 2023 and Beyond

  • Wages will grow rapidly in some occupations in 2023 and onward, most notably in blue-collar and manual services industries. Historically strong job growth from 2021 to 2022 is likely to significantly lower the unemployment rate. If history is any guide, this trend is likely to continue until the next recession, which could occur five to ten years from now.
  • Blue-collar and manual services will again reap significant rewards, as the shrinking of working-age Americans without college degrees curtails the long-term supply of workers in these fields.
  • The pace of automation will shape how rapidly employment grows, and the unemployment rate dropping depends partly on the rate of automation. Ultimately, more automation will reduce the demand for labor and delay a decline in the unemployment rate.
  • The shift to remote work will significantly impact not only how we work, but also how wage trends develop in the near term. Employers operating in expensive labor markets may be able to lower overall labor costs by hiring more workers in cheaper US labor markets or abroad. Moreover, many companies are likely to have flexible wage structures allowing differentiation in compensation across regions.

Visclosky: NWI is the state’s next great economic engine

WASHINGTON D.C. | Household median income in Lake County has declined since 1970, and Northwest Indiana lost 38,000 manufacturing and middle management jobs in the shrinking steel industry over the subsequent two decades.

The job losses resulted in less pressure to maintain high wages in the Calumet Region, dragging down everyone else’s pay.

But the hope is that major transportation initiatives that are underway will help reverse generational trends that have stagnated Northwest Indiana’s economy and population for decades, said U.S. Rep. Pete Visclosky, D-Merrillville.

Visclosky, D-Ind., is hopeful that the South Shore Line extension, the Gary/Chicago International Airport expansion and the continuation of the Marquette Plan to spruce up the lakefront will transform Northwest Indiana for the long term. The state Legislature’s $31.5 billion budget includes funding to extend the commuter train service from Chicago, the Midwest’s largest economy, to Dyer or St. John.

“Too often in the past we blame somebody else for some of the problems we face in Northwest Indiana,” he said. “In this case, you’re seeing the state Legislature and the state government act in a very supportive fashion in investment in a transportation project.”

Indianapolis has long motored the state’s economic growth, while Indiana’s rural areas have shed population. But several major projects are coming to a head in Northwest Indiana at around the same time, giving the region the potential to emerge as the state’s next big economic driver, Visclosky said.

“I can’t overemphasize the transformative change I see in Northwest Indiana,” he said. “You extend the South Shore — ultimately to Lowell and Valpo, the first stop will be Dyer or St. John — it will have an impact for 50, 75, 100 years. You continue to open up the lakefront in Whiting and Portage, and you end up with a lakeshore like Chicago. The runway at Gary after all of these years will be done by July, and I’m convinced that will be a job creator. The Gary bus system, which was going to have funding pulled about a decade ago, just extended two new routes outside the city. You combine all four of those, and you’re going to see Northwest Indiana become the next great economic engine of the state.”

Northwest Indiana can build upon its success in steel, oil refining and manufacturing by becoming even more of a bedroom community to Chicago, a $575 billion economy that’s one of the largest and diverse in the world, Visclosky said. One of 10 Lake County residents already commutes into the city for work, but the region could be a more attractive suburban enclave to young professionals if it had more rail connections.

“We’re going to essentially draw the Chicago economy all the way to Michigan City,” he said. “I think it will be hopping. Twenty-five years from now, I think it will be a different place to live and to work.”

The South Shore Line should spur more investment, likely first in new housing and later in more businesses, Visclosky said. Improved transportation will enable more people in the Chicago region to take advantage of Northwest Indiana’s lower tax structure and good schools.

More young people could stay because of greater accessibility to Chicago’s jobs, Visclosky said. The South Shore Line’s new Sunset Express has already shortened commute times.

With so many major projects coming to fruition at around the same time, the region has the opportunity to take better advantage of its tremendous assets, he said.

“With the express train, you have the opportunity to get from Michigan City to downtown Chicago in 60, 70 minutes,” he said. “The metropolitan area keeps moving and investment follows. We have on occasion whined, complained, and felt sorry for ourselves. We’re on the largest body of freshwater and a great city-state whose economy is larger than Sweden. And we feel sorry for ourselves? That’s crazy.”

