REPEAT: MNI: REALITY CHECK Part 2: Entry/Mid Lvl Wages Catchup

Repeats Story Initially Transmitted at 15:51 GMT Dec 7/10:51 EST Dec 7

--Increases Driven By Competitiveness, Need To Retain Workers

--Minimum Wage Hikes Loom January 1, 2018

By Vicki Schmelzer

     NEW YORK (MNI) - Entry and mid-level wages rose more markedly than upper

level pay in November, with the increase driven by competitiveness and the need

to retain workers, according to recruiters interviewed for MNI's latest REALITY

CHECK on the U.S. jobs market. 

     Looming minimum wage increases in many states played a role also in rising

pay rates, they said. 

     "The salary on the lower-end is going up, which is good to see because we

had such a gap between low and high," said Preet Kuar, Executive Recruiter and

Business Development Manager at Pacific Staffing in Sacramento, CA. 

     Employers have finally realized that offering "free pizzas on Friday" is

not enough to attract and retain talent, she said. 

     "This year, some of my companies, that never increased their salary for

four to five years, were forced to increase the entry level," Kuar said. 

     Executive salaries have risen in recent years as companies grew and "upped

their game," she said. But, at the executive level currently, with remuneration

already high, discussions center on stock options and equity, "not necessarily

the pay," she said.

     As 2017 comes to an end, salaries at both ends of the staffing spectrum are

still rising, "however, the executive salary had gone up a year-and-a-half ago,

and the entry level has dragged out until now," Kuar said. 

     She urged clients looking to hire candidates with a couple years of work

experience, such as a medical office worker or IT customer service help staff to

offer $15 to $16 per hour, well above California's current minimum wage of

$10.50 per hour. 

     "We don't do anything less, because I can't provide quality people that

would stay," Kuar said. 

     Some firms in California are struggling with a steadily rising minimum

wage, which is currently at $10.50 per hour for companies with 26 employees or

more. The minimum wage will rise to $11.00 as per January 1, 2018 and will

increase steadily to $15.00 per hour by 2022. The minimum wage for all workers

will be $25 per hour in 2023.  

     "We have seen some of our clients move out of state because of this," said

Eugene Lupario, chief executive at SVS Group in Oakland, CA.

     "It's very difficult to compete when you are paying close to minimum wage

and when that minimum wage goes up 10-15-20%, it really has an impact on the

bottom line," he said. 

     Some companies lament the "brain drain" and the lack of appropriate

candidates at the offered salary, other firms "are trying to stay a little bit

ahead of that and so they're doing things in an effort to attract talent," he

said.

     For middle wage earners, in the $50k to $90k annual pay area, over the

course of 2017 clients were "a little bit more willing to negotiate" when it

came to salary. Now, negotiations include perks such as sign-on bonuses,

flex-time and working remotely also on the table at times. "Everything's really

in play," Lupario said. 

     At the "upper tier" of staffing, "high wage earners are making higher wages

today - no question about that," he said.  

     In the Pittsburgh area, some lower-end jobs may pay $8.50 or $9.00 per hour

and firms get workers for these positions, "but it's hard, they're not there for

the long term - it's truly just temporary work," said Deb Gray, owner of an

Express Employment Professionals franchise in Greater Pittsburgh. 

     With a little experience in specific skills, a shop tech worker might start

at $20 per hour and an entry level mechanical engineer could earn $45,000 a

year, she said.

     On the growing need to offer an attractive wage for the job at hand,

especially in the skilled trades area, "the businesses who get 'it' are still

willing to negotiate," she said.

     But, for others who remain reluctant to pay up, "we are being honest with

them" and say, "'The guy has two different offers - he needs to think about

what's best for himself - can we more equalize the offers for him?'" Gray said. 

     Reid Bates, owner of Express offices in Olympia, Centralia, and Aberdeen,

Washington, says average wages for his regions were in the "mid-to-upper $14 an

hour range" in November, which is "a good margin" above the current minimum wage

of $11 per hour. 

     The state of Washington's minimum wage rose from $9.47 as per Jan. 1, 2016

to $11.00 as per Jan. 1, 2017. The rate will rise to $11.50 in 2018, $12.00 in

2019 and $13.50 in 2020. Starting in 2021, there will be cost-of-living

adjustments made based on CPI-W, according to the Washington State Department of

Labor and Industries.  

     The 50-cent hike that kicks in Jan. 1, 2018 will be less painful for

employers than the $1.50-plus hike seen last January, Bates said. 

     Still, jobs that already pay $11.50-$12.50 an hour will "start to feel a

little pressure because of the margin difference," he said, adding, "Employers

will have to accommodate that" if they want to retain their workers. 

     "There is a greater awareness of what people are paying now. With that

level of transparency, there is more job jumping to take advantage of what is

out there," Bates said.  

     Out east, John Calabrese owner of the Mohawk Valley Express office in

Utica, NY, saw "slight increases" in wages in November, driven by several

factors but influenced largely by competitiveness.

     "One has to do with just competitiveness and being able to attract labor in

a tighter market and increasing the talent level of the folks coming in," he

said. The desire to retain workers played a role as well. 

     This increased awareness among employers has caused most businesses to "get

on board with increasing their base rates," Calabrese said. 

     The minimum wage in Upstate New York will be increasing from $9.70 to

$10.40 effective Dec. 31, 2017, with local employers already adapting to the

change. 

     "Less than 5%" of his clients "want to be at minimum wage," he said. Most

companies "want to be well above that because they want long-term employees,

they want an invested commitment," he said.

     "I see a lot of employers wanting to be at least $1 above that minimum and

most more. So, they are starting to increase their wage rates now to be ahead of

that," Calabrese said.   

     November U.S. non-farm payroll data will be released Friday Dec. 8 at 8:30

a.m. ET. 

     MNI's median estimate looks for a 200,000 increase for headline non-farm

payrolls, with a range of +165,000 to +250,000. The unemployment rate is

expected to hold steady at 4.1% and average hourly earnings are seen rising

0.3%. 

     Editor's Note: Reality Check stories report on topics of interest in the

U.S. economy. They are intended to complement and anticipate economic data. If

you are currently an MNI subscriber and want to be on the Reality Check

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