Why Wage Increases and Sign-On Bonuses Aren't Enticing Workers to Search For New Jobs
July 9, 2021
Business owners, economists, and the media are racking their brains trying to figure out why there is a lack of workers for all of the jobs that are open. Restaurants, retail stores, and shops complain that they can't keep up with demand without the help.
A new 5,000 person survey from Indeed, the large job aggregation site, offers some insights into this conundrum. The study shows that "many job seekers say they don't feel a sense of urgency." The results indicate that "the unemployed don't feel they need to find a job right away, but do want to return to work sometime in the next three months."
Here are the highlights of the study:
- Job seekers don't express a sense of urgency about finding a new job but say they are likely to pick up the search for work in the months ahead.
- The vast majority of job seekers want a new job in the next three months, but even among those who say their job searches are urgent, more than 20 % don't want to start a new position immediately.
- Many unemployed workers say increased vaccination against Covid-19, shrinking savings and the opening of schools in the fall will be key catalysts for stepping up their job searches.
- Only about 10% of job seekers say they're actively and urgently looking for work.
- Around 45% are passively looking for jobs, and another 30% plan to get a job in the near future, but aren't looking at all right now.
The economy has aggressively turned around since the dark days of the pandemic. Unfortunately, there are around 9 million Americans who are still in between roles. At the same time, the United States Department of Labor reports that job openings have skyrocketed to an astounding 9.3 million openings. A record number-nearly 55% of people - say jobs are "plentiful," according to a new Conference Board Report.
Some companies claim that the enhanced unemployment benefits disincentivize people from accepting a new a job. President Jow Biden's administration says that the answer is simple. "Pay them more," Biden said.
It's not that easy, though. There is a lot of churn in the market. With so many jobs available, it's easy to quit and look for something else. The "Great Resignation" has prompted workers to quit their jobs at record rates. Indeed reports some of their findings on why potential workers are delaying their job searches:
- Around 25% are afraid of Covid- 19 and are waiting for vaccination rates to climb before getting back to work.
- More than 20% say they have a financial cushion and around 12% say their unemployment insurance is the reason they're not rushing to get a job.
- Childcare is also a major factor, as 20% of lower-wage workers are staying home due to care responsibilities.
Let's be honest about this. Low-wage jobs, for the vast majority of people, are not pleasant. It's hard work with little room for advancement. Oftentimes, you're not treated with respect or dignity. When you earn a minimum wage or less, after taxes, commuting and childcare costs, and other work-related expenditures, you're left with little take-home pay.
You may disagree with the person's decision, but it does seem like a reasonable response to collect extra unemployment benefits and figure out your next move instead of lugging around heavy boxes in a warehouse with a five-minute break every few hours. "These jobs are not very good," says Steven Fazzari, an economist at Washington University in St. Louis. "They're hard work, and they don't pay very well."
It's predicted that the job market will return to some sense of normalcy in the fall. By September, schools will reopen, which helps working parents with their childcare issues. Day-care centers will open too. As time passes and people keep getting vaccinated, Covid-19 fears will dissipate. Those who've been on the sidelines should have some renewed confidence. Many folks may have used this time to learn a trade, go back to school, try to pivot into a new career, start a new business or enter the gig economy.
Nick Bunker, an Indeed economist, said, "I'm really skeptical that what we're seeing is the start of a new era of worker bargaining power." Bunker continued, "The wage hikes and benefits could start to disappear in the fall." The tables may turn on the workers. Businesses have been raising wages and offering sign-on bonuses in the amount of $1,000 or more. It's only a matter of time until the companies start thinking of replacing workers with technology.
Fast-food chains may install kiosks where you can place your own order through the machine. Instead of waiters and waitresses, you'll have a device on the table to submit your order. Factories and fulfillment centers have been adding robotics and will hasten the processes. Go to any supermarket, Target, Home Depot, or other larger stores and you'll see more self-serve checkouts every time you return. Long term, companies will see this as a cost savings. The deployment would be a one-time expense. Software, artificial intelligence, robots, and technology don't form unions, take vacations, sick days, or bathroom breaks.