In Search Of Bigger Paychecks

- Steve Matthews, Matthew Boesler, and Jeanna Smialek

America’s labor market is a jigsaw puzzle whose pieces don’t quite fit together.

Unemployment has plummeted to 3.9 percent, the lowest level since the early 2000s. Earnings calls are replete with chief executive officers bemoaning employee shortages. Small businesses are also feeling the pinch: In a July survey by the National Federation of Independent Business, 37 percent of owners reported at least one vacancy, and more than half said there were few or no qualified candidates for the job.

Despite this, wages are creeping higher rather than making the robust gains a hot labor market ought to produce. Accounting for inflation, paychecks actually shrank in July. The disconnect has surprised Wall Street economists and Federal Reserve policymakers alike.

To shed some light on what may be holding down pay, we interviewed employers in three industries where wages remain low despite persistent reports of worker shortages— construction, long-haul trucking, and child care. In Tennessee one trucking company is having success in recruiting drivers with higher pay, hinting at a turning point in an industry where wage gains have lagged. Atlanta’s construction market, on the other hand, shows that raises can’t alleviate a shortage if there’s a dearth of qualified workers. The experience of a child-care center in Minnesota illustrates that slow wage gains in other industries can put a structural ceiling on pay in service- sector jobs.

Chasing Hard Hats in Atlanta

Homebuilders in the Atlanta metro area could finish 30,000 houses this year if they had enough hands to put them up, says Jim Brown, vice president of the Home Builders Association of Georgia. That’s 50 percent more than the actual pace.