The relationship between business owners and workers is undergoing profound changes. According to a Bloomberg News survey, 55% of workers admit that they will seek out job offers from other companies so they can use them as leverage to get raises at their current jobs. This gives companies a lower hand. It is more of a “pay me higher, or I quit” type of situation now. For this reason, companies may need to invest more in employee retention programs. Below are ways employees use rising wages to receive better job opportunities.
The Reason for Higher Wages
A lot of workers tired of their current employers. However, unlike in the past, they now have the freedom to express themselves. There are lots of reasons why workers are feeling a bit more liberated when it comes to making demands and moving on. One factor is the Covid-19 pandemic itself. A lot of people used the pandemic to re-imagine their work lives. This has caused people to consider new careers and even goals outside of employment. For instance, people are looking to spend more time with family.
This means that there really is no labor shortage. Instead, people have been displaced from their jobs and they are looking to accept safer positions than they had before. Most industries that lost jobs during the pandemic started having a tough time filling their positions, and this led to them offering more money. For instance, people perceive leisure and hospitality and education services as more dangerous since increased contact with people exists. These are some of the trends that are giving those in the labor force more power.
There are currently about two million more job openings than unemployed people. This means people can be choosier and more demanding, which is why wages have started rising.
Rising Demand for Employees
The changes occurring in the labor market are much broader than the pandemic-related signing bonuses. Because of the rising demand for employees, companies are becoming more willing to pay a little more and train workers as well. You will also see that most businesses are willing to take chances on employees without traditional qualifications and to accommodate more flexible working conditions.
For instance, there is a rising remote work trend, and most workers are getting flexible working schedules. This leads to an erosion of employer power that began during the low-unemployment years that led to the pandemic. Unfortunately for employers, this trend will persist for years. Burning Glass Technologies, a company that views millions of job listings daily, discovered that now, the share of postings that say “no experience necessary” has risen by 60% in the past two years, which just shows that companies are now less meticulous.
Apart from that, the percentage of those promising starting bonuses has doubled. This is also contributing to giving workers the leverage they need to demand higher wages. If jobs are available, and new companies are offering starting bonuses and higher wages, then employers have two options only. An employer can either increase the wage and provide better benefits or risk losing their employee to someone who is offering better conditions.
The Demand for More Money
Now, the reservation wage, which is what workers normally demand when starting a new job, is currently 19% higher in March this year than it was in November last year. This is the same situation even for those employees without a college degree. This data came from a survey from the Federal Reserve Bank of New York.
This is making it difficult for companies to retain their workers because if a worker applies for a new position and they demand a higher starting wage, it will now be upon the current employer to match the reservation wage or lose their employment. The power has shifted toward the employees. The job market is currently so tight that employers do not have the upper hand in any negotiations.
Briefly, there are currently more jobs than unemployed people. This means that there is a high demand for employees, and this gives employees the power to be pickier. This also gives those who have currently employed the power to press their current employers to either give them better benefits or see them walk. There is a need now more than ever for employees to invest in employee retention programs. If you are interested in employee retention programs for your company, contact Refered today.