MNI:REALITY CHECK Part 2:Wages Continue To Creep Higher in Oct

--Rising Minimum Wages Lifting Salaries Overall

--Wages Leveling Off Mid-To-Senior Level

By Vicki Schmelzer

     NEW YORK (MNI) - Wages across the country continued to creep higher in

October, according to recruiters interviewed for MNI's latest REALITY CHECK on

the U.S. jobs market. 

     Target's raising of the minimum wage for their workers, to $11 an hour

starting in October, prompted other retailers to lift pay also, with

inflationary spillover effects for other industries, especially at the entry

level.

     "Yes, we feel the disruption from Target, but yes, we also feel the

disruption from Uber and Lift, in which people can go work there without any

sort of interview process - people have options now," said Kurt Trost, Talent

Acquisition Manager at Manpower Group. Trost is responsible for the Mid-Atlantic

region from Washington DC to Florida.

     "The dollar, the number, really matters a lot. And some people really take

to heart that 'work smarter, not harder" mentality," he said. 

     Recent workforce joiners have not had to struggle to find a position and

that makes them more willing to choose a higher salary over long-term job

security, he said. 

     "They don't fear the search as much. And so, they're much more inclined to

get back in search mode in six months because they found this job easily and

think the next one will be easy," Trost said. 

     Overall, actual salaries in his region have not been driven higher

specifically because of Target raising the minimum wage.

     "But, we have felt the impact in cities implementing higher minimum wages

than federal or state standards. So, it does impact a certain sector of the work

force and does impact employers that are within a certain geographic radius of

that particular city, because the talent's very mobile," Trost said.

     "So, if you are in a geographic area of somebody who is paying $10 an hour

or $15 an hour at a minimum, that impacts the workforce that's within 20 to 30

miles of that worksite or that city. We do see the lake rise up because of that

- all boats rise," he said. 

     Janis Petrini, business owner and manager of the Grand Rapids, Michigan

franchise of Express Employment Professionals, noted that stepped-up retail

hiring for the holiday season has resulted in increased competition for

entry-level workers. 

     Retail employers are "offering much higher rates than they were last season

and so, I think it's going to feel even more painful" for manufacturers and

other firms looking for entry-level help, she said.

     With "help-wanted signs everywhere," those seeking employment are more

concerned about higher pay than broader job prospects, Petrini said. 

     "Sometimes, the sticker price is the attraction - if I can make $13 here or

$12 there, I am not thinking about the long-term right now, I am just thinking

about how much I can make per hour," she said. 

     The higher salaries being offered by select retailers is "going to put a

strain on restaurant, retail and entry-level manufacturing because they are all

fighting over potentially that same person," Petrini said.

     Preet Kuar, Executive Recruiter and Business Development Manager at Pacific

Staffing in Sacramento, CA, observed that salaries in the area began to go up in

April and May and have remained buoyant into the fall. 

     "It's leveling off at the mid-level or senior-level," she said.

     However, at all levels, "candidates want something else" on top of salary,

whether more flex-time, greater benefits, mentoring or a bonus, she said. 

     One new trend that Kuar has noticed is clients' increased use of

profit-sharing as firms plan for the future. 

     Rather than pay an employee a higher salary and/or offer enhanced benefits

and then be forced to let them go in the event of an economic downturn,

profit-sharing allows both employer and employee to ride out bad times and to

benefit from good times, she explained. 

     With U.S. stocks at life-time highs and the U.S. economic expansion a bit

long in the tooth, area companies are starting to ask, "what's next?" Kuar said.

     Daniel Morgan, owner of two Express franchises in the Birmingham, AL area,

has seen much more negotiation about mid-level salaries than entry-level

salaries lately. 

     Earlier in the year, when forced to pay $14 per hour versus $12 per hour

for a lower level position, employers were "being picky," wanting someone "with

a little bit more experience" to justify the higher cost. Now, "they are just

willing to get those people in, because they know they need them," he said. 

     The shift is at the mid-level, where salaries range from $25 to $30 per

hour. At this staffing level, employers "are being even more picky" about new

hires, he said. 

     "There is still some apprehension in the market from a lot of companies on

'Are we going to need this person five years from now or is this something that

we're going to need them for just a year or two?'" Morgan said. 

     That said, the talent pool at the mid-level is thin. "We've had a hard time

finding those people - I don't know if it's us or the employer, based on what

they're setting the skills and requirements at," he said.  

     On the West Coast, employers have been busy working on 2018 budgets and

penciling in higher salaries for their workers, said Anne Woods, franchise owner

of an Express office in Covina/Santa Fe Springs, CA. 

     This is in part because the minimum wage in California, for firms with 26

employees or more, will rise to $11 per hour from $10.50 per hour, starting Jan.

1, 2018. Wages will then keep rising by $1 per year until Jan. 2022, when the

minimum wage will be $15 per hour. 

     "People are trying to hold wages where they are, because they know they are

going to have to go up January 1," she said. 

     With so many permanent jobs out there, companies that might need workers

for a two to three-week assignment or for weekend work, are being forced to pay

more, she said. 

     "If that job would normally would garner $12 per hour, you're going to have

to offer $15. Nobody's going to take a two-week assignment, because they can get

permanent work," Woods said. 

     One local distribution center pays forklift operators $14 per hours Monday

through Friday, but has been forced to pay weekend workers $16-$18 per hour to

meet production, she said. 

     "The economy goes up and down like a Bell curve. The pay people ask for,

for short-term positions, is actually a Bell curve with a bigger dip and a

bigger up. So, when the economy is up, they're going to demand a lot more for a

two-week assignment - because they know they can get it," Woods said. 

     October U.S. non-farm payroll data will be released Friday Nov. 3 at 8:30

a.m. ET. 

     MNI's median estimate looks for a 315,000 increase for headline non-farm

payrolls, with a range of up 200,000 to up 350,000. The unemployment rate is

expected to hold steady at 4.2% and average hourly earnings are seen rising

0.2%. 

     Editor's Note: Reality Check stories report on sentiment among business

people and their trade associations. They are intended to complement and

anticipate economic data. If you are currently an MNI subscriber and want to be

on the Reality Check email-distribution list, contact sales@marketnews.com

--MNI New York Bureau; tel: +1 212-669-6438; email: vicki.schmelzer@marketnews.com

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