Getting a signing bonus is often associated with top young athletes. Now, taking a job driving a chemical truck in the United States can earn you a signing bonus of as much as $5,000 — and then there are recruiting bonuses, retention bonuses and safety bonuses.
Those are the tactics that Randy Strutz, president of Quality Carriers in Tampa, Florida, is using to fill positions as unemployment lingers near the lowest level since before the last recession. The situation is cropping up across more industries in the United States, as businesses feel increasing pressure to offer better wages and incentives to attract workers.
“It’s been a challenge to get good, qualified drivers,” said Strutz, who supervises about 2,500 truckers at the company owned by private-equity firm Apax Partners. “I expect we’ll probably have to spend more money to find applicants.”
The extent to which a tight labor market drives wage growth is a crucial factor for Federal Reserve Chair Janet Yellen and her colleagues as they debate the timing of the first interest-rate increase since December. Last month, the central bank held off from a hike — in a decision that spurred three hawkish dissents for the first time in five years — with Yellen saying that employment figures suggest the economy “has a little more room to run than might have been previously thought.”
One of the first complaints that Milwaukee School of Engineering construction-management professor Jeong Han Woo hears from recruiters is the lack of skilled labor available. Companies recruiting at the school’s career fair have more than doubled over the past five years to about 75, Woo said. “Almost every one of our graduates has a job offer,” he said.
About 69% of construction firms are having trouble filling the hourly craft positions that represent much of the workforce, especially carpenters, electricians and roofers, according to a recent survey by the Associated General Contractors of America.
Sectors as varied as welding, sales and medicine are experiencing both a shortage of labor supply and high demand, according to the Fed’s latest Beige Book anecdotal survey of businesses.
“Companies are now faced with a choice: How do they offset that margin squeeze, in which they have to pay people a bit more without raising prices?” said Dutta of Renaissance Macro. “My suspicion is they will probably raise prices.”
Not all employers can afford that luxury. A trucking analyst in the New York region said companies in the industry don’t have enough pricing power to afford higher salaries, according to the Beige Book. In the Atlanta district, there was “little evidence of wage pressure,” even though “business contacts continued to describe a tightening labor market with challenges finding high-quality workers to fill open positions.”
RELATED: Driver pay levels flatten
The Beige Book’s national summary said pay growth “ranged from flat to strong” across the 12 regional Fed districts, “but most reported that wage pressures remained fairly modest.” The Fed’s preferred measure of prices rose 1% in August from a year earlier, well below the central bank’s 2% target. Excluding food and energy, inflation is running at 1.7%.
Try telling Jim Fris that wage pressures are modest.
Fris, the chief operating officer of PJW Restaurant Group, which has about 20 mostly casual eateries in New Jersey and Pennsylvania, has been having difficulty filling kitchen positions including prep work, cooks and dishwashers. He said he’s had to raise hourly wages around 25% over the past three years, and pay will go up again this year.
“It’s dog-eat-dog to get the best managers — everybody is paying a little more,” Fris said. “I don’t see this ending. Now, if you’re not aggressive with pay, you just can’t find quality help.”