For blue-collar America, staffing firms see meager wage gains

Thu Feb 5, 2015 3:37pm EST
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By Jason Lange

WASHINGTON (Reuters) - America's vast staffing industry knows it's time to jack up wages when it becomes difficult to find enough workers. That isn't happening yet for many blue-collar jobs, indicating there's still slack in the labor force, top firms say.

While 2014 was the strongest year of job gains in the recovery from the 2007-09 recession, rising output is not yet translating into substantial wage gains for the workers Kelly Services (KELYA.O: Quote), one of the country's largest providers of temporary employees, sends to light assembly plants and distribution centers.

Data due for release on Friday is likely to show that the rate of hiring fell to 234,000 in January, compared with 252,000 in December, according to economists polled by Reuters.

"The supply of unskilled labor is still pretty plentiful," said Kelly's Chief Operations Officer George Corona.

Rising demand for labor on the back of a stronger domestic economy helped drive a 7 percent gain in Kelly's fourth quarter U.S. revenues from services, up from 3.6 percent in the third quarter.

Wages in the U.S. private sector rose 2 percent last year, roughly the average annual gain seen since the country emerged from recession. Before the downturn, wages were rising around 3 percent or 4 percent a year.

Even for occupations that typically require a college degree, like engineers and lawyers, salaries still aren't rising as quickly as they would in a tight labor market, Keith Waddell, the chief financial officer at staffing firm Robert Half RHI.N, said in a call with analysts on Jan 29.

Robert Half, which primarily places professionals and reported a 14 percent increase in U.S. staffing revenues in the fourth quarter, has seen been seeing wage gains just above 3 percent. It expects increases closer to 6 percent when the labor market tightens.   Continued...

A man fills out paperwork before a screening session for seasonal jobs at Coney Island in the Brooklyn borough of New York March 4, 2014.  REUTERS/Shannon Stapleton