We’re not in Kansas anymore. Analysts claim wages are heating up, you know unemployment is low, and just about everyone is struggling with high turnover. Yeah, yeah; we know what’s running through your head: The good ol’ days are gone! There go my profits! Workers are getting too expensive, and none of them stick around!
need to attract workers away from other companies; these rising wages have the added bonus of drawing workers off the sidelines, increasing the labor supply. But because wages have been relatively stagnant for so long, workers haven’t been joining from the sidelines, which is why we’ve found ourselves in such a prolonged state of tight labor.
As you’ve likely come to expect from us, we have a different take on the matter. We don’t think the world is ending. In fact, we think there’s a pretty simple solution: Be on the forefront of the rising wages trend. It’s a real thing, and catching a wave before it catches you always puts you in the better position.
OUR JOB SEEKER SURVEY DATA CONFIRM IMPORTANCE OF PAY
GOVERNMENT FIGURES ARE ALL OVER THE PLACE: UP, DOWN, AND SIDEWAYS The American labor force participation rate (the percent of eligible workers who are working or looking for a job) is the lowest it has been for 50 years, and unemployment is at a similar low point. There’ve been more than 90 straight months of job gains but only about 24 months of wage growth over 2 percent (which is still low). In a typical market with low labor supply and growing demand, wages rise because employers
Figure 1 JOB SEEKER CAREABOUTS (WEIGHTED ON A SCALE OF 7)
For the past three years, we’ve been tracking the thoughts and feelings of job seekers through a survey we call our Applicant Sentiment Index™. We ask everyone who applies with us to tell us how they feel about a couple of different facets of their local job market—and by “local job market” we mean ZIP code. We’re that precise. Naturally, one thing we ask about is wages; and, not surprisingly, we’ve come across two findings: 1) Pay ranks as the absolute most important factor job seekers consider when looking for a job (see Figure 1); and 2) Optimism about local wages is comparatively low and has declined slightly over the past couple of years (see Figure 2). The main takeaway here is that wages matter to your potential workforce, and there’s still room to wow them.
Figure 2 JOB SEEKER OPTIMISM TOWARD LOCAL MARKET 95%
90%
5
85%
4.6
4.2
4.
3.6
3.2
3.0
80% 5.4
75% Social connections Feedback from supervisor Essential job functions Learn new skills Work environment Shift schedule Pay
70%
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Quantity of Available Jobs
Q4 2016
Q1 2017
Q2 2017
Quality of Available Jobs
Q3 2017
Q4 2017
Q1 2018
Quality of Local Wages
OUR EMPLOYER SURVEY DATA HELP ESTABLISH A STRONG STRATEGY The compensation data in this book, which we collected through our employer survey, differ from other information you probably have access to because we focus solely on starting pay and benefits for entry-level employees. Our data are protected from the influence of accrued wage raises and some post-waiting period benefits. This approach provides insight into the unique experience of attracting and hiring lesser-skilled workers, for which there are many competing opportunities and few barriers to entry. Here’s a high-level summary of our nationwide findings this year (see Figure 3): · MORE EMPLOYERS REPORT STARTING WAGE INCREASES. On a position-by-position basis, an average of 67% of employers report a starting wage increase for any given job. For production positions, that number hovers closer to 75%, and for administrative positions, it is closer to 60%. Compare this to 43%, 52%, and 31% respectively in 2017.
