Unfilled Jobs Helping to Push Wages Up
Friday's employment data from the Bureau of Labor Statistics showed employers created 130,000 new jobs last month, the lowest number since May. The private sector's share was 96,000; the balance reflected government hiring.
There's little doubt the numbers reflect a substantial slowdown from a year ago. Since January, all new job hiring has averaged 158,000 a month. Last year the average was 234,000. Whether that's due to the cooling global economy, tariffs, employer caution, or the difficulty in filling existing jobs is being debated by economists and labor analysts.
However, two other statistics tell us that recruiting difficulty plays a role. Unemployment stood at 3.7% for the third consecutive month, the lowest rate in 50 years. Meanwhile, wages are rising. Friday's report said year-over-year average hourly earnings for all workers rose by 3.2%.
Increasing pay is one way for a company to be more attractive to job candidates.
By historic measure, a 3.2% wage increase isn't much, but it's not far short of double the average wage increase in August 2010. It's also half a point higher than the average of the last five years.
Now consider one more report, also from the Bureau of Labor Statistics. The most recent JOLTS report tell us there were 7.3 million open jobs in June. Employers made 5.7 million hires, which didn't make a dent in the openings as 5.5 million workers quit, got fired, laid off, retired or otherwise left their job while 178.000 new jobs were being created.
By far it was voluntary quits that accounted for most of the "separations," as the BLS report calls turnover. The 3.4 million workers who quit during the month represent 2.3% of the total US workforce. On an annual basis, that's almost a 28% turnover rate. Some industries, like food service and accommodation are twice as high. Some, like finance and insurance, are much lower than the average.
Weighing just these few bits of data, the evidence suggests employers are realizing -- or certainly should -- they need to place emphasis on retaining the workers they already have, even before they add new jobs. One retention tool is a pay bump. Even workers of modest skills will get a 10% or better salary increase if they take a new job. Workers with in-demand skills can command as much as 25% more.
If your salary comparisons show your pay ranges to be near or below the median for your industry and occupations, bringing your most critical employees up to at least the average can make a difference in retaining them. (Of course, pay isn't the only reason employees leave, but it is one of the leading reasons.)
Green Key Resources can help you discover where you stand. We can advise you on how competitive your pay -- and your total comp and benefits package -- is. With more jobs than workers, you can't afford to fall behind your competitors. That could be why you have jobs going unfilled for weeks and months.
Call us at 212.683.1988 or one of our branch offices and see how fast we can help you fill them.