Worker shortage should increase wages — is your company ready?
The body gap appears again!
I caught up on reading during the New Year’s weekend and came across a Wall Street Journal article that highlighted wage growth in four cities across the country. It showed how the front edge of the body gap — the demographic-induced worker shortage — is beginning to affect wages. The article caused me to do a little research on what we’re seeing in Wisconsin and how we will be affected. The laws of supply and demand must eventually take hold, making robust talent strategies essential for future success.
I’m not an economist by trade, so the article pushed me out of my comfort zone and into performing some basic research. My reading of statistics from both the Bureau of Labor Statistics and the Wisconsin Department of Workforce Development show little consistent evidence of increasing wages, while an interview with Ted Gayer of the Brookings Institute told the same story. In fact, Gayer said he expected to see some wage increase in each of the past four years and is baffled that it hasn’t happened to this point. