In this file:

 

·         WSJ: Labor Shortage Stymies Construction Work as $1 Trillion Infrastructure Spending Kicks In

Contractors dangle an array of benefits—from signing bonuses to housing allowances—to attract and retain workers

 

·         Morningstar: Wage Inflation Spiral: Playing with Fire

Wages are increasing everywhere, sometimes alarmingly. A salary spiral has not yet set in, but an economist thinks it might.

 

 

Labor Shortage Stymies Construction Work as $1 Trillion Infrastructure Spending Kicks In

Contractors dangle an array of benefits—from signing bonuses to housing allowances—to attract and retain workers

 

By Julie Bykowicz, The Wall Street Journal (WSJ)

June 20, 2022

 

WASHINGTON—Construction projects across the U.S. are running short on labor just as $1 trillion in federal infrastructure money starts to kick in, leading companies to get creative in their quest to attract and retain workers.

 

In Southern states, contractors advertise sunny weather and 12 months of work on help-wanted websites in the frostier Northeast and Midwest, where highway construction goes dormant during the winter months. Project managers in remote areas are luring employees with signing and referral bonuses and per diems for housing, knowing they won’t be able to find enough workers locally.

 

Central Florida Transport, one of the state’s largest aggregate haulers, created a full-time driver advocate position to help its truck drivers with tasks that are tough to do during a busy workday, such as scheduling healthcare appointments or finding a loan broker.

 

“We wanted to do whatever possible to help solve their problems because we can’t afford to lose any drivers,” said Myron Bowlin, the company’s vice president.

 

Historically low U.S. unemployment, the economic rebound from Covid-19 and about $600 billion in transportation-specific funding expected from the roughly $1 trillion bipartisan infrastructure law have combined to exacerbate existing employee shortages in the construction industry...

 

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https://www.wsj.com/articles/labor-shortage-stymies-construction-work-as-1-trillion-infrastructure-spending-kicks-in-11655722801?mod=pls_whats_news_us_business_f

 

 

Wage Inflation Spiral: Playing with Fire

Wages are increasing everywhere, sometimes alarmingly. A salary spiral has not yet set in, but an economist thinks it might.

 

Yan Barcelo, Morningstar

20 June, 2022

 

A wage inflation spiral follows a simple logic. Seeing prices go up, consumers ask for higher wages, and that feeds higher consumer prices. Up to that point, everything is fine and dandy. But if consumers see inflation persevere, they start to expect it and also expect wage increases to compensate for it. That’s when a spiral sets in.

 

“Inflation expectations are just as important as the actual inflation rate itself, asserts Anil Passi, Director, global corporates, at DBRS Morningstar. Expectations change behaviour, including the cancellation of purchase decisions and demand for higher wages. This is what central banks have to wrestle with: not just the consumer price index (CPI), but how they can affect the psychology of people.”

 

Employers Are Increasing Worker Wages

 

In the meantime, inflation is pushing ahead, and not only are wage increase demands multiplying, but substantial wage increases are also being implemented. An emblematic one is Apple’s, which has given a 10% hike to its retail workers in the U.S. and raised its companywide compensation budget. “Apple is a very attractive employer, Passi highlights. People want to work for Apple. It gives a 10% increase.”

 

Many other major names have also handed substantial increases: Google, Walmart, Chipotle and Microsoft in the U.S., RBC, Starbucks and TD Bank in Canada. An unsettling feature of these pay raises, is that “they are happening on an unusual schedule,” notes Derek Holt, Vice-president and Head of capital markets economics at Scotia Bank. They don’t necessarily happen according to a set yearly schedule of wage renegotiations, but pop up in response to exceptional job market pressures.

 

As inflation increases, higher wage demands are accelerating. In Canada, Passi notes, average weekly earnings for March were 4.3% higher than the previous year, and nearly two percentage points above the mark of 2.4% the previous month.

 

Such numbers indicate that Canada is catching up to the situation in the U.S. “The job market in Canada is very similar to the one in the U.S., except that it usually shows a six-month lag,” says Yanick Desnoyers, Vice-president of economics at Addenda Capital. For their part, our Southern neighbours have seen average wage increases of 5% year-over-year and month-over-month, Holt points out. However, there is a positive note: for the last three months, U.S. numbers show no wage growth. “Is it only a temporary pause? Holt asks. Will the rise resume? We don’t really know yet.”

 

Other Factors That Impact Wages ...

 

What Will Make Us Reach a Tipping Point? ...  

 

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https://www.morningstar.ca/ca/news/223059/wage-inflation-spiral-playing-with-fire.aspx