Is it high time for employers to stop being polite and start being real blaming a skills gap for their hiring struggles? For several months now, companies have been complaining about how they can’t find the right candidates to fill their open positions, blaming a labor market shortage of qualified applicants and skilled talent. Recently, however, some economists have started to argue that employers only have themselves to blame for their problems.
In a recent New York Times article, NPR’s Adam Davidson says what employers are calling a skills gap is really a wage gap. Simply put: the skilled workers employers want are out there; however, employers aren’t offering compensation that is compelling enough to drive workers to apply. As a result, candidates are passing them over for opportunities in industries that pay better. And can you blame them? As Forbes’ Maureen Henderson points out, a registered nurse may have plenty of career opportunities, but he or she could make more money working in retail than changing bedpans.
Pointing to a recent finding that 10 percent increase in compensation leads to a 7 percent increase in applicants, University of Chicago economist Ioana Marinescu suggests that employers need to reconsider their compensation offering and make an effort to understand what constitutes a truly competitive compensation.
If these economists are right – and employers bridge this “skills gap” by offering more money – then why aren’t more employers doing it?
Granted, increasing your compensation offering by 10 percent is nothing to sneeze at; however, when considering how much businesses stand to lose when positions go unfilled or when they hire the wrong people, increasing compensation ultimately might be the more economical choice. (Especially when you consider that it could also be the best way to boost retention.)
What’s your take on this debate? Do you believe companies could meet their hiring needs by offering more competitive compensation? (And could part of the problem be that employers do not know what is considered “competitive”?)