US businesses remained optimistic about the outlook for the next six to 12 months as Covid-19 vaccines become more widely distributed, according to the Federal Reserve Beige Book report released Wednesday. It also found that US economic activity overall expanded in the January to mid-February timeframe reviewed by the report.
Employment levels, meanwhile, rose in most districts, though the leisure and hospitality sector continues to be constrained by ongoing Covid-19 restrictions.
Labor shortages were noted as most acute among low-skill occupations and skilled trade positions. Constraints on labor supply included those related to Covid-19, childcare and unemployment benefits.
Responses by Federal Reserve districts included:
- Staffing firms in the Minneapolis district reported difficulty filling jobs. “There are way more job orders than available workers,” especially for jobs paying less than $20, one staffing firm said.
- The Dallas district noted severe winter storms and power outages in mid-February severely disrupted economic activity.
- The Boston Federal Reserve District noted that staffing firms reported strong demand from manufacturing, legal services, healthcare, and scientific and technical firms. One staffing firm reported the market for healthcare and scientific/technical workers was at full employment, making finding qualified workers difficult. Wages for highly skilled temporary employees along with the duration of temporary employment and the conversion rate from temp to perm had increased for highly skilled workers.
- The Atlanta district reported that most employers contacted in Florida anticipated little impact from the recently passed measure to raise the minimum wage in the state to $15 per hour by 2026, although some were investing in capital to replace labor.
- One employer in the Philadelphia district noted the $15 per hour minimum wage is already de facto in place because of labor demand. Another contact in the district pointed to job ads offering $23 per hour for warehouse jobs.
- One staffing firm in the Chicago district noted the reduced risk of contracting Covid-19 was increasing the supply of workers. Driving the reduced risk were modifications to worksites, training and falling case counts.
- A New York City staffing firm characterized hiring activity as moribund and noted the difficulty in onboarding and training new staff remotely.
- Staffing firms in the Philadelphia district reported strong demand while qualified job candidates remained a challenge to hire and retain. Staffing firms also noted an increase in the number of their own temp placements being hired by clients directly.
- One staffing firm in the Richmond, Virginia, district believed workers were reluctant to change jobs now and firms were unwilling or unable to raise wages.