US ECONOMY’S MODERATE EXPANSION SLOWS; COVID SURGE RAISES CONCERNS INCLUDING LABOR SUPPLY CHALLENGES

Dec 21, 2020

While the US economy has continued a moderate expansion, economic activity began to slow in early November as COVID-19 cases surged, according to the US Federal Reserve’s Beige Book report. Businesses cited concerns over the pandemic and mandated restrictions.

Employment has also been on the rise, according to the report. Still, some businesses contacted for the report indicated the sharp rise in COVID-19 cases has aggravated labor supply concerns — including absenteeism and attrition — as more schools and plants close amid renewed fears of infection.

At the same time, some staffing firms contacted for the report pointed to greater placement success with competitive rates; one firm instituted a minimum wage rate for its industrial clients.

Districts were impacted differently.

  • In the Boston district, some staffing firms cited challenges with the labor supply. Reasons included lack of access to daycare and school, worries about contracting COVID-19, mandatory 14-day quarantines and potential further shutdowns. Some Boston district staffing firms also noted bill and pay rates have gone up during the pandemic, although a number reported rates had begun reversing themselves to pre-pandemic levels.
  • Meanwhile, in the New York district, a staffing firm in New York City reported hiring has been moribund, although it hopes for a pickup in late 2021. On the other hand, a staffing firm in upstate New York indicated scattered signs of a pickup in hiring, especially for lower-wage workers.
  • The Philadelphia district reported that it found the sharp rise in COVID-19 is disrupting economic activity. When unemployment benefits and moratoriums on evictions and foreclosures expire, some fear there will be an avalanche of bankruptcies among small and medium-sized firms. Staffing firm contacts in the Philadelphia district noted that business remained below pre-pandemic levels. Still, most firms noted more openings than candidates. However, firms seeking low-wage workers must compete with warehouses that are using billboards to advertise jobs at $15 per hour and higher.
  • Companies in the Cleveland district generally had no trouble finding workers for office jobs, but recruitment was still a challenge for many manufacturing, construction, retail and transportation companies. The difficulty remains despite the lapse supplemental in unemployment benefits.
Source: Staffing Industry Analysts

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