The spring labor shortage will push wages up 3% before settling, Goldman says

  • Date: 14-May-2021
  • Source: Business Insider
  • Sector:Economy
  • Country:Middle East
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The spring labor shortage will push wages up 3% before settling, Goldman says

Last week's was much weaker than expected, adding only 266,000 jobs to the market when economists predicted 1 million. This was accompanied by stronger-than-expected wage growth in a labor market that is unexpectedly tight, which Goldman Sachs attributes to generous unemployment benefits and concerns returning to work. The team led by Jan Hatzius, the bank's chief economist, predicted these factors will cause wages to increase in the short term but shouldn't be a long-term concern. Goldman's note found that the spring labor shortage will push wage growth to 3.3% in the near term, before fading. "We expect these supply constraints to keep labor markets somewhat tight and push up wage growth in the near term, but to fade in the coming months and disappear in September, when most schools will have fully reopened, widespread vaccination will have dramatically reduced perceived health risk, and the $300 federal UI payments will have expired," the report said. The labor shortage is putting pressure on wages as low-income workers have been saying their reservation wage, or the lowest wage they would accept for a new job, has increased by 21% since the fall, according to Goldman. recently raised its minimum wage to $16 an