J.P. Morgan: US businesses may have to pay to entice workers back

J.P. Morgan: US businesses may have to pay to entice workers back

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US businesses look set for a difficult decision in the coming months – will they be forced to increase wages?

Not only are supply bottlenecks pushing up on their input costs but rehiring workers in some sectors appears to be difficult. With ongoing health concerns around returning to work, enhanced unemployment benefits and stimulus cheques, workers are not rushing back to the first job available. Usually, when businesses have found it this hard to fill jobs, wages often rise to tempt those workers into jobs. With the US economy reopening and consumers looking to spend the huge pot of savings they have accumulated, businesses will be scrambling to step up capacity. Those efforts appear likely to result in higher wages – and potentially higher selling prices – at least until the boost to unemployment benefits is taken away.

NFIB survey, % of firms (three-month moving average)

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Source: NFIB, Refinitiv Datastream, J.P. Morgan Asset Management. Data as of 23 April 2021.