A new report by the Federal Reserve released on Wednesday showed that employers had a hard time hiring workers in May, and some are taking steps to make work more attractive to prospective employees as a result.
The Beige Book, which measures conditions in the central bank’s 12 regions, showed employers in all of them struggling to find enough workers. They have begun to employ tactics to increase their chances of finding workers, including boosting wages, offering hiring bonuses, poaching employees from competitors, and raising prices.
Wages rose modestly overall, with many employers opting for hiring bonuses instead, the Fed said.
“Labor demand will remain strong, but supply constrained”
“The lack of job candidates prevented some firms from increasing output and, less commonly, led some businesses to reduce their hours of operation. Overall, wage growth was moderate, and a growing number of firms offered signing bonuses and increased starting wages to attract and retain workers,” the Fed said.
“Contacts expected that labor demand will remain strong, but supply constrained, in the months ahead.”
The Labor Department will release a new report Friday showing how many jobs were added to the economy. The prediction is that 500,000 jobs will have been added for May, which is nearly double the amount added in April.
It may be harder to find workers because the federal government has been giving unemployed workers extra money each week even though they aren’t working–the equivalent of $17 an hour on average. Requirements that those receiving unemployment be looking for work wwere also relaxed until recently in most states.
States ending unemployment boost early
Twenty-five states have announced that they will end their federal unemployment boost early, most in June or July. CNBC reported that moves by all but two Republican-led states will impact 3.7 million workers, with most of those losing their state benefits along with the federal boost.
Job searches jumped in states that decided to end unemployment early, so maybe that will help some businesses find the workers they need. Rising vaccination rates and falling COVID cases should also help some who have been reluctant to go back to work to do so, experts think.
The rising wages could exacerbate inflation rates, though, which have already been a concern. The Fed said it would be able to “gently” guide interest rates back down if they go over two percent, however.
“Should inflation move materially and persistently above 2 percent, we have the tools and experience to gently guide inflation back down to target, and no one should doubt our commitment to do so,” Federal Reserve Governor Lael Brainard said in a speech on Tuesday.