Labor Compensation Up 5.3 Percent – Government Worker Shortage

The BLS released the employment cost index summary and it shows that the cost of labor is up 5.3 percent year over year.

Compensation costs for civilian workers increased 5.1 percent for the 12-month period ending in June 2022 and increased 2.9 percent in June 2021. Wages and salaries increased 5.3 percent for the 12-month period ending in June 2022 and increased 3.2 percent for the 12-month period ending in 
June 2021. Benefit costs increased 4.8 percent over the year and increased 2.2 percent for the 12-month period ending in June 2021. (See tables A, 4, 8, and 12.)

Interestingly, the labor cost of government workers only received a paltry 3.4 percent increase.

Compensation costs for state and local government workers increased 3.4 percent for the 12-month period ending in June 2022, compared with an increase of 2.0 percent in June 2021. Wages and salaries increased 3.2 percent for the 12-month period ending in June 2022 and 1.6 percent a year ago. Benefit costs increased 3.6 percent for the 12-month period ending in June 2022. The prior year increase was 2.6 percent.

The obvious extrapolation is that governments in the United States may begin to lose more workers to the private workforce if this trend continues given that the rate of inflation the past year has been a whopping 9 percent.

We’ve written about the impact of this already, in Touch Choices: Prison Guards or 911 Dispatchers, we noted shortages of prison guards and 911 dispatchers. In Demographics: 500,000 Less Teachers and Teacher Labor Shortage: Texas Poaching Arizona Teachers, we made the observation that teachers are leaving the workforce in droves. Across America, there is also a severe shortage of police staffing and the problem will likely only get worse.

From CNN:

Police departments from Atlanta to Kansas City to Portland are coping with critical staffing shortages and struggling to fill their ranks from patrol officers to 911 operators, as the warm weather historically portends bursts of violence in many parts of the United States.

CNN.COM

We are currently researching private security firms, private teaching and online learning and automation companies to profit from these shortages in the future. Stay tuned and stay solvent…