Recently, some US real estate companies have relaxed their hiring rules, allowing convicted criminals to take on certain ‘skilled labour’ jobs, which would allow the builders meet their output goals in the tight market.
Arizona-based construction company Erickson Cos hired about 30 convicted criminals out of prison within the past 12 months to build new homes as the firm did not want to lose potential profits amidst the high market demand for housing in the local submarket. Typically, it is rather hard for former inmates to find a job, but the lack of skilled and general labour workforce provides vast work opportunities for those willing to utilise their abilities.
Albeit raiising some security and product quality concerns, the hiring practices of many US employers are becoming increasingly atypical. The tightening immigration control makes it harder to pick from the pool of international workforce, but the main problem is the low labour participation rate.
“While the unemployment rate and other labor utilization measures signal an economy at full employment, wage growth has been weaker than expected recently… The cohort that came of age during the Great Recession (faces) the pronounced and long-lasting effects of recessions on young workers,” Goldman analysts wrote.
One of the reasons issue hampering US labour participation is the actual decline in initial pay for the youngest workers. What most entry-level positions are offering is barely above the minimum pay levels across many states, rendering formal education and the related expenses, such as student loans and costs of their servicing, and time investment, almost unnecessary, from the worker compensation perspective.
Moreover, the minimum wage environment has put significant pressure of America’s decimated working class. Whilst college graduates are facing almost the minimum pay wages when entering the labour market, skilled labour is almost completely unfeasible from the personal finance viewpoint, as across the categories of entry-level white collar, blue collar, and unqualified labour, the level of pay is almost the same.
Moreover, according to the data from Labor Department and Goldman Sachs Global Investment Research, average weekly earnings of the young workers are currently 95.5 percent of those in year 2006. The measure peaked at 102.5 percent in 2008, ahead of the economic meltdown, and hit the rock bottom in 2013-2014 at 94.5 percent. However, three years ago, a large amount of disincentivised workers was not a big problem due to the still high unemployment.
In such a situation, US employers are naturally willing to employ whoever they can find.
Yet, as Goldman analysts pointed out, in year 1981, after the late 1970s recession, young US workers demonstrated an actual increase in labour participation as new job opportunities started to re-emerge.
“The 1981 cohort saw a massive surge in employment despite suffering the greatest wage decline of any of the recessionary periods for the past 35 years, and nearly double the experience of the 2008 recession,” Goldman analysts wrote.
The current US labour market dynamics suggest that there are apparently less and less people willing to take on the traditional job roles. The nascent ‘gig economy’ is partially to blame for it, with driving with Uber being a prominent example. Yet, the wealth accumulation of the past generation and the relaxed work ethic standards have unlocked another option: an increasing amount of young Americans are not forced out of their parents’ home, and thus aren’t facing the acute necessity of making ends meet on a daily basis.