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August 01, 2018


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There is a lot of guessing going on right now as to why wages are not dramatically increasing. Here is what we really see in the search business:

1 The July number is likely skewed by the Toys R Us closings.

2 The American worker figure is still effected by the huge 50% decrease over 10 years in the number of single family homes being constructed. Until that number of houses begins to dramatically increase the skilled laborers (blue collar and Hispanic) will not put pressure on wages. The truth is that this 10 year decline preceded by 30 years of illegal immigration have killed the wage pressure on the millions of laborers who built houses. The move of the higher skilled workers into house repair and expansion businesses has put them in positions where they are secure and not ready to return to the lower security residential building market. Throughout the lives of the baby boomers residential real estate was the foundation of the economy slowly replacing manufacturing as the place the blue collar workers could earn $50k plus. And, an industry that was not invaded by the women who entered the workforce. Now baby boomers are retiring at 10000 a day. The skilled workers are disappearing. Fewer are being trained (training in supervisory positions is basically experience). We can place, for higher money, all the estimators, project managers, superintendents we can find. At the C suite level it is even worse. Wages are beginning to increase dramatically. But it takes time. We have only seen the economy accelerate for about 6 months.

3. Right now people working 2-3 jobs are moving to 1 job. They are trading off income for benefits. Benefits become the pay raise. If you go from 2-3 1099 jobs to 1 w-2 job with benefits /Social security you don’t get a big raise.

4. Major corporations are taking advantage of the retirement of baby boomers at the higher end of the wage scale to promote others at lower wages and hire on the low end. The net effect is less cost of benefits and lower average compensation.

5. There are still a lot of skilled workers who will trade their 2-3 jobs for 1 once employers become more desperate. And, they are beginning to do so.

6. The rising real estate prices will eventually allow more workers to relocate. For many years they have been frozen in place.

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