Mcdon­ald’s su­per­sizes its wages as US strug­gles with a self-in­flicted labour cri­sis

The ad­min­is­tra­tion’s anti-im­mi­gra­tion rhetoric could be driv­ing work­ers away as jobs be­come harder to fill, re­ports David Mill­ward

The Sunday Telegraph - Money & Business - - Business -

It is a good time to be serv­ing fast food in south­ern Maine, at least judg­ing by the il­lu­mi­nated sign out­side a branch of Mcdon­ald’s on Route 1 in Wells. The wages on of­fer have been creep­ing up. At one point the branch was of­fer­ing $9 (£6.89) an hour, al­ready above the min­i­mum wage, but in re­cent weeks this has crept up to $12 – or to quote the sign ex­actly “$12!!!”

With unem­ploy­ment cur­rently run­ning at 4.4pc, the US is fac­ing labour short­ages in a num­ber of key sec­tors, es­pe­cially hos­pi­tal­ity, agri­cul­ture and tech­nol­ogy. Alarm bells have started ring­ing.

The prob­lem of find­ing work­ers is be­ing felt across the econ­omy, ac­cord­ing to Pro­fes­sor Bill Kerr of Har­vard Busi­ness School: “Em­ploy­ers are find­ing it harder to fill va­can­cies than ever be­fore.”

The po­lit­i­cal back­drop is not help­ing the sit­u­a­tion. Even with­out changes to the ar­ray of visas that are made avail­able to bring work­ers into the coun­try, the ad­min­is­tra­tion’s anti-im­mi­gra­tion rhetoric and travel bans could be driv­ing some peo­ple away. Restau­rants are des­per­ate for staff and are hav­ing to dig deep to at­tract them. Farm­ers in Cal­i­for­nia are strug­gling to find enough im­mi­grants to fill an es­ti­mated half a mil­lion labour­ing jobs. Fish­eries are short of work­ers, as are some fac­to­ries. Ar­guably the great­est dif­fi­cul­ties are in the tourism sec­tor where work­ers are in par­tic­u­larly short sup­ply.

The fig­ures from the Bureau of Labour Statis­tics are pretty telling. In Au­gust 2015, there were 663,000 va­can­cies in the ho­tel and restau­rant in­dus­try. Two years later this had jumped to 762,000. Ac­cord­ing to the lat­est pro­jec­tions, this will soar to 1.2m in 2026. The hos­pi­tal­ity busi­ness re­lies heav­ily on H2B visas to bring in the sea­sonal work­ers needed. Even Don­ald Trump uses the pro­gramme at his Mar a Lago re­sort in Florida.

In March, the na­tional cap of 66,000 visas was ex­hausted. If that was not bad enough, a pro­vi­sion which ex­empted re­turn­ing work­ers from be­ing in­cluded in that cap was scrapped. It left em­ploy­ers scram­bling for 15,000 new visas which were granted by the ad­min­is­tra­tion, ar­guably too late to be of any use for the sum­mer sea­son. “Restau­rants can’t get enough help and they can’t keep staff. Some are even of­fer­ing re­ten­tion bonuses. We are talk­ing about ev­ery­thing from man­agers to line op­tions,” says Dan Sum­ner, pro­fes­sor in the De­part­ment of Agri­cul­tural and Re­source Eco­nom­ics at the Univer­sity of Cal­i­for­nia, Davis.

One anal­y­sis showed farm wages ris­ing 13pc over five years in Cal­i­for­nia. Work­ers are now be­ing of­fered ad­di­tional ben­e­fits in­clud­ing health in­sur­ance and sav­ings plans. Farm­ers re­ally have lit­tle al­ter­na­tive if they want to avoid crops rot­ting be­fore they can be picked.

At the top end of the labour mar­ket, hi-tech firms are chaf­ing at the dif­fi­cul­ties they are fac­ing hir­ing skilled work­ers from over­seas, es­pe­cially since the Trump ad­min­is­tra­tion started im­pos­ing curbs on H1B visas. This is par­tic­u­larly an is­sue in the com­puter in­dus­try. Fig­ures from the Na­tional Cen­tre for Ed­u­ca­tion Statis­tics show that the US is not pro­duc­ing enough grad­u­ates to meet the coun­try’s needs.

More than 70pc of H1B visas went to In­di­ans in com­puter sci­ence and IT over the last decade. But they are not com­ing in the same num­bers; the lat­est fig­ures show a 31pc drop over the past year from In­dian job seek­ers. Equally alarm­ingly, the num­ber of In­di­ans look­ing for jobs back home is ris­ing sharply.

Ini­tially there had been some op­ti­mism that Trump’s re­view of the pro­gramme would not be par­tic­u­larly dam­ag­ing, es­pe­cially af­ter the then pres­i­dent elect had his ear bent by the big hi-tech play­ers. For ex­am­ple, Satya Nadella, Mi­crosoft’s chief ex­ec­u­tive, wel­comed the planned re­view, say­ing that it would stamp out abuses. But there are some in­di­ca­tions that this op­ti­mism has been mis­placed with the US mak­ing it harder to re­new H1B visas – along with the L1, which is also pop­u­lar with In­dian hi-tech work­ers.

At a meet­ing with the ad­min­is­tra­tion ear­lier this month, Suresh Prabhu, an In­dian govern­ment min­is­ter, warned that the US would be the ul­ti­mate loser. “We ex­plained to them that we are not rais­ing this is­sue be­cause In­di­ans will find it dif­fi­cult to come, but be­cause the US econ­omy it­self will find it dif­fi­cult to cope with the re­al­ity be­cause the US has im­mensely ben­e­fited by IT pro­fes­sion­als pen­e­trat­ing into the mar­ket, of­fer­ing ser­vices that has im­proved their pro­duc­tiv­ity.”

His warn­ing is echoed by Prof Kerr: “There is a con­cern whether the US is a wel­com­ing coun­try. Peo­ple are shy­ing away when they think about where they want to spend the next 10 years of their life or build a com­pany.”

Ul­ti­mately, the big ques­tion across the en­tire econ­omy is whether the Trump ad­min­is­tra­tion’s “buy Amer­i­can, hire Amer­i­can” pol­icy is re­ally vi­able, given ma­jor de­mo­graphic changes in the US.

“Pop­u­la­tion growth is slow­ing in Amer­ica and you are los­ing the peo­ple needed to ser­vice an age­ing pop­u­la­tion,” says James Mccann, se­nior global econ­o­mist at Aberdeen Stan­dard In­vest­ments.

“If there are sig­nif­i­cant changes in im­mi­gra­tion pol­icy, there could be a long-term prob­lem for the US.”

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