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Beige Book says talent supply keeps getting smaller

June 01, 2017

The pool of available talent continued to shrink from early April through late May with most districts citing shortages across a broadening range of occupations and regions, according to the Federal Reserve’s Beige Book report released Wednesday. The Beige Book, a collection of observations from the 12 federal regional banks, provides a snapshot of current economic conditions.

Most firms across the districts noted little change to the recent trend of modest to moderate wage growth, although many firms reported offering higher wages to attract workers where shortages were most severe. For example, a manufacturing firm in the Chicago district reported attracting better applicants and improving retention for its unskilled workforce by raising wages 10%.

Observations by staffing firms include:

Boston: With one exception, staffing firm contacts reported revenue declines, mostly reflecting a dearth of applicants to fill their clients’ positions. Staffing firms continued to report strong labor demand and tight labor supply, singling out systems administrator, network engineer and medical assistant positions as particularly hard to fill. All contacted staffing firms indicated that bill and pay rates had increased, and all contacted staffing firms in New England saw revenues decline year over year for their temporary placements; one respondent saw an overall increase in revenue because of strong activity on the permanent placement side of the business. Although one firm recently lost a big client and seeks to broaden its listings, the revenue declines mostly reflect difficulty recruiting applicants. Firms are brainstorming and trying new ways of recruiting people to fill their clients’ jobs. Looking forward, staffing firms are not as optimistic as they were last quarter.

Philadelphia: Pennsylvania staffing firms have remained very busy since the start of the year. Contacts from staffing firms in labor markets with lower unemployment rates have noted greater wage pressure, while contacts operating in markets with higher unemployment rates report minimal wage pressure.

Cleveland: Staffing firms noted an increase in the number of job openings and placements during the past two months, a situation that they attributed to an improving business climate. Because of difficulties in attracting and retaining employees, companies are placing a greater emphasis on expanding benefits and work-life-balance initiatives, while at the same time increasing wages and salaries.

Chicago: A staffing firm that primarily supplies manufacturers with production workers reported an increase in billable hours after more than a year of little change.

Minneapolis: A Minnesota staffing contact said, “We can’t keep up. I have to say ‘no’ to clients regularly — there is strong demand from our clients for talent,” but a lack of available workers. A job fair in exurban Minneapolis-St. Paul saw employer booths sold out for the second straight year and a “much longer” wait list for booths. A job-fair contact in Missoula, Mont., said job openings were plentiful and employers were more anxious to fill openings, with some spot hiring.

Dallas: Staffing firms noted a surge in demand for white-collar workers in the oil and gas industry, and energy firms cited upward wage pressures, particularly for certain skills sets and experienced personnel. Leisure and hospitality contacts said they have not been able to fill many entry-level and seasonal positions due to a lower number and inferior quality of applicants compared with past years. Most staffing firms said demand increased since the last report, and all contacts noted that orders were up year over year. Staffing demand remained particularly strong in Dallas, and Houston saw an uptick as well, albeit a smaller one.