The Conference Board forecasts that next year’s unemployment rate will hit a low not seen since the 1960s: 3.5 percent. Given the scarcity of talent, what can employers do to keep their ranks filled? Well, they could pay their workers more.
Nearly 25 percent of employees feel they’re being paid at levels below industry average, according to Adecco USA’s newly released 2018 US Workforce Report, which is based on surveys of 1,000 U.S. employees and 500 executives. Seventy percent of employees believe the minimum wage should be raised, and more than half (58 percent) say a pay raise would encourage them to stay at a job they were considering leaving.
“While unemployment rates have continued to steadily decline, we have yet to see that same kind of positive and progressive movement on wages,” says Adecco CEO Federico Vione. The evidence suggests that companies need to start paying more attention to the wages they’re offering if they wish to remain competitive in a tight labor market, he says.
Indeed, despite 90 consecutive months of employment growth during the past decade, wage growth in the U.S. has remained stagnant, rising just 2.4 percent for production and non-supervisory workers during the 12 months ending in March, reports the Brookings Institution. Real wage gains (subtracting for inflation) have been nonexistent for the average worker during the last year and a half, it finds.
The Hamilton Project, an initiative within the Brookings Institution, has just released a new book filled with proposals that its policy experts believe would help boost worker pay — and productivity. Their proposals include eliminating non-compete contracts for low-wage workers and limiting the use and enforceability of such contracts for the mutual benefit of workers and employers. They also call for steps to enhance pay transparency (to put workers and companies on more-equal footing) and using enhanced Pell grants and student-loan deferrals to encourage geographic mobility and career growth.
Now, why should employers be interested in boosting the rate of wage growth? After all, rising pay rates increase their expenses and could, long-term, spark inflation. However, as this piece from ZipRecruiter notes, boosting wages will help you with talent acquisition: it will entice more people into the labor market, give you a better selection of job candidates to choose from and reduce the likelihood that those workers will jump ship looking for a better paycheck.