Tthere is a significant labor shortage across the United States. Yes, federal Covid unemployment payments expired after Labor Day. But still, many workers are reluctant to return to work, wary of their health and safety as the Delta variant continues to rage. Many are looking to change jobs amid reports of a âbig resignationâ and employers are desperate to do everything in their power to retain workers as demand remains strong.
As a result, job vacancies are at an all-time high and small businesses across the country are begging for workers. So what happens when the demand for an essential product is high and the supply of that product is insufficient? It’s simple economics: prices go up. Wages are rising.
According to data from the United States Bureau of Labor Statistics, the average hourly wage of all employees in the United States working for private companies reached $ 30.85 in September, after sharp increases in the previous five months. It’s a safe bet that wages will increase even more in the very near future if people go to eat and heat their homes.
Many small business owners across the country – and in all industries – understand this.
For example, there’s Amanda Cohen, who owns a vegetarian restaurant in New York City and raised her starting salary to $ 25 an hour. She says she “hasn’t had a single problem” attracting workers to her business. âOur emphasis is on ‘people come first and everything comes second,'” she told a Business Insider reporter. âI can’t be successful without a staff. Cohen increased his prices by 30% to cover these costs.
Hourly wages are on the rise at restaurants and retailers elsewhere. And pay increases don’t just happen in the restaurant and retail industry.
Furniture maker Ethan Allen recently announced an expansion in Vermont along with an increase in his starting salary to $ 16 an hour as well as salary increases for more senior associates. A Wisconsin trailer maker is raising wages for the second time in a year in response to the labor shortage in that country. Another manufacturer in Dayton, Ohio, offers each employee a raise of $ 10 per hour. The National Manufacturers Association says its members plan to raise wages by 3.5% over the next year and I’m not even sure that’s enough.
The founder of a construction company in Los Angeles struggles to find workers and admits 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 increased its starting wage to $ 14 an hour (that’s Tennessee, not San Francisco). A New York construction company has increased its hourly increases to $ 25 and is now paying hiring bonuses. Paper hangers, pile operators and roofers have seen their wages increase by more than 15% in the past five years alone.
Wage increases are hitting small businesses everywhere – from the landscaper in Hudson, New Hampshire, who pays workers $ 25 an hour to just “see if they want a job” to trucking companies in Wisconsin that offer bonuses when hiring between $ 5,000 and $ 15,000. Overall, wages in the service sector have increased by around 10% this year.
It is not temporary. Once you raise an employee’s salary, you are never going to take it away from them again in the future. Which means there is a huge change in the airline structures of small and large businesses across the country, a change that will continue for the foreseeable future.
I have clients who still operate as if it was pre-Covid. When looking for employees, they offer compensation similar to the rates they previously paid. They failed to understand that times have changed and that the basic principles of economics play out in front of them: when demand exceeds supply, prices go up. Companies that accept this reality will adapt and continue to benefit from it. They will hire good people and be successful. Business owners who refuse to understand this simple concept simply won’t.