USA Today reports this morning that "companies are scrambling to hold on to workers amid a tightening labor market and higher turnover, doling out bigger raises, expanding benefits and providing more training and other perks ... The U.S. unemployment rate last month fell from 5.5% to a near normal 5.4%, helping shift the labor market's balance of power to employees. In March, 2.8 million workers quit their jobs, largely to take other positions, the most since April 2008.
"Companies are responding. Wages, salaries and benefits jumped 2.6% in the first quarter, the most since 2008, according to Labor's Employment Cost Index."
"Companies are responding. Wages, salaries and benefits jumped 2.6% in the first quarter, the most since 2008, according to Labor's Employment Cost Index."
- KC's View:
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There will, of course, be the entirely legitimate argument from some that things really aren't all that good, that the unemployment rate is that low only because so many people have stopped looking for work and taken themselves out of the labor force. Which is true enough.
But that doesn't change the fact that the labor market is tightening, that the economy is improving (though clearly not for everybody), and that companies are going to have to compensate based on these facts. I hope that business leaders are smart enough to realize that this is time to start closing the wage imbalance chasm that has afflicted this country for so long, with top-level execs making more and more money while the people on the front lines make less money.
Some will say that better paid employees do not necessarily translate into more motivated and productive employees. (This is a standard line used to argue against an increased minimum wage.) That's true ... but creating a dedicated, motivated and productive workforce doesn't stop with a bigger paycheck ... it just starts there. Employees want to feel they have some skin in the game, that their opinions are valued, and even that they have a sense of ownership.
If top-level executives can figure out how to create these kinds of environments, that'll be one way for them to start earning their money.
