- The US labour market is the tightest it’s been in nearly five decades.
- Businesses are having a hard time finding workers.
- One restaurant in the Fed’s Richmond district “moved to counter service and disposable utensils” to stay open with a smaller staff, the Federal Reserve’s Beige Book showed Wednesday.
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A tight labour market takes on many forms.
Some businesses like Target and Costco are raising their minimum wages to attract workers. Others are offering employees new perks. And one restaurant in the Fed’s Richmond district had to start throwing away its forks and knives.
“A few hospitality contacts said that labour shortages led to cutting back on services,” the Federal Reserve Bank of Richmond said Wednesday in the latest Beige Book report, which details business sentiment and economic conditions on a local level.
“Moreover, one restaurant moved to counter service and disposable utensils in order to remain open with a smaller staff.”
That anecdote, from a restaurant in the Fed’s fifth district, highlights the lengths to which businesses are going to stay competitive amid ultra-low unemployment in the US. The unemployment rate in April fell to 3.6%, its lowest level since December 1969. It’s expected to dip to 3.5% when the latest employment report is released on Friday, according to economists surveyed by Bloomberg.
The Federal Reserve branch also noted several restaurants in Charleston, South Carolina, “closed because they couldn’t find enough staff.”
Other Fed branches reported similar findings.
The St. Louis Fed said that while commercial construction activity “improved slightly,” local contacts continued to report labour shortages.
Meanwhile, the Federal Reserve Bank of Kansas City said that a “majority” of its contacts continued reporting labour shortages for low- and medium-skill workers.
“A few respondents also noted shortages in high-skill occupations such as physicians, pilots, accountants, and IT professionals,” the Kansas City Fed said, adding it expects wages to rise.
More broadly, the Beige Book’s national summary painted a relatively healthy economic picture. But labour shortages remained a sweeping issue, with competition boosting wages across industries.
“Solid hiring demand was noted for retail, business services, technical, manufacturing, and construction jobs and by staffing agencies in general,” the Fed said. “However, stronger employment growth continued to be constrained by tight labour markets, with Districts citing shortages of both high- and low-skill workers.”
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