Because of labor shortages and consumer demand, employers have to offer wages well above the minimum established in California, which hits $15 by 2023. Photo by NeONBRAND via unsplash.com
Written by Frank Lopez
Even if the pandemic hadn’t caused such a massive disruption to economies and social structures, minimum wages still would have been a hot topic for debate.
Required by state law, the California minimum wage has been increasing each year for employers with 26 or more workers, and with a delay of one year for employers with 26 or fewer employees.
The California state minimum wage will increase until 2023 where it will stand at $15 dollar an hour.
But, because of labor shortages and companies desperate to attract workers back, they are already offering wages well above that.
Along with employers themselves struggling with a lack of workers, staffing agencies are also having trouble finding qualified candidates with a smaller labor pool.
Denham Resources, an employment agency in Fresno that specializes in executive recruiting and office staffing, has seen dramatically less applicants for jobs, even with businesses offering higher wages to attract talent.
Kathy Bray, owner at Denham Resources, said that in 2019, applicants were happy with a $15 to $16 hourly wage, but are now wanting wages closer to $20 an hour.
Because the agency deals with office jobs, Bray said that applicants are already expecting pay way above minimum wage. Companies are obliging at this time.
Due to rising demands across the board for goods and services, companies cannot reduce the size of work crews or cut hours, leaving employers to have to pay large crews higher wages.
“I think it’s going to end up with consumers seeing, as they already are, higher prices,” Bray said. “We will all see higher prices, including the people who are demanding higher wages.”
There are also issues of seniority, with employees that may have been at a company for several years being paid less than a new employee. That is something employers should be mindful of to keep loyal, longtime workers satisfied.
Bray criticizes calls for employers to simply raise their wages to attract workers because most small and medium sized businesses are already running on thin profit margins and are “in business to keep their business going.”
There is an expectation of an influx of applicants once unemployment benefits and other federal financial aid expires, but those applicants could see issues. Bray said that companies might not favor those who have a two-year gap in their work history when they were able to work but chose not to.
While there is a possibility of the wages offered by companies being reduced as more people return to the job pool, the people getting currently getting hired will keep the higher wages they start with, Bray said.
“Employers will have a hard time justifying bringing wages back down after this,” Bray said. “We celebrated our 50th year in businesses last August and I have never found it as hard to find people as it is now.”
While business communities might feel some tension from state mandated minimum wage increases, the current increases are coming from employers themselves.
“It’s classic law of supply and demand,” said Fresno Workforce Connection Executive Director Blake Konczal. “There is an insufficient supply of interested workers, and I’m not familiar with a business that hasn’t had to raise its wage offer, or offer better working conditions, or better work schedules, not because of the law, but to attract workers.”
Workforce Connection, an employment agency administered by the Fresno Regional Workforce Development Board, helps applicants with job searches, resume writing, training and referrals to partnering agencies. It works with clients across various industries and has locations in Fresno, Reedley and Mendota.
Konczal said employers are “desperate” to find workers at this time and willing to make more compromises than they would have in the past.
In September, when unemployment and Covid-19 related financial benefits end, there is an expectation of the supply of workers to increase.
But right now is the perfect time to find a job because employers are willing to take the chance on inexperienced workers and train them, but that won’t be the case as time goes on,” Konczal said.
The wage increases are being seen across all industries, but it’s not just employee wages that are going up. Employers are increasing hiring bonuses and upfront promises of varied work schedules.
Businesses will have to bite the bullet with these high wage offers for the time being, but businesses owners are facing an existential issue—“If we don’t get off the ground now, we may not continue.”
Employers will do what they have to do right now to stay in business for the long run.
“It’s an applicant’s market right now, and I just wish people would take advantage of it. Right now is the time,” Konczal said.
Even during times without a pandemic, restaurants tend to operate on slim profit margins, which is why restaurant owners and associations tend to be the most vocal against minimum wage increases.
The effect is being felt for corporate restaurants as well as small, locally owned ones.
In May, McDonalds announced it would be raising its minimum wage in corporate owned stores as fast-food chains are still having trouble hiring employees. Over the next several months, the fast-food giant will boost its employee’s pay by an average of 10%.
Local restaurants are feeling the brunt of this labor shortage as well.
Jeff Pardini, general manager of Pardini’s Catering and Banquets and Pardini’s Concessions, said that with restaurants and events being restricted in the state for over 18 months, he suspects many people wanted a change in careers and left the food industry.
He said its hard to compete as an employer when the federal government is giving weekly unemployment checks to people staying at home.
“We are making hiring a part of our everyday business for now because the amount of applicants we are seeing is nowhere near what it normally is, pre-pandemic,” Pardini said.
Pardini said that the business has increased their wages and is offering competitive wages for entry level applicants, as well as for those with experience.
Rather than offering raises later on in a new employee’s career, higher wages are being promised upfront, Pardini said.
“Instead of trying them out for a while and then giving them a raise soon after we find they are a good employee, we are finding qualified candidates and making stronger offers to them right off the bat,” Pardini said.