With unemployment in California still hovering above 8%, many employers are baffled by how difficult finding qualified candidates has become. It’s a trend that isn’t isolated to California. Even though pandemic restrictions are loosening, employers all over the country cannot seem to fill positions.
The explanations for why filling positions has become so difficult are familiar ones:
- Federal unemployment benefits of $300 per week are giving some people an incentive to not work.
- Schools being out of session are forcing many parents to choose between work and childcare, especially given how expensive childcare has become.
- Health concerns are preventing many from returning to full employment.
In our experience, although these explanations for the labor crunch have some validity, they miss the elephant in the room: today’s workers want—and need—to be paid a higher wage.
The minimum wage doesn’t cut it
We regularly work with employers accustomed to paying minimum wage for many of the positions they are struggling to fill today. In today’s labor marketplace, employers offering minimum wage often end up with candidates who are under-or unqualified, if they find candidates at all.
There are two related reasons this is true. The first is the minimum wage itself. The Federal minimum wage of $7.25 per hour has not changed since 2009. For several years, California’s minimum wage has been rising each year by $1 per hour on its way to $15 per hour for all employers by January 1, 2023 (a year sooner for employers with more than 25 employees). The current statewide minimum wage is $14 per hour, but some jurisdictions, like Los Angeles County, have set their own minimum wage.
While the minimum wage in California is rising, the cost of living is, too. California is a notoriously expensive place to live. Transportation costs, with long commutes and costly gas, play a role. Housing is especially tough. In Los Angeles County, the average rent for a studio apartment is $1,158 per month. An employee working at $15 per hour would need to work over 77 hours (without paying taxes) before earning a dime for anything else. With median home costs nearly three times the national average, homeownership is simply out of reach in Los Angeles County for many low-wage earners.
Workers know what they are worth
For many workers who are near the bottom end of the wage scale, the high cost of living means that a minimum wage job is impossible to sustain. Factor in a long commute, taxing working conditions, or difficult working hours, and many people can’t justify working for minimum wage.
Competition adds another layer to the puzzle. Some of the competition comes from businesses just down the road. For example, employers located in unincorporated areas or just outside Los Angeles County may not be subject to the county’s higher minimum wage, but are still competing with employers who are.
But competition doesn’t exclusively come from down the road. It comes from other cities and states as well. When the cost of living is so much lower in the Central Valley or elsewhere in the United States, some workers are simply choosing to leave for greener pastures.
The answer is higher wages
The bottom line is that higher wages are no longer a nice extra. They are a “must-have” for employers who want to fill positions with qualified people.
We have seen it happen again and again: employers that seem to only attract workers who lack experience or other key qualifications suddenly get a flood of applicants when they raise their hourly rate by as little as one or two dollars.
Raising wages is not always easy. Tenured employees may ask for raises as well. Higher wages mean a tighter bottom line. But there’s another side to the equation: with higher wages come better employees who are more productive, work more safely, and will be more likely to stay.
Connect Staffing is here for you
At Connect Staffing we constantly look for ways to build better connections between job seekers and employers. We are happy to help employers find effective strategies for attracting and keeping talent. Contact your local office today to speak to a recruiter about your company’s staffing needs.