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· MEDIAN STARTING WAGES INCREASE IN ALMOST EVERY POSITION. Nearly 90% of all positions saw an increase in the median starting wage, compared with only about 50% in 2017. A heightened median starting wage tells us employers at both the upper and lower ends of the pay scale are raising wages. · THERE’S CONSISTENCY IN THE AMOUNT OF RAISE GIVEN. Year after year, the median increase made by employers hovers somewhere between $0.50 and $0.74 per hour for nearly every position, and this year is no exception. That said, lower-skill (easy to fill) positions see smaller increases (between $0.25 and $0.49 per hour) while jobs with in-demand skill sets (hard to fill) see larger increases (about $1.00 per hour). · MANUFACTURING EMPLOYERS STILL OUTPACE THE COMPETITION. Talent attraction knows no industry boundaries. We continue to find disparities in pay rates and willingness to increase starting wages between manufacturing and distribution employers. Distributors have lower median wages in about 50% of job positions, and they report fewer wage increases. Figure 3 NATIONAL WAGE DATA MANUFACTURING SECTOR
DISTRIBUTION SECTOR
ALL SECTORS
MEDIAN WAGE
% THAT INCREASED WAGE
MEDIAN INCREASE GIVEN
MEDIAN WAGE
% THAT INCREASED WAGE
MEDIAN INCREASE GIVEN
MEDIAN WAGE
% THAT INCREASED WAGE
MEDIAN INCREASE GIVEN
Packer/Hand Packer
$12.00 - $12.49
78%
$0.50 - $0.74
$12.00 - $12.49
62%
$0.50 - $0.74
$12.00 - $12.49
73%
$0.50 - $0.74
Material Handler
$13.00 - $13.49
79%
$0.50 - $0.74
$12.50 - $12.99
64%
$0.50 - $0.74
$12.50 - $12.99
76%
$0.50 - $0.74
Shipping/Receiving Clerk
$13.50 - $13.99
76%
$0.50 - $0.74
$12.50 - $12.99
73%
$0.50 - $0.74
$13.00 - $13.49
76%
$0.50 - $0.74
Forklift Driver
$13.00 - $13.49
77%
$0.50 - $0.74
$13.00 - $13.49
71%
$0.25 - $0.49
$13.00 - $13.49
75%
$0.50 - $0.74
Quality Inspector
$14.00 - $14.49
69%
$0.50 - $0.74
$13.00 - $13.49
72%
$0.25 - $0.49
$14.00 - $14.49
70%
$0.50 - $0.74
Assembler/Fabricator
$12.50 - $12.99
75%
$0.50 - $0.74
-
-
-
$12.50 - $12.99
76%
$0.50 - $0.74
General Laborer
$12.00 - $12.49
80%
$0.50 - $0.74
$12.00 - $12.49
69%
$0.25 - $0.49
$12.00 - $12.49
77%
$0.50 - $0.74
General Mtnc. Worker
$18.50 - $18.99
67%
$0.50 - $0.74
$15.00 - $15.49
67%
$0.25 - $0.49
$18.00 - $18.49
69%
$0.50 - $0.74
Machinist
$17.00 - $17.49
67%
$0.75 - $0.99
-
-
-
$17.00 - $17.49
63%
$0.75 - $0.99
Machine Feeder/Offbearer
$12.00 - $12.49
59%
$0.50 - $0.74
-
-
-
$12.00 - $12.49
60%
$0.25 - $0.49
Welder
$15.50 - $15.99
75%
$1.00 - $1.24
-
-
-
$16.00 - $16.49
74%
$1.00 - $1.24
Machine Operator
$13.00 - $13.49
75%
$0.50 - $0.74
-
-
-
$13.50 - $13.99
76%
$0.50 - $0.74
Office Assistant
$13.50 - $13.99
62%
$0.50 - $0.74
$13.00 - $13.49
68%
$0.50 - $0.74
$13.50 - $13.99
65%
$0.50 - $0.74
Office Manager
$18.00 - $18.49
52%
$1.00 - $1.24
$20.00 or greater
65%
$0.50 - $0.74
$19.00 - $19.49
58%
$1.00 - $1.24
Receptionist
$13.00 - $13.49
58%
$0.50 - $0.74
$13.00 - $13.49
56%
$0.25 - $0.49
$13.00 - $13.49
57%
$0.50 - $0.74
Customer Service Rep.
$15.50 - $15.99
60%
$0.75 - $0.99
$13.50 - $13.99
67%
$0.50 - $0.74
$14.50 - $14.99
63%
$0.50 - $0.74
Data Entry Clerk
$12.50 - $12.99
60%
$0.50 - $0.74
$12.50 - $12.99
70%
$0.50 - $0.74
$13.00 - $13.49
58%
$0.50 - $0.74
Acct./Bookkeeping Clerk
$17.00 - $17.49
67%
$0.50 - $0.74
$16.00 - $16.49
52%
$0.50 - $0.74
$17.00 - $17.49
63%
$0.75 - $0.99
Payroll Clerk
$16.00 - $16.49
59%
$0.50 - $0.74
$15.50 - $15.99
69%
$0.50 - $0.74
$16.00 - $16.49
58%
$0.50 - $0.74
While we absolutely believe the main reason for the wage increases we see is economic pressure to attract talent, we can’t ignore the influence of the regulatory environment. Many states (and a few locales) increased the mandated minimum wage last year and/or implemented annual indexing of the minimum wage, and a rising tide tends to lift all ships. Certainly, for some employers at the bottom of the pay scale, the minimum wage increase was significant enough it legally forced them to increase their own starting wage. IF WE HAVE TO SAY ONE THING BLUNTLY, IT’S THIS … If you want more workers, you need to pay better, and better means two things: better than current market rates, which are rising more quickly than they ever have, and better than job seekers in your local area expect because that will attract job seekers to you and draw sidelined workers into the labor market. We believe the regional sections of this book are a great starting point for setting your wage strategy—and/or to gain a broad understanding of the general trends taking place—but we always encourage you to seek other sources like your state Department of Labor, the Bureau of Labor Statistics, economic development commissions, chambers of commerce, industry trade organizations, and more.
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