Find the full article at: http://www.nwitimes.com/business/investment/visclosky-nwi-is-the-state-s-next-great-economic-engine/article_7cbea0ca-19dd-57a3-a797-9a47a26d2991.html

Jobless rate drops across Northwest Indiana

Unemployment dropped across Northwest Indiana in February.

Joblessness in the Gary metropolitan area — which includes Lake, Porter, Newton, and Jasper counties — fell to 8.3 percent in February, down from 8.6 percent in January. The unemployment rate in the Michigan City metro, which is solely LaPorte County, declined to 8.6 percent, down from 9.1 percent a month earlier, according to Indiana Department of Workforce Development.

In February, five of the top 11 counties with the highest joblessness in the state were in Northwest Indiana.

Lake County had an jobless rate of 8.8 percent, the second highest out of all 92 counties in Indiana, after only Vermillion County along the Illinois border just north of Terre Haute. LaPorte had the fourth highest rate of 8.5 percent, while Japser was seventh at 8.2 percent and Starke was eighth, also at 8.2 percent.

Newton County came in 11th statewide with a jobless rate of 7.9 percent.

Though the Region lagged behind the rest of the state, unemployment fell in every major city and town in Northwest Indiana in February. The biggest drops were in Valparaiso, Michigan City, Hammond, Merrillville and Gary.

Valparaiso has the lowest unemployment rate in Northwest Indiana at 6.1 percent, and Porter County’s overall rate was a relatively low 7.1 percent. East Chicago, which has been hit with steel mill idlings, has the highest joblessness rate in the state at 11.9 percent.

East Chicago, Gary and Hobart were the only cities in Indiana with double-digit unemployment.

Find the full article at: http://www.nwitimes.com/business/local/jobless-rate-drops-across-northwest-indiana/article_b4d9c5e1-ebea-5f86-97f8-0dd861260555.html

Manufacturer Moving Operations to Gary

Gary, Ind. — T&B Tube Company, Inc., a manufacturer of cut-to-length steel tubing, announced plans today to relocate its South Holland, Illinois operations to here, creating up to 100 new jobs by 2017.

The company will invest $5.6 million to purchase, renovate and equip a 196,000 square-foot facility at 4000 East 7th Street in Gary, doubling available space from its current Illinois operations. With the recent addition of galvanized tubing to its product line, along with customer reshoring, T&B Tube’s new Indiana facility will provide critical space for improving production efficiency to meet growing demand. Following landscape improvements and renovations to office and production areas beginning this month, the company plans to be running in Gary by the end of the year.

“Illinois companies like T&B Tube compare expenses and see the advantage they gain in Indiana,” said Governor Mike Pence. “It’s a trend we continue to see among businesses in high-tax states. We’re proud to offer the strongest business climate in the Midwest, with companies moving here to save money and keep their business growing in a state that works.”

T&B Tube, which currently employs 80 full-time associates, has already begun hiring for production positions. Interested applicants may apply through Sedona Staffing and Davis Staffing.

“We chose Indiana because of its lower taxes, business friendly environment, close proximity to our steel vendors and great infrastructure to move our products,” said Jack Jones, president of T&B Tube. “The Indiana location will make us more competitive against our domestic and international competitors. We will also be able to retain all our associates since the new location is close to our current facility.”

Founded in 1982, T&B Tube is a second-generation, family-owned business that specializes in manufacturing cut-to-length steel tube for applications including point-of-purchase displays, outdoor products and tube fabricators. With multiple customers reshoring production to the United States, T&B Tube’s sales have seen double digit increases in the last year.

The Indiana Economic Development Corporation offered T&B Tube Company, Inc. up to $950,000 in conditional tax credits based on the company’s job creation plans. These tax credits are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives. The city of Gary will consider additional incentives.

“The relocation of T&B Tube to Gary is definitely a huge deal for us,” said Gary Mayor Karen Freeman-Wilson. “Our focus is on creating jobs for Gary residents, so they can live, work and prosper in their own community. I look forward to building even more partnerships with IEDC, NIPSCO, GEDC and other entities so that we can continue to entice more businesses to move to Gary.”

As the home of an affordable business climate, Illinois companies continue to pick Indiana as the new home for their growth plans. T&B Tube’s decision to relocate to Indiana follows news earlier this year that Romeoville, Illinois-based American Stair Corporation is also moving its operations to northwest Indiana, with plans to create up to 180 new Hoosier jobs by 2018.

