The job market: No degree required

In many industries, blue-collar wages are on the upswing

May 31st 2014 | WASHINGTON, DC | 

FOUR years ago construction was still deep in recession. When Baker Triangle, a drywalling firm, put out word that it was hiring, applicants would be lining up outside the door the next day. Now it has to place an ad, and “I’m lucky if I get two or three people in the door,” moans Mike Sireno, a manager. He once looked for ten years’ experience; now, two or three years’ is a triumph, and he will happily hire workers “right out of high school with no experience whatsoever”.

Though still a shadow of its former size, construction is experiencing something it has not felt since the housing bubble peaked in 2006: labour shortages. Builders complain that they cannot find enough carpenters, labourers and estimators. It is too soon to call it a seller’s market, but wages are starting to respond. Mr Sireno reckons a commercial drywaller in southern Texas, where his company operates, could expect to earn $15-20 an hour a year ago. Now, that might be $18-25.

Workers without college degrees have for years seen their share of the economic pie shrink as the hyper-educated top 1% grab ever more. That long-run trend may still be intact; but for now, workers with dirt under their nails are staging a comeback. Besides construction, Nancy Lazar of Cornerstone Macro, an investment advisory firm, notes that wage growth has also accelerated in manufacturing, mining and logging, and transport. All these are industries where business activity is starting to grow faster than the overall economy, and all pay well. Ms Lazar says: “You are now entering a new cycle where higher-paying jobs are going to be a key component of the growth in employment.”

This may be why blue-collar pay is on an upswing. For the past two years hourly wages for all workers have grown at an annual rate of around 2%. But, excluding managers and supervisors, the growth of hourly wages for production workers has accelerated, to 2.3% in April from 1.5% in early 2012 (see chart). The gains are still too slight to pose an inflationary threat, especially since salaries in low-paid industries such as retail remain weak.

The unemployment rate for high-school graduates has actually fallen faster than for college graduates: by 4.4 versus 1.5 percentage points since 2010. However, it is still much higher, at 6.3% to 3.3%. And its fall owes less to red-hot demand than to falling supply, as many workers have left the labour force. Ken Simonson of the Associated General Contractors of America, a trade group for builders, notes that in the past four years the number of jobless construction workers has fallen by 1.1m, but only 40% of this is because jobless workers found jobs in construction. The remainder left for other industries, such as oil and gas, stopped looking, or retired.

Truckers are in short supply, too. The median driver is 47 years old; about 100 retire every day. Many companies would put more trucks on the road if they could find more drivers. Some offer signing bonuses of $1,000 to $3,000. Making pay attractive is only half the battle; the other half is finding candidates without criminal records, who can pass drugs tests and are ready to spend most of their life on the move. This is harder than it sounds.

The original article is linked here.

 

 

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