While the low figure is a reason to be optimistic about the economy, it’s also a growing source of anxiety for businesses. According to the J.P. Morgan Chase 2018 Business Leaders Outlook, an increasing percentage of business leaders are worried about finding workers to “support anticipated sales growth.”
About 54% of executives from middle market companies who took the survey said they consider the limited supply of talent their top challenge this year, up ten percentage points from a year earlier.
“You would expect when unemployment is this low, people are going to have to work harder to find folks to train,” said Jim Glassman, head economist for commercial banking at J.P. Morgan. “It’s making companies work harder to find people, working to retain them.”
Some 1,685 senior executives took the survey between Jan. 2 to Jan. 19.
While the shortage of skilled applicants likely won’t cut into corporate earnings, it may frustrate businesses seeking to grow faster in the current era of tax cuts and deregulation. Based on the survey, more businesses are planning to staff up, and, likely in a bid to retain workers, also increase compensation.
According to the J.P. Morgan survey, 64% of business people surveyed plan to increase full-time personnel, and 76% say they plan to boost compensation.
Business worries about staffing come not only amid a global economic recovery—but also as skilled boomers seek to retire, giving way to less experienced millennials. And its not so easy to find workers to fill a role requiring skills that take a lifetime to build.
On the bright side, says Glassman, the tax cuts do take a load off of businesses, as the extra funds allow them to try and attract, and keep, talented workers.
“The reduction of taxes is giving businesses more time to focus on the issue,” he said. Some 33% of companies that expect to see benefits from lower corporate taxes, for instance, say they expect to redirect some of those savings into higher wages.
And in general, these businesses are more optimistic than before—with 69% saying they’re optimistic about the global economy, up 39 percentage points from a year earlier.
“The fact that [businesses] are complaining we should view as a positive sign. We are going to be in a better spot,” Glassman said.