Learn The Lingo

Insights, tips and news for job seekers and employers

Economics 101: Why Pay Rate Matters Now More Than Ever

If you’re struggling to find qualified staff to handle all of the work at your business, you’re in good company. A survey this spring by the National Federation of Independent Business showed that 42% of business owners say they have job openings that couldn’t be filled. 91%  of companies trying to hire right now say there are few qualified applicants for the jobs they’re trying to fill. This is causing some employers to bump up their wages for new workers, but they’re quickly finding a ripple effect; increase the pay for new workers, and you’ll have some existing employees unhappy with their current salaries. What’s the answer? Pay rates matter, not only when attracting talent but also when trying to retain your workforce. What’s the answer here?

Why Are We Struggling to Find Workers?

The story is the same everywhere, in almost every industry. As a result, we can’t find the workforce we need. The labor shortage may be the result of a few trends, such as:

  • Longer and higher unemployment benefits
  • Some workers are reluctant to go onsite for a job while COVID is still an issue
  • There may be a lack of childcare because businesses are reopening while schools are still remote

The Wall Street Journal says, “Some businesses are forgoing work, such as not bidding on a project,” making deliveries more slowly, or keeping a section of their business shut down. According to Business Insider, inflation is causing prices to spike, so workers are looking for higher wages to offset the costs of higher goods and services. Many companies are increasing their rate of pay or adding perks like a signing bonus to attract these candidates. But this creates more problems.

Is the Answer to Increase Pay?

According to Business Insider, the companies that have bumped up their pay scales in the face of labor shortages includes:

  • Chipotle
  • Costco
  • Hobby Lobby
  • Target
  • Starbucks
  • Walmart
  • Wayfair

The Costco CEO was quoted in Business Insider saying the increase in pay is “good business,” as it helps the company retain its workforce. Employees average nine years or more at the company. Chipotle agrees, saying, “We hope to attract even more talent by showcasing the potential income that can be achieved in a few short years.”

How Do I Know if My Payrate is Competitive?

Increasing the rate of pay for incoming employees forces companies to also look at the rate of pay for their existing labor force. Bumping pay for everyone will help retain workers longer. But it may be a hard way to go for small companies who may not be able to compete with their bigger competitors for higher pay.

Lingo Staffing Can Help You With Your Hiring Goals

To determine whether your wages are competitive, consider a little research on sites like Indeed, Glassdoor, or Salary.com. If you’re still struggling to find help, consider reaching out to a firm like Lingo Staffing. We specialize in helping you find the best employees quickly. We can help you meet your hiring goals. Contact us.

Share It