LEOMINSTER – The coronavirus pandemic hasn’t just resulted in vaccination requirements and mask warrants.
It also created a boon for some workers in the form of higher wages.
A severe labor shortage attributed to the pandemic means some companies are paying more greenbacks to their staff so they don’t get off the ship for better-paying jobs elsewhere.
This could easily happen as there are a lot of job vacancies out there.
At AIS Inc. in Leominster, officials at the commercial office furniture maker have increased wages by about 10% for entry-level factory workers, said Bruce Platzman, managing director of AIS.
The increase applies to both new and existing workers and is significantly higher than an average base salary increase of 3.9% expected nationwide in 2022, according to a survey by the organization at Purpose. nonprofit The Conference Board.
“There is a lot of competition at the bottom of the ladder for entry-level positions,” Platzman said.
One development Platzman noted that is contributing to competition – and rising wages – is the explosion of Amazon’s distribution warehouses in central Massachusetts.
Polar Beverages is another local business that appears to have raised wages due to labor shortages caused by the pandemic. Chris Crowley, executive vice president of Polar, mentioned a sign in the company’s shipping area that advertised up to $ 17 an hour for new workers.
“The starting salary is higher than before,” Crowley said. “It’s about employee retention. ”
There is a lot of competition for a shrinking labor pool and worker retention is the name of the game for many businesses during the pandemic. To keep workers, companies have to pay them more.
The Conference Board survey highlights this development.
A global, independent, not-for-profit research and business affiliate association, the board asked its members about their planned base salary increase in 2022.
The result is telling – an expected average increase of 3.9% in 2022, the largest annual increase in 14 years.
It should be noted that of the few thousand council members around the world, only 240 responded to the survey. Of the 240, all are located in the United States and more than half are companies with 10,000 or more employees.
Some of the largest employers in the Worcester area, including Hanover Insurance Group, Fallon Health, Saint-Gobain and Waters Corp., declined a request for comment from Telegram & Gazette on the expected 3.9% increase.
Two developments likely explain this percentage, said Gad Levanon, vice chairman of the Conference Board. One is what Levanon called a “very hot” job market that resulted in significant pay increases.
Another factor is rising inflation, so wages have had to rise so that workers can afford to buy goods and services.
Levanon confidently linked the pandemic to inflation. As for wage growth, it existed before the pandemic, he said. But it has accelerated with more and more workers choosing to remain unemployed during COVID-19.
Supply and demand
Robert Bauman, professor of economics at the College of the Holy Cross, breaks down the problem according to supply and demand.
There are 6 million fewer workers nationwide, compared to pre-pandemic levels, according to the U.S. Bureau of Labor Statistics. As a result, jobs go unfilled and workers realize that they can demand more money from employers.
“One way to look at it is that the workers have a bit more bargaining power right now,” Bauman said.
Bauman noted that the labor shortage is prolonged, having dragged on for months. Employers are realizing that they cannot wait until the problem is over, so they have to increase wages to retain workers and attract new ones.
“It’s a matter of supply and demand for me,” Bauman said. “With a lower supply of workers, you have to increase everyone else’s wages. ”
Bauman has not put his finger on the cause of the labor shortage. These could be workers who choose to stay at home so as not to be potentially exposed to COVID-19. Or maybe it’s dissatisfaction with the job they had before the pandemic.
“It’s hard to say what it is. Something has changed in the pandemic, ”Bauman said.
There is also a morale problem that could be an unintended consequence of the labor shortage. Veteran workers may not like newbies to come in and earn a salary equal or close to their own.
If these veteran workers don’t feel respected, they could move on for higher pay at another company. The result is a loss of experience which could seriously affect the productivity of a business.
“There’s no question about it,” Bauman said to acknowledge a potential morale problem. “That’s why a lot of companies have to pay more for everyone. ”
Keep workers happy
Platzman hopes the 10% increase in base salary offered by AIS will attract factory workers. But that extra cash payment stings the bottom line, along with the overtime paid to existing plant staff to make up for unfilled jobs that Platzman says number several dozen.
But Platzman is somewhat optimistic. If the labor market does eventually recover and the cost of raw materials – such as steel, copper and aluminum – that AIS needs for production continues to stabilize, the company’s balance sheet will be in position. by force.
But there are big unknowns here, so Platzman said AIS needs to charge customers more for its products in order to cover the increased costs of labor and materials.
“Customers were going crazy,” Platzman said of the higher prices. “But the prices are increasing dramatically in this industry. Everyone is raising the prices.”
Contact Henry Schwan at [email protected] Follow him on Twitter @henrytelegram