03/29/2024

Beige Book – May 31, 2017

(Federal Reserve Bank of San Francisco) Employment and Wages On balance, the labor market tightened further, and contacts reported continued moderate wage gains. In the technology, financial services, and health-care sectors, demand for skilled information technology (IT) labor remained strong, pushing up wages for those workers. Contacts in the hotel industry noted widespread strong upward wage pressure for all positions, with one contact reporting plans to raise workers’ wages.

Recent changes in immigration policy created substantial labor supply shortages for low-skilled workers in the agriculture sector; as a consequence, some growers discarded portions of their harvest. Several contacts observed that applicants for some low-skilled positions did not meet the minimum job requirements or were unable to pass pre-employment screenings such as drug tests. Cost pressures in the steel industry resulted in employment reductions and slowed wage growth.

Prices Overall, price growth was steady over the reporting period. Electricity prices expanded at a moderate pace. Prices for branded and generic pharmaceuticals continued to increase more slowly than in previous years. Competitive pressures pushed down prices for cloud computing services and data storage. Price growth in the apparel industry declined, as consumers continued a long-run shift from designer products towards lower-priced substitutes. Contacts in the restaurant industry reported that increased labor costs via minimum wage increases were passed along to consumers.

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