REALITY CHECK Part 1: Clear Signs of Wage Inflation In July

--Some Recruiters Seeing Employer Pushback On Higher Salaries

By Vicki Schmelzer

     NEW YORK (MNI) - There were clear signs of wage inflation in July, but also

evidence that some employers may have hit their pay limit, according to

recruiters interviewed by Market News International for this month's REALITY

CHECK on the U.S. job market. 

     "The competition for talent, across the nation, is driving the wages up in

all areas," said Janis Petrini, business owner and manager of the Grand Rapid

Express franchise in Michigan. 

     This trend is being seen across all industries and across all staffing

levels, she said. 

     "Companies are starting to realize there hasn't been a considerable wage

increase in over the last 16 years," she said. 

     To educate themselves, companies have been eyeing wage surveys and seeking

advice on how to attract and retain talent. 

     "In order to be competitive and to be an employer of choice - they have to

look at their wages," Petrini said. 

     "We see it positive across all skill sets - that wages are going up and

continue to go up," she said. 

     However, Petrini reminded also that the Grand Rapids area has a "less than

3% unemployment rate."

     Employers are slowly being educated about the need to offer higher salaries

and to move faster to lock in talent, said Kurt Trost, Talent Acquisition

Manager at Manpower. He is responsible for the Mid-Atlantic region from

Washington DC to Florida

     "We've been in this tighter market for a year-and-a-half, nearly two years,

for that top talent," he said.

     In recent years, employers have been forced to learn some "hard lessons" by

losing talent at the last minute, only to restart the hiring process all over

again, he said.  

     The thinking is "pay what we need to because the last time we dragged it

out, we tried to short them, we tried to negotiate, and it didn't work out,"

Trost said. 

     John Calabrese, owner of the Mohawk Valley Express office in Utica, NY,

said, "employers are more willing to listen" to recruiter recommendations when

it comes to adjusting wages higher to attract candidates. 

     In a domino effect, company decisions earlier in 2017 to offer better

salaries have prompted other firms to do the same, with wages overall "moving

higher," he said. 

     "Those that were really holding firm - they see that they're having

difficulty getting the labor pool that they need. So, we're seeing that last

rung of employers starting to increase their pay rates as well," Calabrese said.

     "It was more significant this month than what we've seen in the past," he

added. 

     Eugene Lupario, chief executive at SVS Group in Oakland, CA, saw clear

signs of wage inflation in July.

     "We were kind of sensing that was going to happen and people were making

some accommodation with some of the requirements to attract talent and now we

are actually seeing a movement to higher pay rates," he said. 

     While higher level/senior positions were still the most likely to see wage

negotiation higher, lower level salaries were moving up also, he said.

     "It's the lower level assignments, some of the more entry level and more

junior assignments, that we are starting to see 5% to even 10% increase in

hourly rate," Lupario said. 

     In another part of California, Anne Woods, franchise owner at the Express

office in Covina/Santa Fe Springs, CA, has started to see some "pushback" from

employers. 

     "Employers have gone up in their salaries as far as they're going to go,"

she said. 

     For someone earning $20 per hour seeking $22 per hour, "I am seeing a lot

more pushback on a dollar or two more an hour," she said. 

     This newfound reluctance to meet salary requests is not just at entry

levels "it's from the entry level, minimum wage, all the way up to the $100k

person and I don't see it as being industry specific," Woods said. 

     There are still plenty of positions that have yet to be filled, but

employers seem to be nearing their pay limit, she said. 

     It is not yet clear if employers "just don't have any more to give" or

"they're starting to see a softening coming and so they're being a lot less

aggressive about paying whatever they have to pay to get somebody," she said. 

     "So, they are still hiring, but I do see a shift in my market, more of a

reticence to meet higher wage requests," Woods said. 

     Given that the East and West Coasts have seen the greatest and most

sustained job increases in the current economic expansion, which economists warn

is long in the tooth, it would be prudent to keep an eye on this wage trend.  

     "In the great recession, February 2008 - long before Lehman Brothers, you

could see it on the street in California and we felt the downturn first, Woods

said.

     "It always starts with the Coasts, both Coasts, whether it is an uptick or

a downturn," she said.

     Preet Kuar, Executive Recruiter and Business Development Manager at Pacific

Staffing in Sacramento, CA, told MNI that while clients "are a lot more open to

talking about paying more" than a year ago, they fret the long-term

ramifications of increasing salaries. 

     Even after nearly 10 years, some companies still have memories of the 2008

financial crisis, she said.  

     "Instead of giving outrageous salaries, because they can't find

candidates," these firms feel more comfortable "offering sign-on bonuses or an

increase after being there six months," she said. 

     Overall however, Kuar is generally still able to negotiate higher salaries

for prospective job seekers in the current environment. 

     For top candidates, who "have the depth of being a well-rounded leader,

have their skillsets, are on top of it, are looking for ongoing education, and

can show that they have had major accomplishments, I'm able to get them paid 20%

more than what they're getting paid," she said.  

     At the same time, Kuar has seen a few examples of buyer's remorse.   

     Some employers "are complaining that we paid more and it ended up being

someone who fluffed up their resume and couldn't deliver," she said.

     "So, I am hearing more and more - take your time hiring, but fire quickly

if they don't work out," Kuar said.

     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.

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

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