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
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.”