The Hiring Dilemma: corporate America is raising wages to bring reluctant workers back

Monday, May 17, 2021 by Robinhood Snacks |
_"When Uber surge pricing never ends" [Henrik Sorensen/DigitalVision via GettyImages]_

"When Uber surge pricing never ends" [Henrik Sorensen/DigitalVision via GettyImages]

Check the math... Something strange is happening in US employment. 9M+ Americans are still unemployed, and companies are scrambling to hire as the economy revs up — but they can't find enough people. In March, job openings hit a record 8.1M... but exceeded hires by 2M+. And in April, the unemployment rate jumped. Now, companies are boosting wages to lure workers (and your Chipotle delivery just got pricier).

  • Amazon is now paying new hires an average starting wage of $17/hour (up from $15). It's also offering $1K signing bonuses.
  • Chipotle is bumping average pay for restaurant workers to $15/hour, and says employees can earn $100K/year after three years. Meanwhile, McDonald's is raising wages for 36K+ workers.
  • Uber and Lyft, which are dealing with driver shortages, are offering large bonuses to get people driving.
  • Walmart, aka: America's largest private employer, raised its average hourly wage to $15+.

Now add it up... Average hourly earnings for private-sector employees rose by 21 cents to $30.17 in April, as companies struggled to hire. A few potential reasons workers aren’t returning:

  • Unemployment $$$: President Biden extended the $300 extra/week benefit through September. Now, the average monthly unemployment payout is ~$2.5K (tax-free up to $10.2K). 42% of people receiving benefits earn more than they did at their jobs.
  • Childcare: Only 60% of the largest US school districts were fully open in April, leaving some without childcare. Women carried out the bulk of duties.
  • Corona: Workers are worried about catching Covid while rolling burritos side-by-side.

The Hiring Dilemma could have two outcomes... #1: it could help workers and the economy through rising wages — real wage growth has been sluggish for decades. #2: it could become an Economic Dilemma. Wage growth could be canceled out by weaker purchasing power if prices continue to spike. Rising prices especially hurt low-income households. The labor shortage could also slow econ growth. Workers will likely return as benefits expire and schools reopen — but businesses may find it hard to lower wages, which could result in downsizing.