Ten years after the Financial Crisis, the United States economy is booming. Expansion in sectors such as logistics, manufacturing, and retail is leading to blue-collar job growth, a condition that creates headaches for management due to higher wages and worker shortages.

Impressive Growth

The year 2019 marked the United States economy’s tenth consecutive year of expansion. Adjacent to a full decade of rapid economic growth is the continuous expansion of the job market. For instance, November of 2019 saw nonfarm payrolls surge by 266,000, beating the expected creation of 187,000 new jobs. The unemployment rate dipped as low as 3.5%, marking a return to the lowest jobless rate since 1969.

Alongside this expansion was an increase in hourly pay rates. Economists expected a 3.0% increase in average hourly earnings from 2019—a prediction exceeded by the job market by 0.1%.

Menacing Shortage

Although high wage growth is fantastic news for hourly workers, the trend marks more negative tidings for employers.

The Conference Board—a nonprofit that publishes insights about the international economy—predicts that the labor market will continue to tighten in 2020. A recent blog post published by the group states that “while employment growth will somewhat moderate in 2020… the working-age population is barely growing and labor force participation rates are only slowly increasing.”

As a result, “employers hiring blue-collar and manual services workers will have a harder time recruiting and retaining current employees.” Combined with strong pay growth, low rates of entry into the blue-collar labor market will lead firms to compete for workers via wage hikes, improved benefits, and other perks.

A few days ago, the Wall Street Journal published findings that support the Conference Board’s assertions. They noted that half a million American factory jobs are vacant—a condition that has not been true for nearly twenty years.

Urgent Response

Executives across the country are scrambling to keep up with hiring demands.

For instance, the Wall Street Journal interviewed Michael Winn of Columbus Hydraulics Co., who stated that “we’ve had to get very aggressive with talent acquisition… we are having to draw people in from distant places.”

Because of high blue-collar job growth, most firms have indeed turned to raising wages. However, to truly stand out in the labor market, firms ought to rely upon non-wage factors. Gallup found that 78% of blue-collar worker churn has nothing to do with wages. Instead, employees quit because of avoidable factors, including slow career advancement, overwork, and lack of recognition from management.

In order to prevent vacant positions in 2020, employers must solve the qualitative issues facing every frontline workplace.

Learn how Qlicket has helped its customers boost employee retention through enhanced workplace communication solutions.

Read our 2019 blue-collar labor market analysis here.