Companies are raising wages to lure workers in wake of the pandemic, Duke poll finds
Nearly three-fourths of companies are struggling to fill open positions, leading to a sharp increase in starting wages, according to a global survey of chief financial officers by Duke University’s Fuqua School of Business.
The persistence of the coronavirus pandemic has dogged many companies trying to expand at a time when workers fear catching the virus, have few child care options and increasingly have more options for employment, with job openings recently hitting a 20-year high.
Of the firms struggling to hire, 82% are increasing wages on average by 10% to attract workers, according to the survey, which Duke does in collaboration with the Federal Reserve Banks of Richmond and Atlanta.
John Graham, a finance professor at the Fuqua School of Business, said hiring was a problem for companies before the pandemic. But in the past few months, those hiring issues have come back in full force.
A record-breaking 4.3 million Americans quit their jobs in August, nearly 3% of the entire workforce, according to the U.S. Bureau of Labor Statistics.
And the labor force participation rate is still 1.8 percentage points lower than it was in January 2020, shortly before the pandemic began shutting down the U.S. economy.
The hiring issue “holds across all different industries,” Graham said in a phone interview, noting it’s not just a problem for low-wage employers.
“The problem is that we have 2% of the workforce saying, ‘We’re not even going to look for work right now for various reasons,’” he said. “That’s creating a labor shortage.”
Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond, said in August the labor shortage cannot be blamed on just one thing.
Many business owners have tried to pin the shortage on the unemployment benefits that have been given out as a result of the pandemic. But Barkin told members of the North Carolina Economic Development Association that while unemployment may have given workers more leverage, there are other factors at play as well.
“What’s the story here?” Barkin said. “Part is a drop in participation, particularly from parents with elevated care responsibilities and from three times the normal level of retirements.”
Many workers, he said, are simply refusing to work for less than $15 per hour now, especially as gigantic employers like Amazon have tens of thousands of openings at that rate.
“Why would you take an $11 job? Why wouldn’t you go try to get that $15 job?” Barkin said in August. “I think that’s what’s happening at a really broad scale.”
Is the pandemic causing inflation?
These hiring issues are arriving at a time when supply chains are in disarray.
Around 75% of the survey respondents said their supply chains were suffering from production delays, shipping delays, reduced availability of materials and increased materials prices.
Graham said the combination of rising wages and supply chain issues is creating “a lot of pressure on inflation.”
The consumer price index increased 5.4% from August 2020 to August 2021, the highest rate in more than a decade, the Bureau of Labor Statistics said this week.
Graham said companies believe that inflation pressure could stick around in the near term.
“What I think I can say comfortably is (price increases are) definitely a problem for the next 12 months, both on the supply-chain side and the labor side,” Graham said.
He added that many companies don’t see relief coming to their supply chains and hiring until the second half of 2022.
In general, Graham said, “there’s a lot of uncertainty right now.”
And that is dampening some of the enthusiasm around the economy’s recovery from the pandemic.
When Duke asked its survey respondents to rank optimism about the economy on a scale of 0 to 100, the average rating in the survey was 59.9 — a drop from the 69.0 rating reported last quarter.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published October 14, 2021 at 8:30 AM.
