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Utah Business

Wage Growth

Navigating the Tricky Waters of Wage Growth

Today’s hyper-competitive job market presents numerous challenges for employers, from sourcing candidates to quickly bringing them onboard to retaining them long-term. But an emerging trend threatens to unravel the fabric of corporate team-building as new hires join an organization: more and more employees are avoiding the once-taboo subject of comparing their salaries and openly discussing their compensation.

Articles like this one in the New York Times, “Why You Should Tell Your Co-Workers How Much Money You Make,” encourage employees to take advantage of their rights under the National Labor Relations Act and openly discuss their salaries among peers and co-workers as a means to fight pay inequality and increase their job satisfaction. Whether employees talk or not, they can find starting salary figures on any number of online sources, including Glassdoor, Indeed and more.

Point being, there is more transparency than ever about wages, and co-workers will find or are likely to share information about their compensation.

On one hand, it’s easy to say, “well, pay everyone equally, and that’ll solve the problem,” or “just bump up the wages of the current employees to match the new hires.” But it isn’t that simple. The reason involves how employers treat starting wage growth (i.e., what they pay new hires) versus average wage growth (i.e., what they pay current employees).

Historically low unemployment rates across the country and in Utah have compelled employers to reallocate budget that was previously designated for wage increases for their team members into paying higher starting wages to attract candidates. Whether these job seekers receive multiple offers from other employers or merely have greater expectations for compensation, they are ideally positioned to maximize their starting salary, and employers must respond.

This market dynamic places a good deal of pressure on employers when it comes to paying current employees, frequently resulting in lower cost-of-living or merit increases and/or pay bonuses across the board. Given the growth trajectories of salaries across Utah, several industries – especially technology, manufacturing, and call centers – struggle with balancing attracting the right candidates at competitive salaries with properly compensating current staff to minimize employees leaving for better opportunities.

Complicating matters is the willingness of employees to switch jobs. According to a recent Wall Street Journal article, “Almost one in seven of the nation’s 6.1 million jobless Americans in May [of 2018] were voluntarily unemployed, having left a previous position to look for another, the highest share of voluntary unemployment in more than 17 years.”

Even scarier for employers, the September Job Openings and Labor Turnover Summary (JOLTS) report from the U.S. Department of Labor indicated that in July, 3.6 million people across the country voluntarily quit their jobs. That translates into nearly two-and-a-half U.S. workers out of every 100 for the month. Putting this in perspective: for a 100-person employer, at that rate and depending on the industry, at least 24 to 30 employees will quit the organization during the year. Factoring in the costs to recruit and train new employees, this type of worker attrition can be crippling for employers.

Further compounding the problem, JOLTS reported that job openings were at an all-time high of 6.9 million, meaning employers have an increasingly difficult time finding, on boarding, and retaining employees.

In this job seeker market, employers must evaluate their organizational compensation rates and create a game plan to accommodate the ongoing need to be aggressive in their job offers to secure the most talented candidates yet demonstrate sufficient nurturing for their current team members. Employers must strategically and quickly assimilate new hires into their current workforce to maximize retention. Because employees tend to be more committed to the people with whom they work versus the organization where they work, proper peer-to-peer socialization will dramatically reduce new-employee turnover, and save a company time and money. Generally, employers commit less than half the number of staff hours in developing programs to retain employees than they do to find new ones, and the hard costs associated with recruiting can be high.

Following this type of an approach can be the difference between maintaining or growing employee productivity and stalling the growth of the business.

Susan Hornbuckle is vice president of customer and talent engagement for Kelly, a global leader in providing workforce solutions. She oversees the staffing and business solutions operations for Kelly throughout Utah, with a focus on staffing for accounting and finance, administrative, aerospace and defense, education, engineering, information technology, light industrial and manufacturing, and more. Connect with Susan at: