Well, what a difference a day makes. Initially, concerned and a tad bit confused, Wall Street came around to embracing the new Federal Reserve. The ‘Powell Fed’ might be ready to embark on a strange journey that eventually sees negative interest rates in the United States. I don’t want to get too far ahead if the Fed only sees one rate hike over the next two years. I don’t want to get too far afield, but if the Fed only sees one rate hike over the next two years, then what happens if the economy or stock market hits a bump in the road?
Skills Crisis
In yesterday’s Philly Fed release, a special questionnaire revealed the depth of the skills gap. I get that many people believe this is an urban myth. However, with a record of 7.6 million job openings, employers are frustrated and are ready to try anything. That’s great news for Americans that have been hoping for a chance at the dignity of a paycheck.
Issues:
Long vacancies due to the labor shortage
1. Has your firm experienced any significant labor shortages or mismatches between labor skill requirements and labor supply?* | 2019 (%) | 2018 (%) |
Labor shortages | 73.6 | 63.8 |
Skills mismatches | 66.0 | 69.6 |
Job vacancies remaining more than three months | 50.9 | 47.8 |
2. Is your firm experiencing a labor shortage in general or in certain skills, abilities, or positions? | 2019 (%) | 2018 (%) |
We are seeing a tightening labor market, such that it is getting harder to fill positions in general, but still possible to fill them. | 47.2 | 35.3 |
Novel Solutions and better training
3. What actions has your firm taken to address skills shortages?* | 2019 (%) | 2018 (%) |
Increased training for hired workers** | 43.4 | - |
Partnered with educational institution to align curriculum with talent needs | 41.5 | 34.8 |
Expanded recruitment outside the region | 32.1 | 24.6 |
Hired less qualified workers to meet labor requirements** | 30.2 | - |
This is serious issue, but. what a high-end problem to have. I think businesses are going to have to do more to make sure they have the workers. While it shouldn’t come down to one or the other, this is certainly a better investment than massive buybacks and higher dividends.
The operative word is “investment.”
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