Establishing a competitive hourly pay rate for general laborers is hard when you’re on a tight budget. Wages are going up out there, so companies need to step up their hourly rates to attract the best talent. But if you have a small business and money is tight, how can you increase your hourly pay rate and still make a profit. We have four ideas that may help.
Rising Wages for General Labor
General laborers are generally doing a little better these days. While the federal minimum wage requirement hasn’t increased since about 2009, 29 states and the District of Columbia now have minimum wages higher than the federal rate of $7.25 per hour. There is a general push in Congress right now to double that rate.
While employers know that better-paid workers are better for their business, it’s tough sometimes to come up with that extra cash, especially when the economy is still struggling from the coronavirus.
Salary.com lists the general hourly rate for laborers by percentile:
- The median is $16 per hour.
- The 10th percentile is $12 per hour.
- The 90th percentile is $21 per hour.
So, if your goal is to pay somewhere between $10 to $21 per hour, there are a few things you should consider:
- How will this impact your existing staff?
- How much can you afford?
- What is the average pay rate for your local region?
Your goal is to make your hourly rate market competitive enough that it attracts the best quality candidate you can afford. How can you do that?
Tips for Setting Your Hourly Rate
If you’re searching for ways to increase hourly salaries while your business is on a tight budget, consider these four areas to squeeze.
1. Increase profitability.
You can do this by improving your supply chain to lower costs. You could also redistribute workloads to make the most of your top producers. Consider talking with your teams about production and setting the expectation that your goal is higher production so that you can increase wages all around.
2. Cut overtime spending.
Time and a half can eat away at your salary budget, and it signals that you’re not effectively scheduling the work. Tracking employee overtime and reducing it is critical. Set a cap on overtime and watch it like a hawk, then set the goal to lower it until it’s eliminated.
3. Consider a small increase in pay but a big increase in perks.
Can your business offer end-of-year bonuses? How about flex time? Can some employees work-from-home? What about offering extra time off? Some employers offer a transportation stipend. The idea here is to think outside the box about what will matter the most to your workforce. If you can’t offer the top hourly rate, what other bonuses does your company offer?
4. Talk with your employees and engage them in this effort.
We can’t state this enough. Engaging your workforce by creating a transparent culture around profitability helps them understand the connection between your profit and their wages.
The right compensation attracts the right kind of employee to your business. How much are we losing by not having the people we need? Your struggles to pay people a living wage could hinder your ability to grow as a company and harm your reputation.
Lingo Staffing is Here to Help You
Talk with the team at Lingo Staffing about how to establish a more competitive wage structure. We can help you understand the market and help you find better talent.