About T&B Tube
For three decades, T&B Tube has strived to put the customer first and exceed their expectations. We know how important it is that our product arrives on time and fabricates without problems. With our Gary location, we will have easy access to all the large steel mills, as well as major interstates. With our high speed tube mills and, robotic recut machines, we are able to supply cut to length steel tubing faster and at competitive prices. For more information, visit www.tbtube.com.

About IEDC
Created in 2005 to replace the former Department of Commerce, the Indiana Economic Development Corporation is governed by a 12-member board chaired by Governor Mike Pence. Victor Smith serves as the Indiana Secretary of Commerce and Eric Doden is the president of the IEDC.

The IEDC oversees programs enacted by the General Assembly including tax credits, workforce training grants and public infrastructure assistance. All tax credits are performance-based. Therefore, companies must first invest in Indiana through job creation or capital investment before incentives are paid. A company who does not meet its full projections only receives a percentage of the incentives proportional to its actual investment. For more information about IEDC, visit www.iedc.in.gov.

Source: Indiana Economic Development Corp.

Find the full article at: http://www.insideindianabusiness.com/newsitem.asp?ID=70073

Staffing Employment Grew 5.4% in 2014

New Data from Quarterly ASA Staffing Employment and Sales Survey

U.S. staffing companies employed an average of 3.2 million temporary and contract workers per week in 2014, up 5.4% from 2013, according to data released today by the American Staffing Association.

“Staffing and recruiting firms are playing an extremely important role in helping millions of Americans in flexible work situations achieve their goal of bridging to permanent employment,” said Richard Wahlquist, ASA president and chief executive officer. “The staffing industry hired 14.6 million people during all of 2014. Most transitioned quickly to permanent jobs as businesses increased the size of their talent pools. The average length of employment with a staffing firm was 11.3 weeks in 2014, down from 14.3 weeks in 2013.”

In the fourth quarter of 2014, average weekly staffing industry employment grew by 137,100 workers—4.2% more than in the third quarter.

Temporary and contract staffing sales were 7.9% higher in the fourth quarter of 2014 compared with the same period the prior year, totaling $30.54 billion. Fourth quarter sales were 3.7% higher than in the third quarter of 2014. For the full year, sales were up 5.7% over the prior year.

See the ASA website for more details about the quarterly ASA Staffing Employment and Sales Survey, sponsored by ASA research partner CareerBuilder.

For more information, visit the ASA Newsroom. You can also follow ASA on Twitter.

Find the full article at: https://americanstaffing.net/posts/2015/03/19/staffing-employment-grew-5-4-in-2014/

State Jobless Rate Ticks Upward

Indianapolis, Ind. — The Hoosier State added 8,600 private sector jobs in January, led primarily by the Trade, Transportation & Utilities (+6,700), and Manufacturing (+1,500) Sectors. Over the past two years, Indiana’s private sector has grown by 98,600 jobs. During this period, monthly job growth has averaged 4,100, and the state has experienced gains in 19 of the past 24 months. Since July 2009, the low point of employment, 268,300 private sector jobs have been added in total. Indiana now stands at just 21,100 private sector jobs below the all-time peak of employment in the state, which occurred in March of 2000.

Despite sizable private sector gains, Indiana’s unemployment rate was driven up 0.1 percent to 6.0 percent in January mainly due to another substantial labor force increase (+14,249). The Hoosier labor force has grown by 85,500 individuals over the past two years, which is one of the largest increases in the nation. Indiana’s labor force participation rate also increased in January by 0.2 percent to 63.9 percent, and continues to be a full percentage point higher than the national average. January also marks the 10th month in a row Indiana’s labor force participation rate exceeded the national rate.

“Hoosier private sector job growth continued a remarkable trajectory in January,” said Steven J. Braun, Commissioner of the Indiana Department of Workforce Development. “Over the past two years, Indiana has grown nearly 100,000 private sector jobs, and scores of Hoosiers are returning to the labor force. Clearly, the numbers indicate many Hoosiers are returning to work and thousands of others, encouraged by the availability of new jobs, are beginning to look for work again, which are both tangible positive economic indicators.”

Source: Indiana Department of Workforce Development

Find the full article at: http://www.insideindianabusiness.com/newsitem.asp?ID=69823