I often tell my clients that level of pay is not the most important thing to employees, but the pay has to be competitive. The thing employees want most is a boss they like and who cares for them, and a job they like to go to everyday. But if the pay is low, that will mean less and less to them and they will leave, or they won’t even apply in the first place.
Recently I did compensation research for a Central Florida client. Their challenge is to find and attract employees who can help process their ever-increasing orders. Business is good! There are several places an HR professional like myself or business owner can go to research the average pay in a given area. (Payscale.com, Glassdoor, Zip Recruiter, Salary.com). What I found is that pay has drastically changed from just 6 months ago. Because pay rates are changing so fast, even the research sites I typically use aren’t up to speed with the current rate of pay. More specifically, they were $2 to $5 less than what businesses were advertising for entry level hourly positions.
Why is entry-level pay increasing and so fast? Well, Universal Studios announced that entry level positions will start at $15 an hour beginning June 27, 2021. Amazon commercials state that none of their employees make less than $15 an hour. What this means is that large employers like Amazon and Walmart are helping to set the wage rate for everyone else, including small and medium sized family owned businesses.
But another force is at work. Simply put, there is a greater demand for workers than supply. We all know that COVID has hurt businesses everywhere. Perhaps it is the extra $300 the Federal Government has tacked onto the state unemployment or perhaps it is the stimulus money that incentivizes people to stay home rather than work a job. Whatever the reason, we have all seen the many help wanted signs.
So after sharing the results of my findings with my client, they knew an upward adjustment was in order. This is easier said than done because it means that everyone’s pay will need to increase. But the bottom line is the market dictates what we need to pay, even if that market is being influenced by non-market forces.
If you are having trouble getting employees through the door, even to interview, you too might be surprised to find your pay is low. Therefore, do thorough research to know if you are truly competitive. And be ready to do this more often than you would typically do until things settle down and we get past all the stimulus. Once you have determined your competitive pay rate, I recommend you post the amount of pay with the job ad. Just like a dating app, where someone is less likely to respond to a potential match because they did not provide a picture, potential job applicants are less likely to respond to a job ad when they don’t know the pay.