An expanding national economy, labor shortages, supply chain obstacles and strong consumer spending across the board were all reflected in the Federal Reserve Bank’s June Beige Book, which reports on economic conditions by consulting with banks and businesses across 12 districts nationally. Missouri falls into two different Federal Reserve districts: St. Louis and Kansas City.
The St. Louis Federal Reserve district, which includes Springfield, Columbia and the eastern side of the state, has seen overall moderate growth since the last Beige Book report in mid-April, but one factor stands out above all: labor shortages.
St. Louis businesses are experiencing a sudden jump in demand for their products and services as the intensity of the COVID-19 pandemic abates in the U.S. and vaccination numbers increase. Product and material shortages have made it difficult for firms to keep up, and “supply chain issues also stemmed from labor shortages at suppliers’ facilities,” according to the report.
Wages in the St. Louis district have slightly increased, with starting pay on the rise in an attempt to attract new hires.
“One restaurant owner reported that raising his starting wage has drawn interest from prospective workers — when he can find any to talk to,” the Beige Book reports.
Another restaurateur, observing rather crummy staff morale, offered a $1,000 bonus to any employee who didn’t miss or arrive late to a shift; only one employee managed to do so.
“Now, all of a sudden, it’s a candidate market,” said Megan Usovsky, director of business development at the St. Louis office of recruiting firm Robert Half. “Candidates are now saying, ‘Look, I really want flexibility in my job. I want to work from the comfort of my own home.’”
Usovsky has noticed unemployment rates in legal, administrative, accounting and other sectors to be especially low.
So how, with such a dramatic worker shortage, are companies bringing on new employees?
“If you can allow candidates a flexible schedule, that’s one thing that I know has really sort of enticed candidates over,” Usovsky said.
That flexibility can be offered in the form of remote options, but in some cases it also means flexible hours or even flexible days.
The Kansas City Federal Reserve district, which includes Joplin and the western side of the state, reported “robust” expansion of manufacturing activity, with a majority of manufacturers seeing pre-pandemic order numbers. But some are struggling to keep up with the demand.
Nina Lee, a manager at the staffing firm Business Personnel Services in Lee’s Summit, has noticed a labor shortage for a while now. Although there has been some improvement, she worries that the benefits of current unemployment aid are higher than offered wages.
“They’re making more money staying at home than they would going to work,” Lee said.
Unemployed Missourians have been receiving supplemental federal aid during the pandemic, but Gov. Mike Parson set June 12 as the cutoff date for those extra benefits.
While some companies are offering slightly higher starting wages, Lee said others are instead offering eye-popping signing bonuses. One trucking company is offering a $9,000 bonus to new drivers in the Kansas City area.
Many other companies across the state are also offering bonuses between $500 and $1,500 in search of workers, largely in industrial and technical jobs, sectors seemingly hit the hardest by the current labor shortage.
June’s Beige Book also notes that “more than one-third of manufacturing and services contacts expected to raise wages by 4 percent or more at their firms.”