The impact of the COVID-19 pandemic on long-term unemployment continues to pose significant challenges for employers. At present, long-term unemployment is at its highest level in sixty years. Women have been particularly hard hit, as nearly three million women have dropped out of the workforce in the last year.
At the same time, employers report that they can’t find enough people to hire.
Surveys suggest why some can’t or won’t go back to work. Millions of adults say they aren’t working for fear of getting COVID-19. Rolling school closures are leaving workers with gaps in childcare. Some who are out of work don’t have the skills needed for jobs that are available or are unwilling to switch to a new career. Many have retired earlier than expected.
Moreover, research by the Society of Human Resource Management found that a quarter of employees plan to quit their jobs outright once the COVID-19 pandemic subsides and recruiting efforts start up again. Major contributors to this exodus include desire for better compensation and benefits (35%), and better work/life balance (25%).
“The pandemic has changed people’s motivations,” said ZipRecruiter economist Julia Pollak. “Employers may need to be patient and may have to become more flexible in order to find workers.”
Workers could stand to benefit from a temporary reduced supply of labor. They could command promotions and better wages, which they then could spend in their communities, boosting economic output. They might also be able to negotiate more flexible schedules or other perks.
What can companies do to attract workers?
One way is the way they always have: with increased pay and incentives. In many ways, enhanced unemployment benefits, now discontinued, were a backdoor to higher wages for lower wage workers. Before Covid-19, when unemployment was as low as 3.5 percent, some employers were forced to raise pay, and wage earners in the bottom quartile experienced the fastest wage growth.
But many employers have relied on low wages for years. Prior to the pandemic, job growth had occurred in all of New Jersey’s largest 15 counties over the prior three years. However, in each of these counties, wages had actually gone down. In other words, even as hiring increased, wages in the aggregate declined. As a result, many employers are now ill-equipped or unprepared to raise wages even if it hurts the bottom line.
Six of ten employers say that skilled-labor shortages negatively impact their business. Still, only one in ten say they are considering a higher starting wage. In other words, businesses that rely on low wage labor are willing to take lower profits than raise wages.
But many employers need skilled workers. How can an employer remain competitive?
“Members have access to wage and salary ranges and the mean/median for most jobs in New Jersey so that they can benchmark wages and salaries by level, years of experience and organization size,” says John Sarno, president of the Employers Association of New Jersey (EANJ).
EANJ uses licensed software that simplifies salary data analysis and compensation planning, allowing EANJ members to determine competitive salary and wage levels, compare employee salaries with market benchmarks with access to employer-reported compensation data. More here.