Labor Shortages Seen Likely to Boost Salaries

NEW YORK —  Widespread labor shortages and higher inflation will increase pressure on U.S. employers to raise salaries and benefits in 1989, according to the Conference Board.

The business-financed research group said today that its panel of 10 business and human resources experts predicted that private industry wages and benefits would grow 5% next year, up from 3.7% in the year ended this September.

That’s compared to expected inflation of 5% next year, which would be up from the current annual rate of 4.2% for 1988.

“Six full years of economic recovery have produced the tightest labor market in decades,” said Audrey Freedman, the Conference Board management counselor. “Business seems to have reached the edge of the population’s capacity to produce additional trained workers.

“Employers are staffing their operations with greater difficulty and at rising cost,” she said.

Worsening Situation

Panelists indicated that many employers would attempt to deal with labor shortages by increasing productivity, creating entirely new jobs and tapping the continuing growth in the number of women workers.

The panelists stated that labor shortages next year would continue to be the worst in such major metropolitan areas as Boston, Los Angeles, Atlanta and northern New Jersey, and were spreading to growth areas such as Greensboro, N.C., and Richmond, Va.

“It is often difficult to fill secretarial and clerical positions in downtown areas, such as Los Angeles, due to less-than-attractive commuting situations and the high costs of parking, food and dress,” said Irving Margol, executive vice president of Security National Bank in Los Angeles.

“Thus, ‘stealing’ efficient secretaries occurs not only between companies but also within companies,” he said.

The panel also indicated that there are shortages of highly skilled workers, including teachers, nurses and other licensed health-care workers, in many regions.

Supply of Beginners Depleted

Some of the nation’s greatest labor shortages were in the category of entry level, lower-paid jobs that are staffed largely by 16 to 24 year olds with no formal training or experience, the Conference Board said. However, the proportion of 16 to 24 year olds in the work force is declining, while many of the 10 million new jobs created in the past five years have been entry level type positions.

“The rising and continuing demand for these workers have virtually exhausted the diminishing supply of employable people who are able and willing to accept work,” said Mitchell S. Fromstein, president of Manpower Inc., the Milwaukee-based temporary employment concern.

“This phenomenon was anticipated by demographers, economists and planners, yet has caught many major employers by surprise as it unfolds,” Fromstein said.