U.S. businesses paid sharply higher labor costs in the third quarter to produce their goods and services, reflecting higher worker pay and a slowdown in...
U.S. businesses paid sharply higher labor costs in the third quarter to produce their goods and services, reflecting higher worker pay and a slowdown in production tied to widespread bottlenecks in the economy.
Companies are paying higher salaries and benefits to attract new workers and hold onto to existing ones amid the biggest labor shortage in decades. The amount of wages and benefits paid to workers rose at a 2.9% pace in the third quarter. At the same time, businesses cannot get enough supplies on time to keep production going at full tilt. So even as hours worked increased 7% in the third quarter, output only increased 1.7%.
“Much of that reflects the impact of the delta variant,” said chief economist Scott Brown of Raymond James.Major shortages of labor and supplies are widely expected to ease over the next year as the U.S. and global economies return to normal. If so, production would likely speed up and wage increases would moderate.What’s less clear is what happens to productivity — the key to a higher standard of living.
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