[US] Employers must accept the reality of rising wages to succeed

There is an ongoing significant shortage of labour across the United States. Federal unemployment COVID payments ran out after Labor Day but many people remain reluctant to return to work out of concern for their health and safety as the Delta variant maintains its grip, The Guardian reports.

A number are hoping to make a job change in the wake of reports about the “great resignation” and employers are will do anything it takes to retain workers as demand continues to be strong.

Job openings are now at a historic high and small businesses across the nation are crying out for staff. 

When the demand for a critical commodity is high and the supply of that commodity is in short supply, simple economics dictate that prices go up. In this case, it is wages that are on the rise.

Data from the US Bureau of Labor Statistics shows that the average hourly earnings of all employees in the US working for private companies rose to $30.85 in September. On the heels of large increases in the prior five months. Making it extremely likely that wages will increase again in the near future.

There are many small business owners across the country and across industries who understand and accept this.

Amanda Cohen - the owner of a vegetarian restaurant in New York City - raised her starting wages to $25 an hour. In conversation with a reported from Business Insider, Ms Cohen said she hasn’t “had a single problem” attracting workers to her business. “We put the focus on ‘staff comes first and everything comes second’,” she explained. “I can’t succeed without a staff.” Ms Cohen has raised her prices by 30 per cent to cover these costs.

Hourly wages are reportedly on the rise at restaurants and retailers elsewhere. And wage increases aren’t only prevalent in the restaurant and retail sector.

Furniture manufacturer Ethan Allen recently announced an expansion into Vermont along with an increase in its starting wage to $16 an hour as well as wage increases for more experienced associates. A trailer manufacturer in Wisconsin is raising wages for the second time in a year in response to the labour shortage there while another manufacturer in Dayton, Ohio, is giving every employee a $10-an-hour raise. 

The National Association of Manufacturers says its members plan to increase wages 3.5 per cent over the next year and it may not be enough.

The founder of a construction company in Los Angeles is reportedly having a hard time finding workers acknowledging that “the easiest way, which is the hardest way” to get and keep workers on his job sites is “to pay them more”. A company that builds roads in Tennessee bumped up their starting wages to $14 an hour and a New York construction firm raised hourly raises to $25 and is now paying hiring bonuses. 

Paperhangers, pile-driver operators and roofers have seen their wages increase by more than 15 per cent in just the past five years.

Wage increases are affecting small businesses everywhere; a Hudson, New Hampshire, landscaper is paying workers $25 an hour simply to “see if they want to pursue a position” and trucking companies in Wisconsin are offering hiring bonuses of between $5,000 and $15,000. Service industry wages overall are up around 10 per cent in 2021.

The change is not temporary. Once an employee’s wage has gone up it will verge on impossible to take it away. This means an enormous shift in overhead structures is taking place at small and large firms across the US, a shift that will continue for the foreseeable future.

Businesses that are still operating as they did pre-COVID; looking for employees while offering compensation similar to the rates they paid before, need to realise that times have changed and notice the basic principles of economics that are playing out before them. The businesses that accept this reality will adapt and continue to profit. They will be able to hire good people and succeed. Those business owners refusing to understand this simple concept will not.

Source: The Guardian

(Links via original reporting)

There is an ongoing significant shortage of labour across the United States. Federal unemployment COVID payments ran out after Labor Day but many people remain reluctant to return to work out of concern for their health and safety as the Delta variant maintains its grip, The Guardian reports.

A number are hoping to make a job change in the wake of reports about the “great resignation” and employers are will do anything it takes to retain workers as demand continues to be strong.

Job openings are now at a historic high and small businesses across the nation are crying out for staff. 

When the demand for a critical commodity is high and the supply of that commodity is in short supply, simple economics dictate that prices go up. In this case, it is wages that are on the rise.

Data from the US Bureau of Labor Statistics shows that the average hourly earnings of all employees in the US working for private companies rose to $30.85 in September. On the heels of large increases in the prior five months. Making it extremely likely that wages will increase again in the near future.

There are many small business owners across the country and across industries who understand and accept this.

Amanda Cohen - the owner of a vegetarian restaurant in New York City - raised her starting wages to $25 an hour. In conversation with a reported from Business Insider, Ms Cohen said she hasn’t “had a single problem” attracting workers to her business. “We put the focus on ‘staff comes first and everything comes second’,” she explained. “I can’t succeed without a staff.” Ms Cohen has raised her prices by 30 per cent to cover these costs.

Hourly wages are reportedly on the rise at restaurants and retailers elsewhere. And wage increases aren’t only prevalent in the restaurant and retail sector.

Furniture manufacturer Ethan Allen recently announced an expansion into Vermont along with an increase in its starting wage to $16 an hour as well as wage increases for more experienced associates. A trailer manufacturer in Wisconsin is raising wages for the second time in a year in response to the labour shortage there while another manufacturer in Dayton, Ohio, is giving every employee a $10-an-hour raise. 

The National Association of Manufacturers says its members plan to increase wages 3.5 per cent over the next year and it may not be enough.

The founder of a construction company in Los Angeles is reportedly having a hard time finding workers acknowledging that “the easiest way, which is the hardest way” to get and keep workers on his job sites is “to pay them more”. A company that builds roads in Tennessee bumped up their starting wages to $14 an hour and a New York construction firm raised hourly raises to $25 and is now paying hiring bonuses. 

Paperhangers, pile-driver operators and roofers have seen their wages increase by more than 15 per cent in just the past five years.

Wage increases are affecting small businesses everywhere; a Hudson, New Hampshire, landscaper is paying workers $25 an hour simply to “see if they want to pursue a position” and trucking companies in Wisconsin are offering hiring bonuses of between $5,000 and $15,000. Service industry wages overall are up around 10 per cent in 2021.

The change is not temporary. Once an employee’s wage has gone up it will verge on impossible to take it away. This means an enormous shift in overhead structures is taking place at small and large firms across the US, a shift that will continue for the foreseeable future.

Businesses that are still operating as they did pre-COVID; looking for employees while offering compensation similar to the rates they paid before, need to realise that times have changed and notice the basic principles of economics that are playing out before them. The businesses that accept this reality will adapt and continue to profit. They will be able to hire good people and succeed. Those business owners refusing to understand this simple concept will not.

Source: The Guardian

(Links via original reporting)