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AP / Beth J. Harpaz
A tight labor market takes many forms.
Some companies such as Target and Costco increase their minimum wage to attract workers. Others offer new benefits to employees. And a restaurant in the Richmond district of the Fed had to start throwing his forks and knives.
"Some contacts in the hospitality industry have said that the shortage of manpower has resulted in a reduction of services," said the Federal Reserve Bank on Wednesday in the latest report of the Beige Book, which details the business climate and the economic situation at the local level.
"In addition, a restaurant moved to a counter service and disposable utensils to stay open with a small staff," he added.
This anecdote, from a restaurant in the fifth district of the Fed, highlights the ability of companies to remain competitive in the face of an extremely low unemployment rate in the United States. April unemployment rate fell to 3.6%, its lowest level since December 1969. According to economists surveyed by Bloomberg, it is expected to drop to 3.5% on the release of the latest employment report on Friday.
The Federal Reserve branch also said that several restaurants in Charleston, South Carolina, "closed because they could not find enough staff."
Read more: Employment report breaks expectations and unemployment reaches 49-year low
Other Fed agencies have reported similar results.
The St. Louis Fed said that although the commercial construction activity "has slightly improved," local contacts continued to report labor shortages.
At the same time, the US Federal Reserve Kansas City said that a "majority" of its contacts continued to report shortages of skilled labor.
"A few respondents also noted shortages in highly skilled occupations such as doctors, pilots, accountants and IT professionals," the Kansas City Fed said, adding that wages would rise.
More generally, the national summary of the Beige Book painted a relatively healthy economic picture. However, labor shortages remained a major problem as competition led to higher wages in all sectors.
"A strong demand for hiring was found in the retail, business services, technology, manufacturing and construction sectors, as well as in recruitment agencies in general", said the Fed. "However, contraction in labor markets has continued to dampen sustained job growth, with districts citing shortages of highly skilled and low-skilled workers."
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