Friday, March 29, 2024
Homeus economyWage rises and labor shortage are a ‘democratization’ of U.S. workforce, fund...

Wage rises and labor shortage are a ‘democratization’ of U.S. workforce, fund manager says

  • While the U.S. labor force participation rate remains well below pre-pandemic levels, with April's nonfarm payrolls growing by just 266,000 against forecasts of 1 million, workers' wages have risen at their sharpest pace in years, and new unemployment filings continue to fall.
  • McDonald's, Chipotle, Bank of America and Under Armour are among the companies that have promised recently to increase minimum and average wages.

A hiring sign is displayed in a business window along a shopping street in lower Manhattan on July 05, 2019 in New York City.Spencer Platt | Getty Images

The U.S. labor shortage is lifting wages for workers and causing a "democratization" of the workforce and changing the face of "class warfare," according to Cole Smead, president of investment advisory firm Smead Capital Management.

While the U.S. labor force participation rate remains well below pre-pandemic levels, with April's nonfarm payrolls growing by just 266,000 against forecasts of 1 million, workers' wages have risen at their sharpest pace in years, and new unemployment filings continue to fall.

With companies forced to up their wage offerings in order to attract prospective employees, McDonald's, Chipotle, Bank of America and Under Armour are among those that have recently promised to raise minimum and average wages.

The labor shortage after the pandemic, attributed in part to a lack of qualified workers, Covid-related reluctance to return to work and the continuation of enhanced unemployment benefits due to government stimulus, has shifted the sands after decades of growing wealth disparity.

"In effect, we're short labor, and that's why the price of labor is climbing," Smead told CNBC's "Squawk Box Europe" on Wednesday. "We haven't seen this in so long, and that is why people are befuddled, and it is going straight to the mouths of people on the lower end of the income bracket, it is not helping the CEOs."

RELATED ARTICLES
- Advertisment -

Most Popular