Fed panel: Wage hikes and more flexibility are the answers to hiring woes – Reuters
MINNEAPOLIS — Workers’ expectations for higher wages, better benefits and job flexibility could explain the hiring challenges companies are facing as the economy continues to recover from the pandemic, according to a recent analysis from the Federal Reserve Bank of Minneapolis.
At a conference on regional economic conditions this month, a panel of four employment experts from the Minneapolis Fed’s six-state footprint agreed that low wages were a major contributing factor. preventing potential employees from entering the labor market. Many service-sector jobs don’t pay enough to attract workers who will often have to contend with inconsistent or unreliable schedules and few or no benefits, panelists said.
Employers across all sectors have struggled to fill vacancies since the economy began to recover from the initial shock of the pandemic. Since hitting a low of less than 5 million in the spring of 2020, the number of job openings in the U.S. labor market has risen to nearly 11 million late last year. Minnesota‘s labor force participation rate remains at 67.7%, about 2.5% below what it was in the months before the pandemic.
The pandemic and recovery are part of the problem, but the conditions generating current hiring problems existed long before the first COVID-19 infections in the United States, said Joe Hobot, president and CEO of the American Indian OIC, a Minneapolis organization that helps Native Americans. find a job.
“That will be the new normal, probably spanning five years or more,” Hobot told the panel. “We don’t really think this is an anomaly caused by the pandemic, but rather an acceleration of trends that we have seen coming for some time.”
The first thing any employer can do to attract workers is raise wages, he said.
“The $15 an hour minimum wage debate is a strange one, and I think we need to see a dramatic increase in those wages, especially at the entry level and the draft level,” Hobot told the panel.
Brianne Farr, market manager for Michigan’s Upper Peninsula for ManpowerGroup, a Milwaukee-based global staffing and recruiting firm, agreed: Lower-level jobs where wages haven’t yet risen to match the inflation are more difficult to provide.
“The few people who are looking for work – the few quality people, want the highest rate of pay possible, and I don’t blame them,” she said.
In the summer of 2021, as millions of American workers began looking for new jobs in what some called “the great quit,” the Fed and local labor groups polled service and industrial workers. low-wage hospitality workers in the Twin Cities area who were looking for new employment. Of this group, 58% wanted higher salaries, 47% wanted better benefits, and 43% wanted more flexibility.
The lack of flexibility at work also works against parents seeking to enter or re-enter the labor market. Minnesota Employment Services Coalition staff told Fed investigators that the biggest perceived barrier faced by job seekers was affordability of child care, followed by housing. More than 70% said child care affordability was a significant challenge, and more than 50% said it was extreme. More than half of coalition staff described low pay as a major concern for job seekers.
Although concerns about COVID-19 didn’t feature prominently in the survey, Farr said many of the clients she works with say it’s a common reason people continue to avoid the venue. job.
“Even if you’re vaccinated, people are still afraid to go to work,” she said. “Maybe they have an unvaccinated child at home, maybe they are immunocompromised themselves.”
Wade Luneberg, with Unite Here Local 17, a union representing about 8,000 Minnesota hospitality workers, said the pandemic is still making many service workers nervous.
“COVID in a customer-facing industry is really tough — not knowing what the status of that customer or the person working next to them might be,” he said. “The closures also pose a threat to the reliability of hospitality, retail and service operations. The other extreme is overscheduling due to labor shortages.
A reliable return to childcare will also be key to getting people back to work, said Luneberg, who added that COVID-related school closures have made childcare harder for workers.
What do workers count on in terms of income when they stay away from the labor market? While some have blamed the decline in labor force participation on the end of expanded unemployment benefits, the end of these measures does not appear to have affected the types of income workers rely on, according to a federal analysis of the United States. United. Data from the Census Household Pulse Survey.
“While there was indeed considerable uptake of these benefits, particularly in the first half of 2020, they generally tended to decline and many households relied on a combination of other sources of income,” explained Erick Garcia Luna, regional outreach director at Fed. from Minneapolis.
According to the data, many households supplemented their incomes by dipping into savings, selling assets, using credit cards and loans, and borrowing from friends and family.
The survey of low-wage service and hospitality workers from the Fed and the local task force found that more than 80% continued to rely on regular income from work to meet their spending needs since the start of the pandemic. Although self-reported dependence on unemployment has increased, there has also been an increase in the level of dependence on credit, savings, and borrowing from friends.
“They show the complexity of workers’ finances and provide insight into why the end of pandemic benefits may not have had the effect many were hoping for,” Garcia Luna said.
The Federal Reserve Bank of Minneapolis monitors economic conditions in Minnesota, the Dakotas, Montana, northern Wisconsin and the Upper Peninsula of Michigan and is charged by Congress with encouraging conditions that maximize employment and maintain prices stable.