The mining and software industries have at least one thing in common. A labor scarcity, or a shortage of skilled workers, could affect the profit margins for both of them, according to a report issued by Fitch Ratings Tuesday afternoon.
“Investors would be well served to identify companies in sectors confronting tight and/or fragmented labor supply,” the report reads. These sectors include technology, natural resources (such as oil and gas, or mining), and unionized industries like autos and airlines, the report claims.
The inability of certain sectors to find appropriately skilled workers would indicate some level of structural unemployment, an economic scenario in which joblessness remains high because of a mismatch between laborer skills and employer needs, rather than a lack of consumer demand.
Under these conditions, the report warns, labor inflation in these certain sectors could result in reduced output and lower profits for employers.
However, the situation, specific to a small number of industries, might be masked by the overall national unemployment rate, currently stuck at 9.1 percent, according to the report.
The Fitch report cites mining as one sector where a modest labor force and heavy union activity could push wages higher. The report notes there were 23,000 mining and natural resource job openings in May. According to the Bureau of Labor Statistics, though, mining has added 115,000 jobs since October 2009, including 7,000 new jobs in May of this year.
Another industry to watch is shale drilling, according to the report. Since different kinds of shale can vary so widely, skilled laborers in this area have highly specialized knowledge, which makes them “not fully interchangeable,” in Fitch’s phrasing.
Shale drilling is undoubtedly a dynamic industry; it’s been reported that between the fourth quarter of 2009 and the first quarter of 2011, 72,000 people got hired as a result of drilling in the Appalachian-area Marcellus Shale rock formation. However, there were only about 9,300 new jobs created, according to The Wall Street Journal, and the positive impact of the drilling on local communities is a matter of some debate.
A third industry that could be affected by labor shortages, according to the Fitch report, is the tech sector, where companies are being forced to lay out more and more generous stock options in order to attract the best talent.
In the past year and a half, numerous sources have reported that skilled labor is harder to come by, more or less across the board. Manufacturing, tech, construction, accounting, and farming are among the sectors where the available jobs reportedly outnumber the qualified workers.
While the Fitch report concludes that “broad based inflation may not be an immediate threat,” given the enervated state of the U.S. economy, it adds that “localized inflation pressures may have meaningful impacts on margins and project timetables in select industries.”
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