There's a 'blue-collar wave' taking place in America — but it may not last

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There's a 'blue-collar wave' taking place in America — but it may not last

  • Firms are having a more difficult time finding blue-collar workers than white-collar workers.
  • The shortage is expected to continue to put upward pressure on wages for blue-collared workers.
  • But economists say a tight labor market could incentivize companies to shift toward automation in attempt to reduce costs, lessening the demand for manual labor. 



Reversing a longstanding trend in the American labor market, companies are having a harder time filling openings for manual-labor positions than those for white-collar jobs.

As the unemployment rate remains at multidecade lows, labor shortages have emerged across the economy. That's been particularly the case for blue-collar industries that are also facing critical shifts in demographic and educational trends.

Hiring in transportation, manufacturing, construction, and mining grew twice as fast as other private sector employment this year, Wells Fargo said in a research note titled "Riding the Blue-Collar Wave." The shortage is expected to continue to put upward pressure on wages in the sector, according to a recent report by the Conference Board, a business research group based in New York.



"In certain instances, companies looking to attract enough blue-collar workers will have to continue increasing wages and, as a result, possibly experience diminished profits," said Gad Levanon, lead report author and the Conference Board’s chief economist. "But the picture looks very different for the workers themselves."

One apparent reason for the shortage is shifting levels of education within the workforce. The group of working-age individuals with a bachelor's degree has grown, while the number of those without one has fallen.

"While figures on wealth and saving mask some of the income disparity that has been a flash point this cycle, the jobs market suggests that the tide has shifted in favor of those at the lower end of the earnings ladder," Wells Fargo analysts wrote in a recent research note.

In some ways, however, economists say a booming blue-collar job market could become self-defeating. With fewer workers available and increasing pressure on wages, firms may eventually turn to robotics and automation in order to save costs.

"All these sorts of activities will combine to lessen the relative demand for traditional blue collar jobs, but increase the demand for those jobs that are more highly trained, with computing and other technical skills," said Michael Hicks, a labor economist at Ball State University in Indiana.

It doesn't help that the economy is expected to lose steam over the next couple of years, a situation Hicks noted would likely bite workers in manufacturing and home construction first. 

"Blue collar jobs aren't dead, but they are changing profoundly," he said. "The future for folks with a high school degree only is dismal."

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