As the country recovers from the Great Recession, things are looking up for the economy. Jobs are not quite so difficult to come by and markets are bouncing back. Although these conditions might seem favorable for workers who have waited years for a raise or job seekers looking for new opportunities, an alarming trend has emerged: Employers are not paying better wages.
According to our survey, half of employers claim they have not adjusted annual wages to account for post-recession hiring — and 15 percent have actually adjusted them down. Although you may still hold on to pre-recession fears about the future of the economy, it’s time to face these fears and start to incorporate higher employee wages into your budgets.
This is the fourth post in a multi-part series on The Hiring Site focused on the effects of the skills gap and what you can do to help bridge the divide. To see the entire study, view additional resources or download our comprehensive report, The Shocking Truth About the Skills Gap, visit www.careerbuilder.com/skillsgapstudy.
Not convinced? Here are a few great reasons to pay your employees more:
1. Most job seekers are looking for new jobs because of wage dissatisfaction.
Our research reveals the main reason 35 percent of employees are looking for new jobs is they are not satisfied with salary — a reason followed closely by discouragement over limited growth opportunities.
You probably have several superstar employees who aren’t getting paid enough. Take a look at what you pay them and compare that number to industry standards. Chances are, they’ve done the same comparison, and you may have several flight risks on your hands.
Only 24 percent of survey respondents believe their company’s compensation structure is extremely or very competitive. Worse, 4 in 10 employers who feel this way also say they don’t provide other benefits to make up for lower compensation. If your company is in this category, you are not only delivering a one-two punch to your chances of attracting dissatisfied job seekers, but also leaving yourself open to losing your best talent.
What can you do? First, find ways to bring your wages up to industry standards, even if money is tight. When you review your budget, don’t treat employees as a cost. Instead, treat them as a resource and invest in them as you would any other business need.
2. Top talent will not settle for low wages.
The unemployment rate dropped to 6.6 percent in January following the addition of 113,000 jobs. Economists consider this slow in comparison to recent months, and expect this to accelerate when the weather returns to normal. This is bad news for the 35 percent of surveyed employers who think the unemployment rate allows them to pay potential employees less than they did before the recession.
With the increase in the availability of jobs, top talent no longer feels obligated to take a job with less than stellar compensation. “I shouldn’t worry about salary and just be happy I have a job offer” is a recession mentality, and fewer people feel this way as the economy recovers.
Some companies are already beginning to acknowledge this. Our survey shows 43 percent claim they would consider increasing wages to fill open jobs. Why? Because talented, skilled professionals are not applying when the compensation isn’t good enough.
What can you do? After you increase the wages of your current employees, review your compensation packages for new employees. Find out what the top employers in your industry are offering to attract talent, and align your compensation packages with theirs. Finally, select industry-specific websites for your job postings. This will help the word get out that you offer killer wages, and the top talent will flock to you.
3. You are contributing to the skills gap.
Thirty-two percent of employers who responded to our survey claim they cannot fill vacancies because their compensation isn’t competitive. Thirty-seven percent also think a gap in expectations around wages is one of the biggest causes for the skills gap today.
According to the laws of supply and demand, this makes perfect sense. The recession created an environment in which jobs were a scarce commodity in high demand. Job seekers were therefore willing to pay dearly for them by settling for lower wages. The tables have turned, however. Skills, not jobs, are now in demand.
There is yet another element at play: Baby boomers are beginning to retire and will leave in their wake a vast number of open jobs in need of skilled replacements. Some economists predict companies may face costs upwards of $100 million per year as they try to fill the jobs boomers leave behind. This gap will only widen as skilled employees leave the workforce.
What can you do? Respond to the demand for talent by putting a high value on it, both to attract job seekers and retain the talented employees you have. Give boomers incentives to work with and/or mentor junior employees to avoid the sting when they retire. Though it will require investment at the outset, you will create a trickle down of talent through your ranks that will provide great returns for your company.
Don’t be left behind with the other companies suffering from the skills gap. Get current with the times and raise your wages to reflect pre-recession compensation. By adopting a practice of competitive compensation, you will secure the loyalty of your current employees and rake in top talent from across your industry. Let go of your fears for the future — because the companies that invest in the best talent now will prosper as the markets continue to improve.
What do you think? Can you come up with more reasons for companies to increase wages?Related