US firms may be hir­ing but lid on wages, in­vest­ment hits pro­duc­tiv­ity


As the Fed­eral Re­serve puzzles over what is hold­ing back U.S. wages and pro­duc­tiv­ity six years into the eco­nomic re­cov­ery, a pasta sauce com­pany in New Jersey may of­fer some an­swers.

Chel­ten House Prod­ucts makes pri­vate-la­bel sauces and dress­ings for high­end gro­cers such as Whole Foods, Trader Joe's and Kroger, and has dou­bled its work­force to 300 over the past five years to keep up with a boom­ing or­ganic food mar­ket.

Now it is strug­gling to hire not just skilled me­chan­ics or elec­tri­cians but even work­ers who han­dle the jars rolling down its con­veyer belts. Chel­ten CEO Steve Dabrow says fac­tory work is be­com­ing a harder sell with un­em­ploy­ment down at a seven-year low of 5.3 per­cent. "You're not sit­ting down, you're stand­ing on your feet all day, you're not tak­ing breaks, and bot­tles are fly­ing down the line," he said.

The Bridge­port, New Jersey, com­pany, which hired 60 peo­ple just last year, is not bid­ding up wages much for any­one save those with very spe­cial­ist skills be­cause, for now at least, it still man­ages to fill the va­can­cies. It has made some strate­gic cap­i­tal in­vest­ments, such as in a more au­to­mated new plant in Las Ve­gas in 2013, but has more re­cently fo­cused on ex­pand­ing by tak­ing on ad­di­tional work­ers.

Like other U.S. man­u­fac­tur­ers for whom the 2007-2009 re­ces­sion is fast­fad­ing, this com­pany's story of brisk hir­ing, lim­ited wage hikes, and some cap­i­tal in­vest­ment helps il­lus­trate why the other- wise mostly rosy U.S. la­bor mar­ket is marred by low wage growth and sink­ing pro­duc­tiv­ity.

In­ter­views with sev­eral heads of small and mid­size com­pa­nies, to­gether with re­sults from em­ployer sur­veys and data on la­bor costs, in­di­cate that while com­pa­nies are pre­pared to hire more work­ers, they do not feel the need to raise wages sig­nif­i­cantly or have the con­fi­dence in the econ­omy to make big cap­i­tal in­vest­ments. This is good for the job num­bers but it is re­strain­ing pro­duc­tiv­ity and eco­nomic growth.

Dabrow and man­agers at other U.S. man­u­fac­tur­ing com­pa­nies say they of­ten need to bring on work­ers who lack the ex­pe­ri­ence or ded­i­ca­tion of those hired in 2009, when U.S. un­em­ploy­ment peaked at 10 per­cent. -

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