Without a doubt, the pandemic has turned a lot of the established workforce planning orthodoxy on its head. “Things will never be the same” say pundits as we return to a new normal. Many changes wrought by the rapid onset of the pandemic are likely to remain. Work from home options will likely remain at much higher levels even once offices are fully reopened. Virtual business meetings and conferences are probably here to stay too. Perhaps one of the most significant shifts is in wages and labor utilization. As economies reopen, hiring has been more difficult than expected. What’s driving this dynamic?
Most notable in hospitality and service jobs, but elsewhere as well, labor is exerting its muscle as workers slow-walk a return to low wage roles. Pressed for staff, hiring organizations are lowering their age requirements filling gaps with teenage workers. The common narrative about the sluggish return of the workforce is that extended state unemployment benefits depress the appetite of service workers to return to lower wage jobs. However, there’s evidence this may not be the real reason.
The Washington Post reports as some states cut supplemental unemployment benefits earlier than federal guidelines dictate, they are not seeing the flood of workers returning to low wage positions as their state legislatures had predicted. The Washington Post found that small restaurants and hospitality businesses in states such as Missouri, which ended the extra unemployment benefits early, did not see an immediate spike in overall hiring. However, they did see “a jump in hiring of workers over age 25”. However, the Post’s research also found, “the uptick in hiring of older workers was roughly offset by the slower hiring of teens in these states. In contrast, restaurants and hospitality businesses in states such as Kansas, where the full benefits remain, have been hiring a lot more teenagers who are less experienced and less likely to qualify for unemployment aid.”
Hiring teenage workers is not a sustainable hiring practice despite the willingness of America’s youth to accept these lower-wage roles. Workforce management experts point out that in the fall, once young people return to school, they will not be as readily available to work. The tightening supply of teens will again expand the demand for adult workers and drive their value higher.
A better measure of what is driving the return of workers to service and non-skilled roles seems to be the grudging (and tacit) acknowledgement among employers, that pay scales at the bottom have been artificially depressed for a long time. Indexed to inflation and productivity increases between 1968 and 2021, the minimum wage today would be around twenty-five dollars per hour. While very few businesses are offering that as a starting pay rate even in today’s environment, the ones currently reporting greater success enticing workers back to the job are offering starting wages of fifteen dollars or more.
Associated Press reports, “Businesses, particularly in the restaurant, retail and travel industries, have been offering a $15 wage to try to fill enough jobs to meet surging demand from consumers, millions of whom are now spending freely after a year in lockdown.” Online job site ZipRecruiter tells the AP the number of job postings on their site advertising staring wages of $15 an hour has more than doubled since 2019. This increase is also paired with more jobs offering 401(k) retirement accounts, flexible scheduling, signing bonuses and other benefits.