Category Archives: Economy

Blue-Collar Worker Shortages: Navigating a Business Environment of Higher Labor Costs

Source: Gad Levanon, Frank Steemers, The Conference Board, December 2018
(subscription required)

From the abstract:
The threat of labor shortages is more acute in blue-collar and low-pay services occupations than in more highly educated white-collar occupations, the exact opposite of the prevailing trends in recent decades. We expect that by the end of 2019, the labor market will be historically tight. Industries that employ large shares of blue-collar workers, such as agriculture, mining, utilities, construction, manufacturing, transportation, accommodation and food services, repair, maintenance, and personal care services, are strongly affected by rising wages and shrinking supply. While the labor white-collar market is also tight, wage growth for the 40 percent of workers in management, professional, and related occupations is slow to accelerate. Sales and office workers, most of whom do not have a bachelor’s degree, are in shorter supply than management and professional workers.

Related:
Blue Collar Worker Shortage Turns U.S. Labor Market on Its Head
Source: Rich Miller, Bloomberg, December 13, 2018

Beige Book: Summary of Commentary on Current Economic Conditions by Federal Reserve District

Source: Federal Reserve Bank of Philadelphia, December 5, 2018

Commonly known as the Beige Book, this report is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.

Overall Economic Activity
Most of the twelve Federal Reserve Districts reported that their economies expanded at a modest or moderate pace from mid-October through late November, though both Dallas and Philadelphia noted slower growth compared with the prior Beige Book period. St. Louis and Kansas City noted just slight growth. On balance, consumer spending held steady – District reports on growth of nonauto retail sales appeared somewhat weaker while auto sales tended to improve, particularly for used cars. Tourism reports varied but generally kept pace with the economy. Tariffs remained a concern for manufacturers, but a majority of Districts continued to report moderate growth in the sector. All Districts reported growth in nonfinancial services – ranging from slight to strong. New home construction and existing home sales tended to decline or hold steady, while construction and leasing of nonresidential structures tended to rise or remain flat. Overall, lending volumes grew modestly, although a few Districts noted some slowing. Agricultural conditions and farm incomes were mixed; some Districts noted impacts from excessive rainfall and from tariffs, which have constrained demand. Most energy sectors saw little change or modest growth. Most Districts reported that firms remained positive; however, optimism has waned in some as contacts cited increased uncertainty from impacts of tariffs, rising interest rates, and labor market constraints…..

Look West for Strongest Growth Since the Recession

Source: Barb Rosewicz & Joe Fleming, Pew Charitable Trusts, November 19, 2018

The second-longest U.S. economic expansion has played out unevenly across states. Growth has been strongest in North Dakota and a group of mostly Western states and weakest in Connecticut, as measured by the rate of change in each state’s total personal income since the start of the Great Recession. In the first half of 2018, all but a couple of states shared in widespread gains.

The national recovery has been long-running, but growth in total U.S. personal income is still off its historic pace. As of the second quarter of 2018, the combined personal income of U.S. residents rose by the equivalent of 1.9 percent a year over the 10-plus years since the recession began, compared with the equivalent of 2.3 percent over the past 20 years, after accounting for inflation.

The rates represent the constant pace at which inflation-adjusted state personal income would need to grow each year to reach the most recent level and are one way of tracking a state’s economy.

After tumbling nationwide except in West Virginia during the depths of the recession, personal income totals have recovered in all states but have grown at far different rates.

Eight states’ growth since the start of recession beat the 20-year U.S. rate as of the second quarter of 2018, and nearly all were in the West. North Dakota once again led; the sum of its residents’ personal income has increased the equivalent of 3.3 percent a year. Connecticut and four other states recorded the weakest recovery, with growth rates at or below the equivalent of 1 percent a year. None of those states are in the West.

Related:
States’ Personal Income Recovers Unevenly From Recession (PDF)
49 States’ Estimated Personal Income Grew Over Past Year (PDF)
Number of States in Which Inflation-Adjusted Personal Income Fell (PDF)

Investing in America’s Workforce: Improving Outcomes for Workers and Employers

Source: Editors: Stuart Andreason, Todd Greene, Heath Prince, Carl E. Van Horn, W.E. Upjohn Institute for Employment Research, 2018

How can well-structured and effective workforce programs and policies result in better economic outcomes for individuals, businesses, and communities?

Explore contemporary research, best practices, and resources from more than 100 authors in the book Investing in America’s Workforce: Improving Outcomes for Workers and Employers.

The book is divided into three volumes: Investing in Workers, Investing in Work, and Investing in Systems for Employment Opportunity. Within each volume are discrete sections made up of chapters that identify specific workforce development programs and policies that provide positive returns to society, to employers, and to job seekers. Download the three volumes and individual chapters below.

