Higher Wages ‘Never the Top Reason’ Workers Take Jobs Amid Labor Shortage

Retailers, restaurants and small businesses are pulling out all the stops to bring workers in the door amid the ongoing labor shortage, with many taking steps to raise their base pay to at least $15 per hour, more than double the federal minimum wage of $7.25.

However, John Waldmann, CEO of scheduling software Homebase, told PYMNTS that in surveys the company has done among hourly workers, “pay is never the top reason they are taking the jobs they’re taking.”

“Ultimately, a lot of it comes down to the work experience that is being offered and other benefits that are available,” he added.

Related news: 7-Eleven Franchisee Labor Woes Suggest Wages Are Not Enough to Woo Workers

Waldmann said that over 60% of the company’s clients had to close their doors at the beginning of the pandemic, and many of them have yet to return to the staffing levels seen prior to COVID-19. Homebase has seen “unprecedented levels of job posts” since March, Waldmann said, at the same time that the number of applicants per job post is at the lowest levels the company has seen.

“Businesses are trying to hire and want to hire, but they’re not able to,” Waldmann said, adding that it’s a “pretty safe bet” that retailers and small businesses will be dealing with a labor shortage through the holiday season.

Some variables that have been accused of depressing the labor market supply — such as childcare responsibilities, health concerns and expanded unemployment benefits — are becoming less of a concern as vaccination rates steadily rise and pandemic policies are rolled back. But still, the labor force participation rate was 61.6% in September, according to the U.S. Bureau of Labor Statistics, down from 63.4% in January 2020, potentially pointing to some deeper structural issues.

Among these issues, Waldmann said, is a “big change” in immigration last year, with fewer people entering the U.S. compared to years prior because of COVID-19; an increase in the number of people retiring, particularly those retiring early; and geographic dislocations during the pandemic that caused people to move away from old jobs or to places where there isn’t as high of a demand for their work.

“I’d like to believe that some of those impacts … are going to work their way through the system,” Waldmann said. “But here’s the reality: If you are a small business, if you are a manager of teams, you should expect to be doing more with less for a while.”

What Workers Want

One of the benefits most valued by workers is flexibility, Waldmann said, which suggests that retailers and businesses should invest in a platform or technology that makes it easier for people to express their availability for work and trade shifts with co-workers.

Target, for example, when announcing it will hire fewer seasonal workers this year and provide more hours to existing employees, rolled out a new mobile scheduling app to simplify the process of adding or swapping shifts. The Minnesota-based retailer has about 300,000 store staff in total at its 1,900 stores.

Also see: Retailers Lean on Employees to Do More Amid Labor Shortage

Waldmann said businesses should also consider providing faster access to pay for hourly workers, allowing them to get paid as they work to “smooth out their income in the way that their expenses fit.”

“Their bills are on two-week pay cycles; they’re incurring a lot of expenses and often incurring overdraft fees and other expenses as a part of their normal two-week cycle,” Waldmann said. “That doesn’t have to be the case.”

PYMNTS research, conducted in collaboration with LendingClub, found that 54% of U.S. consumers, or 125 million adults, are currently living paycheck to paycheck, with close to 40% of these people struggling to keep up with their bills.

Going into the holiday season, Waldmann said that customers need to practice patience, as stores will likely be understaffed, and the employees possibly overworked. “Even the businesses that are hiring, they’re probably dealing with a ton of new employees who aren’t going to be as trained or experienced,” he noted. “It’s nobody’s fault; it’s just where the world is.”