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Everyone the Fed is talking to keeps saying 'wage pressure'
Businesses around America are going on about 'wage pressure.'
On Wednesday, the Federal Reserve released its latest beige book, filled with anecdotes from various business leaders and experts in its 12 districts.
Jeoff Hall at Thomson Reuters noted that the term "wage pressure" came up 18 times in the most recent beige book, versus 13 in the previous one, and 11 in June's release. Some of the anecdotes alluded to a shortage of skilled workers, or difficulties in retaining staff.
Here's how the Fed summarized its conversations on wages:
"Wages were relatively stable in most Districts, with slight to moderate increases since the last report. However, several Districts reported increasing wage pressures caused by labor market tightening. St. Louis reported almost three-fifths of responding firms had raised wages in the last three months. New York cited increased pressure on starting salaries, while Cleveland noted intensifying wage pressure in the construction, retail, and transportation sectors. San Francisco reported upward wage pressures for skilled workers in the IT, information security, and construction sectors. In the Kansas City District, wage growth slowed in many sectors despite selected labor shortages. Dallas noted flat wages, but also wage pressures for some specialty skills.
Anecdotes aside, actual wage growth has yet to manifest in the economy impressively. The latest employment cost index report showed that wages grew 0.2% in the second quarter, the slowest pace on record. In fact, the tepid pace of wage growth has been one of the most dismal aspects of the labor market, and of the economic recovery overall.
But, for now, the anecdotes contained in the beige book suggest that the opposite is something that lots of businesses around the country are talking to the Fed about, and perhaps, experiencing.
On Friday, the jobs report will shed more light on how wages grew, or contracted, in August.
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