As America wakes up from its COVID-19 slumber, many employers say they are struggling to find the right talent (or anyone for that matter) to fill their many openings. Or, is it they can’t find people to fill their open positions for what they are willing to pay? In today’s mighty competition for talent, employers should first make sure their pay practices aren’t keeping them from attracting the right people.
Let’s start with some basic labor economics. We all know that the U.S. is a capitalist country, and with capitalism comes the concept of supply and demand. If the supply of a required good or service goes down, the theory is that the price of that good or service will go up. Well, it’s the same with labor. When there are more open jobs than there are people to fill them, wages should and will rise. This is the situation we are facing in our current COVID-emergent economy.
In recent months there have been an estimated 10 million open jobs in the U.S. at any given time – the highest level of job vacancies ever. However, that’s over one million more available jobs than there are unemployed people to fill them. To make matters worse, as a share of gross domestic product, workers’ wages are lower than at any point in the second half of the 20th century. Seem counter to basic labor economics? Yes, it is.
Now consider this possibility. Perhaps there is actually no “real” labor shortage . . . there is simply just a shortage of workers who want to work for what we are offering to pay them. Recently, we have seen a tidal wave of pay raises at companies like Southwest Airlines, Walmart, Costco, CVS, McDonalds, Amazon, Chipotle, Sheetz and many more that suggest the new U.S. “minimum wage” is really $15.00 per hour. Besides fair pay, workers need full-time jobs (rather than part-time) with benefits that help them provide for themselves and their families. Pay is not everything, but it’s a BIG thing.
So, what should an employer do? First, look at your market. Are you paying competitive wages that attract the right talent? Would the desired talent want to work for your provided wage - and work for you over other companies? Conducting a compensation analysis of the local hiring market and making needed changes to your pay structure are the best ways to make sure you are staying competitive.
TBP can assist you in conducting a compensation analysis and developing market-based pay structures to help you hire and retain great teams. We design and implement compensation, hiring and employee relations practices to help your business grow. To learn more about our services, contact our Pittsburgh corporate office at: (724)799-8170 or visit our website at www.bradleypartnerships.com, or email us at info@bradleypartnerships.com.