From our regular surveying of contacts across the region, we know labor conditions are a concern shared by many. Is the problem not enough jobs, not enough workers, workers who don’t have the right training or skills, some combination of these, or something else altogether?
As appeared in the Cleveland Fed Digest's Ask the Expert
We hear it’s a combination of things. We know that at a bigger-picture level, there is a mismatch between the skills that businesses are demanding and the skills of the available workforce. The mismatch varies from region to region.
But we also see that in many cases there are other more micro-level issues that affect the balance between supply and demand for labor. Lack of access to transportation is one. Awareness of opportunities is another; for example, I was talking with a gentleman at a workforce training program who wants to be a crane operator. Before the program, it didn’t occur to him that “crane operator” was even a thing. He became aware of it when he was connected with this organization that was able to train him.
Another issue is that there may be jobs that are available but fewer workers interested in them than previously. The trucking industry says it’s really short on long-haul drivers. In general, people don’t really want to do that job. You have to travel a lot. You may not be home as much. In economic theory, we would say that just means the wage needs to go up to entice people into those positions, but businesses say there’s only so much they can increase wages.
Every time the Fed conducts Beige Book surveys, we ask questions related to the business cycle, hiring, prices, costs, wages. The businesses tell us what they see before the data even hint at it. That’s very useful. [The information in the Beige Book is gathered primarily through interviews with business people in each District, along with information from Federal Reserve Bank and branch directors.]
Policymakers such as Loretta [Mester, the Cleveland Fed’s president] learn about emerging issues through data we collect and from business and community leaders who let us know how overarching trends are affecting the Fourth Federal Reserve District [Ohio, western Pennsylvania, the northern panhandle of West Virginia, and eastern Kentucky] on the ground. We also exchange information with community members, sharing what we’re seeing in our analyses. Plus, the knowledge we glean from constituents can inform our decision to pursue a particular line of research, which then would add to public understanding of a particular issue.
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