BRAKKE CONSULTING VIEWPOINT
We are hearing a lot about how hard it is to find workers in our industry. Seems like the Law of Supply and Demand is at work.
The Bureau of Labor Statistics (BLS) reported that last week, initial jobless claims – a proxy for layoffs – fell to 184,000 in the week ended December 4, which is the lowest level since September of 1969. Hourly private sector wages were up 4.8% in November from the previous year, reflecting strong consumer demand and a tight labor market. Indeed, the supply of labor is down: the civilian labor force is smaller by 2.4 million people, or 1.4%, compared to 4Q2019. So, the Law of Supply and Demand still works.
It is easy to get lost in mountains of BLS data – but here is a number that struck me: Nonfarm business sector labor productivity fell 5.2% in the 3Q of this year (output declined 1.8%, hours worked increased 7.4%), which is the largest quarterly decline in since the 2Q of 1960.
All these numbers portend a real challenge for big and small businesses in 2022 to increase profits faster than revenue – how to manage rising labor costs, a shortage of workers, and slipping productivity. We expect big increases in labor costs in 2022 along with product price increases, which will propel inflation. More on what this means next week.
Bob Jones
YOUR VIEW
Last week we asked about productivity and working from home. To no one’s surprise, most respondents (85%) said that they had worked from home a significant portion of last year. 63% of those felt they were more productive at home than at the office; and half of those said they were significantly more productive. Just under 20% of respondents felt their productivity was either about the same or less productive. In contrast, the majority of those who didn’t work from home don’t believe that people are more productive working from home. Let’s hope those latter folks weren’t in management!
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