REALITY CHECK Part 1: Firms Pulling Out Stops To Secure Talent

--This Includes Offering Higher Salaries

--Creative Solutions For Baby Boomers

By Vicki Schmelzer

     NEW YORK (MNI) - In August, U.S. employers pulled out all the stops to

secure the talent to do business and this included offering higher salaries,

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

REALITY CHECK on the U.S. job market. 

     However, there were still laggards on the pay front, who remained reluctant

to bump up wages.

     "Every company has not moved up their rates yet," said Daniel Morgan, owner

of two Express franchises in the Birmingham, AL area, 

     "You have two different markets out there. You have employers that

understand what the market is and they are adjusting to that, and you have

employers that are not adjusting at all," he said. 

     Larger companies especially, with "lots of different layers," often have

difficulty paying up for talent "given the chain of command," Morgan said. 

     Overall however, "wages are definitely going up, especially for lower,

mid-level" (positions), he said. 

     Preet Kuar, Executive Recruiter and Business Development Manager at Pacific

Staffing in Sacramento, CA, spent most of August working on executive searches. 

     She saw higher sign-on bonuses and equity shares being offered to

candidates. 

     "Salary probably wasn't as high as I thought, but creative packages -

absolutely," Kuar said. 

     For the most part in the past, it was "easy" to get sign-on bonuses for

top-tier candidates," she said. 

     Now, if the search has gone on long enough, then "it's not a hard

negotiation" for recruiters to get a sign-on bonus for a candidate that may not

be "exceptional," but "can do the job" and be "a culture fit," Kuar said. 

     Willingness to pay higher wages is being seen at all staffing levels,

recruiters said. 

     "We've seen increases of $1 to $2 dollars off of the base rate that we saw

probably a year ago on more entry level jobs," said Janis Petrini, business

owner and manager of the Grand Rapid Express franchise in Michigan.

     The skilled-trade jobs sector already saw a "real marked increase" a year

to two years ago, as the talent crunch began, and salaries are still holding at

higher levels, she said.

     At the professional level, companies are "definitely very open to

negotiation, relocation, creative salary packages, negotiating on benefits and

vacation time - anything they can do to secure the talent," Petrini said.  

     "We are definitely seeing an openness in this area to do whatever it takes

on the wages," she said.  

     With an unemployment rate in the Michigan area around 3.2% (BLS as per June

2017), well below the U.S. average, and the pool of workers ever shrinking,

local employers are looking to attract talent from other states as well as "to

entice anybody who is not in the work force to return to the work force,"

Petrini said. 

     Candidates, rather than employers are in the driver seat and they know it,

recruiters said. 

     "There's definitely a higher demand coming from candidates in terms of

their compensation expectations, and I think that's reflective of what they feel

they can get in the market place because of the amount of companies that are now

pursuing these people," said Peter Kitchin, Executive Director at Michael Page

of New York.

     "I've yet to see companies hit sort of the roof, if you like. We are not

seeing clients say 'that's as far as we can get' and losing candidates as a

result of that. I do foresee that happening at some point this year, but we

haven't reached that point," he said.  

     It is "still very much a candidate driven market place at the moment,

whereby candidates can really drive the compensation levels upwards." Kitchin

said. 

     In addition, "organizations are fighting to keep their best talent" and

this means "having to provide salary reviews and higher levels of compensation

to retain their best staff, let alone attract new staff," he said.  

     Barring reluctance to move to areas where house prices continue to be

prohibitively high, there are signs that workers are more willing to move to

other cities and states for a position with higher pay. 

     Deb Gray, franchise owner at an Express office in Pittsburgh, PA, told MNI

that this has been especially true lately for "millwrights," i.e. craftsmen or

tradesmen who install, dismantle, repair, reassemble and move machinery "in

factories, power plants and construction sites," as per Wikipedia. 

     Businesses are suffering because "the millwrights are leaving for oil and

gas - going for 100-hour work at X number of dollars and then the machine shops

are being left without," she said.

     "So, what was a skilled trade gap before is amplified because they're

chasing all these extra hours," she said.

     As a result, manufacturing companies have become more willing to pay up,

with wages "inching up," Gray said. 

     Salaries have been firming "almost across the board," but it has been a

learning curve for employers, and some still do not want to adjust wages higher.

     For example, at the entry level for office worker, "the price point has not

moved" and remains $10 per hour, Gray said. 

     This is in contrast to general labor, where employers understand that "you

don't get much for $10," she explained.

     Employers were also willing to replace someone with more experience and a

higher salary with a candidate with a bit less experience and a lower salary. 

     Gray offered an example at the mid-level/supervisory level. "If I had

someone long-term at $65k, I could probably get them for $45k," she said. 

     This would seem to back up a recent San Francisco Fed research paper, which

noted the dampening effects on wage inflation of Baby Boom employees retiring

and being replaced by candidates with less experience and a lower salary. 

     But, Express's Morgan noted cases, where the Baby Boomer considering

retirement is offered the opportunity to work part-time and help ease the

transition, which can be a win-win for both employee and employer where budget

is concerned. 

     An administration worker making $80,000 per year might be replaced by a

junior job seeker making $45,000, but then be offered the choice to work

part-time for partial pay to stay and train and oversee the new hire, he said. 

     From the employer's perspective, "they really haven't paid any more and

they're not paying any less" than before, Morgan said.  

     "It helps the company out; they need to bring a new employee in anyway

because they have the work," he said. 

     In this scenario, a firm gets "an employee and a half at the same rate that

they were paying before" as opposed to bringing on two full-time employees,

Morgan said. 

     "That's a way employers are getting around having to employ more people,"

he 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. If you are currently a 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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