Labor market shortage taking a toll on company profits

Because America’s economy has far more available jobs than workers, companies are changing their recruiting strategies, including lowering educational requirements and increasing telecommuting. (Image: Shutterstock)

Corporate profit may be on the decline in 2019 due, in part, to higher labor costs and slower revenue growth. These are the findings by the Conference Board, which says companies in the U.S. that may experience the biggest losses are those using blue-collar workers, who now command higher pay due to their scarcity.

The Conference Board’s report, Global Labor Market Outlook 2019, also points out that, because America’s economy has far more available jobs than available workers, companies are changing their recruiting strategies. This includes lowering educational requirements and increasing telecommuting.

Other findings show that labor inequality is shrinking because higher blue-collar wages has narrowed the gap. Also, during the financial crisis and in the two to three years following it, the share of workers with a BA or some postsecondary education increased among new workers. But since 2012 and 2013, this trend of “upskilling” has mostly reversed. These results suggest that, in recent years, as the pool of available workers became depleted, employers have hired less-qualified workers for a given job opening.