President of MPLS Fed Calls Labor Shortage 'Overblown'
There is one constant as a franchise business reporter—every category, brand and franchisee struggles to find high-quality employees. With no macro data points suggesting this labor logjam is set to break, the president and CEO of the Federal Reserve Bank of Minneapolis, Neel Kashkari, shared his blunt assessment that labor shortages in his district are “overblown” during an interview in the Business Journal.
Kashkari was talking specifically about business conditions in Minnesota, but his national influence and the widespread nature of labor concerns, I wanted to share some of his thoughts on an important national topic that is often overlooked by more immediate concerns like wildfires, hurricanes and political gridlock.
Asked specifically how big an issue labor conditions are, he replied “I think it’s overblown. Most businesses say we can’t find workers. I ask if they’re raising wages. They say no or not much.” Before grabbing your pitchfork, I invite you to hear out his larger argument.
“If they can’t find workers at wages they were used to paying, they declare a labor shortage,” Kashkari said. “I don’t see a widespread labor shortage, I see businesses not wanting to raises wages across all sectors. I’ll believe there is a labor shortage when I see wages increase and companies still have trouble finding workers—until then it’s just talk.”
Kashkari added that many businesses are afraid to pass increased costs onto their customers, but said if everyone is facing the same price pressures, customers will have no choice but to adapt, noting that it’s “not just a Twin Cities problem.”
While the Fight for $15 and other more localized wage increase movements have received plenty of airtime, nuanced discussions of economic policy are few and far between. There is no denying historical charts showing the wage stagnation that’s occurred since the late 1970s. He also noted that entry-level workers, especially in retail and fast food, are seeing higher gains than average, which he said is a great trend.
In my own interviews with franchisees and franchisors alike, there is no denying the genuine wishes to pay workers more—or the personal challenges business owners face when employees leave for greener pastures or applicants fail to pass muster. This is real human misery from folks who pride themselves on creating good jobs. This topic is eventually going to need a national airing out if conditions don’t improve, especially in the building trades and other labor-intensive fields that are just as critical as they ever were.
As a one-time econ minor, I remember the laws of supply and demand well. As a reporter with 15 years under my belt, I know the human cost that’s imposed both by stagnant wages and business owners who are struggling to keep the wheels turning.
I offer no substantive conclusions but think it’s worth elevating this conversation whenever possible, both around the kitchen table and in headquarters across the country. We’re always going to need folks to do the hard and unglamorous work our society requires. The real question is: can we build business models that keep the required seats (and overalls and chef's aprons and cash registers) occupied? That, of course, remains to be seen.