We hear it all the time: when the labor market tightens, wages rise. The thinking goes that more competition for good workers leads businesses to boost their pay to attract and retain the best talent possible.
In this model, the best workers make more money, companies benefit from their labor, and everyone goes home happy at the end of another productive work-week.
In the wake of the worst economic bust since the Great Depression, this isn’t happening. Wages are flat and employees are disgruntled.
Pent-up demand for higher pay is building, and according to the findings in our annual job seeker attitude survey, once wages begin to rise businesses are going to lose the leverage they’ve had over workers since the downturn began.
The Numbers Don’t Lie.
With 215,000 new jobs added to the economy just last month and the unemployment rate at a 7-year low, we’ve now recovered the jobs that were lost in the Great Recession and are in the midst of a prolonged economic expansion.
Despite all the good economic news, job seekers have mixed feelings about the state of the job market.
- 54% selected a 7 or above when we asked them to rate on a scale of 1-10 how confident they were that they could find a job.
- When we asked them to rate the overall economy the highest percentage gave it a 5, with only 2% rating it a 10.
Why the discrepancy? As we mentioned before, wages – more specifically, stubbornly stagnant wages.
Money Changes Everything.
Wages have been growing at the slowest pace in over thirty years, and job seekers’ experiences reflect that troubling fact.
Here’s the breakdown when we asked how long it had been since their last raise:
- 47% said it had been more than a year
- 10% told us they have never received a raise.
The raises that were given out were less than stellar, according to job seekers, with 59% rating their most recent raise at a 5 or below on a scale of 1-10.
Because of that wage stagnation, employed job seekers are looking to jump ship to chase bigger paychecks:
- 47% cite “looking for better pay”
- 43% say they are looking for “advancement opportunities.”
- 27% want to change careers
That dissatisfaction over wages, combined with painful memories of the huge job losses of the recession, factors into another trend we noticed when we asked job seekers how they viewed business as an institution:
- 78% said “no” when asked if they believed that businesses had worker’s best interests at heart.
- Government got bad reviews too, with 77% disagreeing with the statement “The Government cares about regular workers, and is trying to make things better for them.”
The New Normal.
Of course, these trends have been noted before. Wages have been on the decline since the 1980’s – and American’s faith in its institutions has been on a similar slide – but it seems that the economic disaster of the last crash has seriously damaged the optimistic belief that every generation will do better than the last.
In fact, only 47% of the job seekers we surveyed thought that we would ever fully recover from the great recession.
What does all this mean for recruiters? Job seekers are now more focused on their personal economic situation.
Recruiters can’t rely on loyalty to the company to keep workers at their desks, as Americans have begun to view the nature of employment as a short-term transactional arrangement rather than a cooperative relationship of mutual growth.
Pay is their primary concern, and if the economy continues to improve retention will become a bigger issue as workers begin to flee lower-paying jobs for higher salaries.
Retention is Often Cheaper than Recruiting.
It can be a tough call, but if the cost of hiring, onboarding, and training new employees is in line with, or below, the cost of wage hikes, it makes sense to keep the staff you’ve assembled, who know your company, and whose capabilities are clear to you.
If a company-wide wage increase isn’t possible, you should conduct “stay interviews” with your staff and ask them what would entice them to remain with the company.
Some employees may prefer more flexible schedules, a clear path to eventual promotion, or extra vacation days over a raise. Finally, hearing where your employees are coming from can be a powerful assist.
We created this survey to help employers understand the concerns of their staff, so that decisions can be made in the context of where the majority of job candidates are at in terms of their perceptions of the job market.
By listening to their concerns and adjusting your retention policies to address them, you can keep valuable employees on your team and helping to grow your business, even in a tight job market.
Allan Jones is the chief marketing officer at ZipRecruiter and leads marketing, analytics and customer service teams with a philosophy that is a blend of science, art and customer happiness.
Allan previously held executive roles at a number of startups, including head of product and subscription at Docstoc (acquired by Intuit) and CEO of venture backed subscription business Fourth and Grand.
His expertise and highly successful track record in subscription businesses has fueled ZipRecruiter’s massive growth as he has worked to build the company’s first ever-marketing organization. Outside of work, his passions are music, politics and the L.A. tech scene.