Customers are plentiful at David's Taqueria and Produce store; it's employees that are hard to find

February 4, 2000
Web posted at: 10:19 p.m. EST (0319 GMT)

In this story: Unsustainable growth? $1,000 recruitment bonus RELATED STORIES, SITES

From Correspondent Deborah Feyerick

(CNN) -- Business is booming at David's Taqueria and Produce store in Corte Madera, California. In fact, it's so busy that the owners have trouble finding enough people to keep the store fully staffed.

"We advertise in the newspapers, in the college, in the high schools in the area and we get absolutely no response -- none," said store manager Lynn Hartman.

	VIDEO
CNN's Deborah Feyerick looks at the conditions causing the labor shortage and what the repercussions might be. Real 28K 80K Windows Media 28K 80K

A stronger-than-expected January employment report put the jobless rate at a 30-year low of 4 percent, with no sign of trouble.

"There's tremendous demand for skilled people at all levels of almost every organization and almost every industry and that's true in almost every part of the country," said Bruce Tulgan of RainmakerThinking Inc., a research, training and consulting firm that advises companies on hiring and retaining employees.

Unsustainable growth?

A tight labor market is good for job seekers, but risky for the economy, because demand outweighs supply. It may also be a sign that the economy is growing at an unsustainable rate.

At Manhattan's Cakes and Shapes, Edie and Sandra work non-stop to fill all the orders.

"They want my product -- it's great, but how much can I produce by myself with Sandra's help in a day," said Edie Connolly.

To find and keep workers, companies may be forced to pay higher wages -- a cost usually passed on to consumers.

Those higher prices can lead to inflation, which ultimately comes full circle.

At Landis Communication in San Francisco, employees get $1,000 if they bring in a new worker

"Small businesses that cannot get the workers they need may have to shut down. They may have to reduce what they're doing," said former U.S. Secretary of Labor Robert Reich.

But it seems the new economy -- with its improved technology and freer trade -- has helped keep prices down for now.

Economists used to expect inflation when unemployment fell below 6 percent.

"It turns out that the labor market is far more flexible than anyone assumed," Reich said.

$1,000 recruitment bonus

One sign of that flexibility is that companies are adapting and finding new ways to recruit talent.

At Landis Communication in San Francisco, employees get $1,000 if they bring in a new worker.

"We're always in a race to find qualified people," said David Landis.

While looking for new employees may be hard right now, many economists predict the shortage will force companies to become more creative and efficient if they are going to remain in business.

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.