Across the country, help is wanted. The bureau of labor statistics (BLS) reports that the U.S. economy created 9.2 million new jobs in the month of May. 9,200,000 isn’t just a whole lot of zeros; it’s a record-setting number of new job openings in one month.
Consumer demand has skyrocketed, and businesses can’t fill positions fast enough to keep up. The mountain of job openings is due to a convergence of pandemic factors that we will get into later. The end result has been a deeply constrained labor supply. This is leading to fierce competition from employers fighting for the same limited supply of applicants. The competition for new employees has led to an introduction of incentives and novel solutions to attract job applicants. This labor crunch has emerged in the middle of the economic recovery from the covid recession. Consumer demand fueled by stimulus, a record savings rate, and cheap debt is pressuring businesses to hire more and hire fast.
What is causing the tight labor market?
Well, it’s a complicated convergence of factors, but it boils down to the pandemic pausing economic activity and the vaccine releasing massive consumer demand.
Significant factors contributing to the worker shortage:
- Businesses are trying to restart their normal operations at the same time.
- Employees are reevaluating what they want and quitting at record numbers to find better-fitting jobs.
- Women who disproportionately took on childcare responsibilities during the pandemic are still sidelined as they wait for schools and childcare services to get back to normal.
- Covid hot spots are still a problem as the more contagious delta variant spreads in under-vaccinated parts of the country.
- Boosted unemployment benefits have allowed workers to wait to find better jobs.
- Many baby boomers are retiring early instead of going back to work
What can you do to attract job applicants?
Increase pay
The lowest hanging fruit is increasing wages. The more competitive your compensation is the more applicants you will attract. Increasing wages can be difficult for small businesses, particularly in the retail, restaurant, and hospitality sectors—three of the hardest-hit sectors of the economy during the covid recession. Raising pay has been made more difficult by companies like Amazon, Costco, and Target. They have raised their minimum pay to $15/hour. The wage increase is more than double the federal minimum wage of $7.25/hour. The boost in wages is good for workers but is tough for small businesses that have to compete with large companies with big budgets for the same workers.
A tactic deployed by businesses to compete with the large companies has been offering signing bonus. This increases the upfront cost of labor but only temporarily. In some parts of the country state governments are helping businesses by offering signing bonuses to unemployed residents who go back to work.
Provide better benefits than the competition
Another way that you can attract employees is to offer a robust benefits package. The benefits you offer need to match your employees’ needs and the needs of the employees you want to attract.
The impact of health benefits on your employer brand has increased because of the covid pandemic. Covid has made the importance of health insurance more salient in the minds of more Americans. The pandemic forced people to imagine how their household would be affected by a significant and costly health event.
Don’t forget that health, dental, vision, and life insurance are not your only options. Some candidates will be motivated by lifestyle benefits like gym memberships, commuter/parking FSA’s, childcare benefits, and pet insurance. These are just some of your options. Find out what matters to your employees and the employees you want to attract.
Provide work flexibility
Flexible work; this is a big opportunity right now. Workers have experienced what once upon a time felt unattainable, Working from home….in their lounge pants. Many are not ready to go back to working from the office all day, every day. 52% of job seekers say the ability to work flexible hours is one of the most important factors when considering a job offer. 33% say it’s among their top three factors when applying for a role. Many businesses are refusing to budge from their remote work policy. Therein lies your opportunity to capitalize on their rigidity. Having a flexible work model will help you stand out in a tight labor market.
Does the idea of having a 100% remote workforce sound unappealing? Luckily, many employees who want flexibility still want an office to go to. A flexible work model can work how you want and for what works for your employees. It could mean work from home somedays and work from the office on others. It could also mean your employees choose their own hours. Find out what your employees want and align that with your business needs.
Hire faster
In the current job market, employers have job openings, but workers have the leverage. With so many companies hiring at once, workers are in high demand. Workers are getting multiple interviews and job offers. Employers have little time to shop around for unicorn candidates. So, when you find a candidate you like, make them an offer. You will save yourself a lot of time and frustration.
Don’t lose your employees.
It’s cheaper to keep a customer than to acquire a new one. The same goes for good employees. Losing employees is expensive. Your productivity drops, and in this job market, you will have to pay their replacement more. There are also hidden costs to replacing employees. On average, it takes new employees eight months to become fully productive. There’s also the time costs of recruiting, onboarding, and equipping the new employees to keep in mind. You also have to think about the opportunity cost incurred while your new hire builds internal and external relationships.
So, what can you do to give you the best shot of keeping your employees? The best thing you can do is find out how your employees feel and what they need. Without that information, your solutions will be suboptimal at best and ineffective at worst. To learn how your employees feel, conduct stay interviews, launch surveys, and always conduct an exit interview when employees leave.
Finding employees is difficult and expensive right now, but it’s not impossible. Try your best to stand out with benefits, perks, and compensation. Don’t shop too long for new employees. If you find someone you like, offer them the job. If you don’t, you might lose them to a different employer.
While you’re on the search for the next team member, don’t forget to pay attention to the needs of your current employees. Get employer insights straight to your inbox by signing for our newsletter. We are also offering a free 21-day trial of JazzHR, the applicant tracking system that helps you speed up the way you hire.