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U.S. wage growth following the Covid-19 pandemic will be hampered as corporations look to cut costs by hiring remote workers in regions with lower salaries, ADP chief economist Nela Richardson told MNI.
"I would expect that wages will continue to be slow in terms of growth if companies can now delegate, on the basis of workers' living preferences, how much they're going to pay for that flexibility," she said in an interview.
Even before the pandemic, firms in wealthier areas of the U.S. were shifting work to states where wages and the cost of living are lower, Richardson said. "Companies can discriminate based on location, and I think that we might see more of that," she added.
The Biden administration late last month released its USD2 trillion infrastructure plan, with USD100 billion dedicated to expanding broadband access to all Americans. That may allow more workers in rural areas, where internet connectivity is often spotty, to participate in online work. The Fed has also committed to closing the gap on its maximum employment goal with a focus on a more inclusive recovery including the low-wage jobs hit hardest by the pandemic.
NEW JOBS NEEDED
Richardson said lower-wage jobs lost during the pandemic recession, which typically can't be done remotely, will likely need to be replaced by other jobs that aren't so tied to a physical location.
"Do we really want to fight that hard to get crummy jobs back? Or do we want to really take this time to retool and reskill people for better jobs that are not so vulnerable?" she said.
"It doesn't have to be just a government solution," she said. "It could be a government private sector solution, where we're starting to retool and help employees and future employees build skills that companies want in the new digital, maybe remote, economy."