Good talent is hard to find, and the tight labor market is leading some employers to wage bidding wars over talent. But how much money is enough to convince an employee to turn down a job offer and stay with their current employer?
In a recent survey, Express Employment Professionals posed that question to job seekers and also asked employers how much they would be willing to offer a star employee to stay with the company. On average, employees want more than employers are willing to offer.
Job seekers were asked, “If offered a new job, how much of a pay increase would it take to stay with your current employer?” The top three responses were:
- 20% said 16 to 20%
- 19% said 11 to 15%
- 19% said 5 to 10%
Employers were asked, “If a star employee were offered a job with another company, how much of a pay increase over their current salary or wage would you offer to retain them?” The top three responses were:
- 39% said 5 to 10%
- 14% said 11 to 15%
- 13% said they would not offer a pay increase
Overall, 57% of employees said they would want a raise of more than 10%, while only 30% of employers said they would be willing to offer more than 10%, even to a star employee.
Terri Greeno, an Express Employment Professionals franchise owner in Crystal Lake, Illinois, says she tells companies that while the minimum wage is $8.25 by law, in effect, the “new minimum wage” is $11 to $12 an hour due to high demand.
Greeno stresses that even employers who do not raise wages in this competitive labor market are “paying for it one way or another” in the form of high turnover or additional overtime.
KV Aulakh, an Express Employment Professionals franchise owner in Barrie, Ontario, is seeing the same trend and warns that employers risk losing talent if they don’t keep up with pay expectations.
“Most companies in our area pay above the minimum wage,” Aulakh said. “Companies that do not increase wages certainly lose workers and, more importantly, have a hard time finding the right talent that they need.”
In Michigan, Janis Petrini, a Grand Rapids franchise owner, says wages have continued to increase over the last year. She says she’s seen the most pronounced increase for hourly workers, largely because “it is much easier to see the changes at the hourly level since these wages tend to be set for specific positions.”
Brandon Malloy, an Express franchise owner in McMinnville, Oregon, says the upward pressure on wages in his area remains “strong” but that some companies are remaining “hard-headed” about not offering higher pay-and losing workers as a result. He says an entry-level worker will switch jobs for a $1 per hour increase; a mid-level or skilled worker will change for a $3 per hour increase, and a professional will switch for a $5,000 salary increase.
Daniel Purdy, an Express franchise owner in Abbotsford, British Columbia, reports that due to ongoing labour shortages, many employers are already offering wages well-above industry standards in order to retain their workers.
“Many local service sector and light industrial jobs pay $1.50 to $3 per hour above the minimum wage now,” Purdy said. “There are significant labour shortages throughout the Lower Mainland with B.C.’s unemployment rate at an unprecedented low of 4.6%. In a tight labour market, company loyalty is becoming increasingly rare. We’re seeing younger generations of employees only average one to two years in the role with the same employer.”
Chris Ashcraft, a franchise owner in Mobile, Alabama, agrees that an entry-level hourly worker will switch jobs for a $1 per hour increase. In his area, it is difficult to fill a job for less than $10 an hour, and he expects wages “will continue to rise.” Companies that cannot afford to pay increases often offer other benefits like bonuses for attendance or healthcare.
“It has never been easier for workers to jump between jobs,” said Bill Stoller, CEO of Express. “And because workers are so mobile, there’s less fear about leaving a ‘good job’ for a pay increase. If the new job doesn’t work out, there are plenty of other employers eager to hire. Businesses have to keep their finger on the pulse of the local economy, or they risk losing the talent wars.”