Login | December 15, 2019

Business is booming and employers would like to expand – but they can’t

JAZMYN STOVER
Special to the Legal News

Published: June 17, 2019

The U.S. economy is thriving. Unemployment is at a 49-year low – which is generally a good thing. But this can also be problematic, as eventually employers run out of people to do the work.

For nearly a year now, the number of open jobs in the U.S. has been higher than the number of people looking for work in nearly every industry. This is the first time this has happened since the Department of Labor began tracking job turnover two decades ago.

Indeed, all employers are facing a demographic challenge: Lower unemployment, an aging population and lower immigration. This translates to fewer qualified applicants for employers.

As a result, more employers are finding it difficult to hire and retain qualified employees, pressuring them to rethink their hiring and retention efforts.

While nearly every industry has a labor shortage, some industries feel the impact more than others.

Employers have traditionally been concerned about a shortage of highly skilled workers, particularly those with advanced degrees in STEM fields (science, technology, engineering and mathematics), but this is no longer the case. Employers are now having a harder time filling blue-collar positions than professional positions that require a college education.

Blue-collar workers, such as home health care aides, restaurant workers and hotel staff, are the hardest to find.

This shift is happening as more and more Americans are going to college and taking white-collar jobs, while working-class baby boomers are retiring.

The consequence is that blue-collar workers currently have the most leverage in the labor market, which may help to reduce the wage gap between white-collar and blue-collar workers.

Hence, working-class Americans are able to demand better wages, benefits, schedules and working conditions.

What Does This Mean for Employers?

It is important for employers to think about the factors that drive prospective employees in their career decisions, as well as employee retention strategies. Given the extremely competitive labor market and the resources necessary to recruit, hire and train employees, retention of employees becomes an equally important topic for discussion.

Each employee differs as to his or her reason for remaining at a job. For one employee, it might be an in-depth dive into the company’s culture, leadership and values. For another employee, it might be a desire to have access to ongoing paid education, proactive career development or internal mentors. Generational differences in the workplace can also heavily affect this discussion.

As an attempt to reduce turnover, many employers have been conducting employee engagement surveys that not only provide feedback to the employer on how happy an employee is, but also how dedicated he or she is to the mission of the organization.

Other employers have created unique incentives to attract and retain qualified workers, such as:

• Expedited Pay: According to the National Opinion Research Center, a nonpartisan research organization at the University of Chicago, 51% of Americans are living paycheck to paycheck and would not be able to cover necessities without dipping into their savings if they missed more than one paycheck. Some employers in the restaurant industry have implemented same-day and next-day paychecks, where employees can receive their earned pay on the day or day after they earned it.

• Signing Bonuses: Signing bonuses are becoming more common. And for highly skilled positions, like physicians, some employers are offering signing bonuses of up to $100,000.

• Other Incentives: Some other unique incentives offered by employers looking to stay ahead of their competition include paid parental leave, group identity theft protection, financial wellness programs, company-subsidized on-site childcare centers, fully equipped workout areas, nap rooms to allow employees to rejuvenate, and relaxed dress codes. These unique incentives highlight the fact that employers are facing increased pressure to rethink their hiring strategies in order to obtain and retain skilled employees.

Conclusion

Employees can be an employer’s most valuable competitive advantage, and implementing proactive human resource strategies aligned with business goals may benefit the entire organization. Indeed, in a labor market marked by a shortage of labor, the best solution is to invest in your human capital through the development of an effective retention management plan.

Proactive efforts to reduce turnover, in lieu of reactive recruitment methods, may seem like an unreasonable response to the current pace of industry growth. However, taking the time to align human resource strategies with the organization’s business objectives may result in a reduction in turnover and improved employee engagement while boosting productivity and the bottom line.

Jazmyn Stover is a partner in the Fisher Phillips Cleveland office, where she advises clients on critical workplace issues that develop at the intersection of business and employment law.


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