This year, many areas are experiencing a rise in minimum wage—some for the first time in many years. In other locations, there are raise pressures beyond legal requirements, as employers are finding they’re simply not receiving as many applicants as they did in the past for roles that are on the lower end of the pay spectrum.
This trend is being seen across the country. Wages are being pressured upward, and employers have definitely taken notice. What does this trend mean for your hiring plans?
2021 Recruiting Trend: Wage Increases Required to Attract Talent
Although the federal minimum wage hasn’t changed, the minimum wages most employers were paying certainly have, primarily due to increasing market pressure resulting from fewer candidates applying for lower-paying jobs. As employers compete for talent, they’ve been upping the ante to get more people to pay attention to their vacancies. What used to be an aspirational goal for some—a $15/hour minimum wage—is now attainable in many roles that previously paid less than $10/hour. This trend is buoyed by many organizations’ adopting their own minimum wages—organizations that employ tens of thousands of people.
Although this upward wage pressure may feel new, it’s actually been building for years. There’s been a continual push to increase the minimum wage, and there was upward pressure in previous years on employers to increase wages when unemployment was low.
Some expected the pressure to dissipate because the pandemic caused widespread job loss, but it didn’t change the underlying factors that created the push. On top of that, many people realized, after either gaining more flexibility or going without a job for a long period, that they were no longer willing to accept the same pay levels as before.
Additionally, the size of the available workforce isn’t growing as quickly as it did in years past, meaning there aren’t as many new people entering the labor market to keep up with the increasing need for more employees. This means candidates have even more bargaining power.
Employer Considerations when Recruiting in a Rising Wage Environment
Here are a few things for employers to consider in this new recruiting environment:
- Pay attention to all levels of legal requirements, down to the city level. Minimum wages have already climbed in many cities and states, even without a federal change.
- Even without legal requirements, note that your competitors may have already raised their pay rates, meaning you’re facing a higher pay threshold just to remain competitive.
- If you’re a top-paying employer, others are looking to you to set the bar, and you may need to do a new market analysis to determine the current pay landscape.
- In lieu of permanently raising wages, many employers are utilizing sign-on bonuses that pay out if the new employees stay a certain number of months. This can be a way to entice someone to not only apply but also take a role that doesn’t pay as much as the competition. It’s still something employers need to budget for in the short term, but it’s easier for long-term planning because the bonus isn’t repeatedly paid out, as long as the employee stays.
- If your hiring budget doesn’t allow for increasing wages, consider that would-be employees are also looking at what benefits are on offer. Things like flexible schedules, the ability to work remotely, and other benefits can all be selling points.
- Even if the increase in hiring costs is a stretch today, consider the longer-term implications of paying a higher wage. It may mean you’ll have less short-term turnover to manage and thus will end up with lower total costs in the long run.
- Employers that wish to pay less than the competition may need to consider hiring people with fewer qualifications and training them in-house.
- Employers may need to emphasize how workers are being protected from COVID-19 as an incentive to attract employees.
What has your experience been with applicant wage expectations in recent months? Has your organization increased your pay levels to attract more talent this year?
The post Rising Wages—What Do They Mean for Your Hiring Plans? appeared first on HR Daily Advisor.