As states have opened up, restrictions lifted and vaccines distributed, over 8 million new jobs were posted online. With this huge number, you’d think that millions of Americans in between roles would jump at the chance to find a new job. However, this isn’t happening. Instead, companies, specifically those in the retail, hotel, leisure, restaurant and warehouse sectors, are begging for workers to meet the demand.
There is a rational reason for the dichotomy. Stimulus checks were sent out to families, while unemployment benefits were enhanced by the federal government. An unintended consequence was that it was a better deal for people to remain on unemployment rather than going back to work.
It’s not that people are lazy. They weighed the options and decided to wait it out and see what happens. You may disagree with them, but many people feel it doesn’t make sense to go to a menial, dead-end job and risk catching Covid-19 when you don’t have to do it.
Another reason for the lack of job applicants is due to working mothers deciding to take care of their children, especially as public schools closed. Moms had to make the tough choice of giving up their work.
Major companies, in an array of different industries, have come to the conclusion that they need to raise wages to attract workers. It’s also seen by many as the right and good thing to do.
One of the largest, most respected U.S. financial institutions, Bank of America (BofA), announced plans to set the minimum wage for all positions at the company to $25 an hour by 2025. BofA increased its minimum wage to $15 an hour in 2017, then $17 two years later. It now stands at $20. The move may motivate other banks and institutions to follow BofA’s lead.
The bank didn’t stop with internal employees. Brian Moynihan, the CEO of BofA, will call on its outside vendors to pay their respective employees at least $15 an hour. It’s reported that 99% of the 2,000 vendors—representing about 43,000 employees—benefited from this policy.
Sheri Bronstein, chief human resources officer at Bank of America, said about the decisions, “A core tenet of responsible growth is our commitment to being a great place to work, which means investing in the people who serve our clients.” Bronstein added, “That includes providing strong pay and competitive benefits to help them and their families, so that we continue to attract and retain the best talent.”
Amazon, the online retail juggernaut, announced that it plans to hire 75,000 people in its U.S. and Canadian fulfillment and logistics networks. The company said it will offer an average starting pay of over $17 per hour. In many locations, there will be sign-on bonuses of up to $1,000.
The giant retailer offers full-time employees health, vision and dental insurance benefits, along with a 401(k) with 50% company match. Amazon also provides paid parental leave. Employees can avail themselves to upskilling opportunities and financial assistance for taking courses in high-demand areas.
The ubiquitous fast-food chain, McDonald’s, is increasing the hourly wages for U.S. company-owned restaurants. The burger chain seeks to bring aboard about 10,000 workers. Workers at McDonald’s will receive raises of around 10% and entry-level employees will earn $11 to $17 per hour. Managers will take home about $15 to $20 an hour.
Like many chains, there are both company-owned stores and those owned by families and individuals. These increases won’t benefit workers at noncorporate-owned stores, which amount to 95% of the outlets.
States are trying to help out as well to get workers into businesses. Connecticut Governor Ned Lamont announced that he’s spearheading a “Back to Work CT” program. This initiative seeks to entice unemployed residents to find a new job. When this occurs, there will be a one-time $1,000 bonus paid. This amount will be offered to 10,000 long-term unemployed people who live in the state.
There are critics of raising the minimum wage. Small business owners say they can’t compete with giants, like Amazon and BofA. They don’t have the funds, as their businesses operate on razor-thin margins. An increase of a few dollars means the difference between a small operator earning a profit or losing money. Some may harshly say that the owner shouldn’t be in business if they can’t pay a living minimum wage. Small businesses have been the backbone of America since the beginning. Not every business can be a multimillion or billion-dollar operation.
There is also the concern that by raising the minimum wage it would simultaneously increase child care costs. In 2019, the average early child care worker in the U.S. earned $11.65 an hour. A $15 minimum wage would increase the cost of labor for child care providers by about 33%. It’s also not fair to treat each state as if they’re the same. Based on the cost of living, for some states, $15 may seem abundant—in others, not so much.
A big concern is that companies may start weighing the escalating costs of wages against deploying new technologies. It’s reasonable to believe that wages will increase, especially as we’re seeing signs of inflation. We’ve already seen self-checkouts at major retailers, such as Target. A McDonald’s franchisee, believing worker pay will continue going higher, may elect to use self-pay kiosks instead of employing people. The expenditure, they’ll rationalize, will save a lot of money in the long run, which will end up hurting the same workers we’re trying to help.
Source: Forbes