Note: The policies and practices presented in the book are intended to spur innovative thinking that results in context-specific solutions. The perspectives are not intended as an endorsement from the Federal Reserve System or its partnering institutions.

VOLUME 1: INVESTING IN WORKERS
Front Matter and Table of Contents
Acknowledgments
Foreword: The Evolving U.S. Labor Market by Patrick T. Harker
Introduction: Investing in America’s Workforce by Stuart Andreason, Todd Greene, Heath Prince, and Carl E. Van Horn

– Building Employer Investment in Workforce Development
– Investing in Undervalued Human Capital
– Investing in Historically Black Colleges and Universities
– Investing in Workers with Different Abilities
– Investing in Workers of the Future

VOLUME 2: INVESTING IN WORK
Front Matter and Table of Contents
Introduction: Investing in Work by Prabal Chakrabarti and Jeffrey Fuhrer

– Investing in Opportunities to Create Good Jobs
– Investing in Work and Wealth
– Investing in Rural Work
– Investing in Human Capital to Support Local Economic Development

VOLUME 3: INVESTING IN SYSTEMS FOR EMPLOYMENT OPPORTUNITY
Front Matter and Table of Contents
Introduction: Investing in Systems for Employment Opportunity by Stuart Andreason and Alexander Ruder

– Financial Innovations in Workforce Development
– Government Investment in Workforce Development
– Investing in Technology
– Investing in Skills and Credentials
– Investing in Regional Workforce Development Systems
– Appendix: Investing in America’s Workforce

Why Aren’t U.S. Workers Working?

Source: Mary C. Daly, Joseph H. Pedtke, Nicolas Petrosky-Nadeau, and Annemarie Schweinert, Federal Reserve Bank of San Francisco, FRBSF Economic Letter 2018-24, November 13, 2018

Labor force participation among U.S. men and women ages 25 to 54 has been declining for nearly 20 years, a stark contrast with rising participation in Canada over this period. Three-fourths of the difference between the two countries can be explained by the growing gap in labor force attachment of women. A key factor is the extensive parental leave policies in Canada. If the United States could reverse the trend in participation of prime-age women to match Canada, it would see 5 million additional prime-age workers join the labor force.

Local government – Ohio, Michigan and Maryland: General Motors’ plant closures underscore the importance of economic diversity

Source: Francis A Mamo, Rachel Cortez, Gregory W. Lipitz, Alexandra S. Parker, Moody’s, Sector Comment, November 28, 2018
(subscription required)

On 26 November, General Motors Company (Baa3 stable) announced it will halt production at four US manufacturing plants as soon as March 2019. The closures are credit negative for several local governments in Ohio (Aa1 stable), Michigan (Aa1 stable) and Maryland (Aaa stable).

Collectively, the four plants employ more than 3,800 people and had a 2017 payroll of $480 million (see exhibit 1). All of the closures are credit negative for the affected local governments, but closure of the Lordstown plant in Warren, Ohio (Baa1 negative) will have a pronounced negative effect on Trumbull County’s (Aa3) employment base….

Why the 2018 Midterms Matter for the U.S. Economy

Source: Bernard Yaros, Regional Financial Review, Vol. 29 no. 2, October 2018
(subscription required)

Though midterms do not have much of an economic impact via policy uncertainty, they can still affect the economy by altering the course of federal fiscal policy. This is exactly what we expect to happen after the 2018 midterms. This article discusses how tax legislation, annual appropriations, and other areas of fiscal policy could change depending on the composition of the next Congress.

Why Are Unemployment Insurance Claims So Low?

Source: Dante DeAntonio, Regional Financial Review, Vol. 29 no. 2, October 2018
(subscription required)

Initial claims for unemployment insurance continue to fall at an impressive rate, and the level of claims is low by any historical comparison. While the timeliness and frequency of UI data make it useful as an early labor market signal, it is important to understand the factors that impact the data. In this paper we show that recent changes in state UI laws have worked to depress new UI filings during the current expansion by as many as 100,000 claims per month.

The Economics of Puerto Rico’s Post-Maria Recovery

Source: Bernard Yaros, Regional Financial Review, Vol. 29 no. 1, September 2018
(subscription required)

A year has passed since Hurricane Maria devastated Puerto Rico. In many respects, the economy is still reeling in its wake. This article looks back at the economic loss during and after the storm and also considers the road ahead for the island’s economic recovery under different policy scenarios.

U.S. Metro Area Cost of Living Index: Update Through 2016

Source: Suzanne Schatz, Regional Financial Review, Vol. 29 no. 1, September 2018
(subscription required)

Living costs give insight into the quality of life, potential migration patterns, and the economic potential of metro areas. This article examines the most recent annual update of the Cost of Living Index to better contextualize recent cost of living trends and their implications for the outlook for U.S. metro areas.