May 27, 2021: According to Cole Smead, the labor shortage in the U.S. is slightly increasing wages for workers, causing a “democratization” of the workforce, and replacing the face of “class warfare,” according to Cole Smead, the president of investment advisory firm Smead Capital Management.
Despite the U.S. labor force participation rate remaining less than the pre-pandemic levels, with nonfarm payrolls of April growing by just 266,000 against forecasts of 1 million, workers’ salaries have increased at their sharpest speed in years new unemployment filings continue to decrease.
McDonald’s, Chipotle, Bank of America, and Under Armour are among the companies to have vowed increases to a minimum and average wages within the past few weeks, as companies are forced to up their wage offerings to attract prospective employees.
The labor shortage after the pandemic, attributed partly to a lack of qualified workers, Covid-related reluctance to return to work, and the continuation of unemployment benefits because of the government stimulus, has shifted the sands after growing wealth disparity.
“In effect, we’re short labor, and that’s why the price of labor is climbing. We haven’t seen this in so long, and that is why people are confounded, and it is going straight to the mouths of people on the lower end of the income bracket; it is not helping the CEOs,” Smead told CNBC on Wednesday.
On Tuesday, Tilman Fertitta, CEO of hospitality and gambling empire Landry’s, told CNBC that while his businesses were busier than ever, the weekly stimulus checks of the government are “killing” companies when it comes to finding the workers.
“Everybody’s getting the extra $300, people who do not work so they are going out, and have dinner, and go to the casinos, but at the moment I can’t find employees, they spend all the money with me,” Fertitta said.
“We are truly struggling, and that is what is causing a lot of your inflation right now; you don’t have the workers. You have to slaughter 660,000 cows for a week to keep up, and if you only slaughter 620 or 630, that is why beef is up. Everything is up, every product there is.”
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