Holiday Hiring Is on a Tear, Signaling Wages Can Still Climb

(Bloomberg) -- The rising labor costs bedeviling corporate America are likely to linger for at least the next few months, as holiday hiring adds pressure to a labor market already grappling with pandemic-era challenges and resurgent worker unrest.

Employers like United Parcel Service Inc. and Walmart Inc. are seeking a record number of seasonal workers this year -- up 11% so far through October, according Challenger Gray & Christmas Inc. That’s the most since the firm began tracking plans in 2012. Retailer Nordstrom Inc. is on its first seasonal hiring binge since 2017, while education firm Chegg Inc. blamed the lure of Starbucks Corp.’s holiday wages for its brutal enrollment plunge.

Across the board, job switchers are getting higher wages, a factor Federal Reserve Chair Jerome Powell discussed during his Wednesday press conference. Companies like Amazon.com Inc. are making big workforce investments, allowing margins to suffer in the near term. Companies face epic shortages of truck drivers too, while Deere & Co. and Kellogg Co. have failed to resolve strikes.

Over the longer term, companies may respond by turning to more automation to replace humans -- think of car rental companies using automated checkout processes. The S&P 500 Index is now 70% more “labor-light” than it was during the 1980s, but the trend stalled in 2007, according to BofA strategist Savita Subramanian. Consumer and industrial companies stand to gain in particular if wage pressure were to spur more automation, she wrote in a note earlier this week.

(This was a post on Bloomberg’s Markets Live blog. The observations are those of the blogger and not intended as investment advice. For more markets analysis, go to MLIV.)

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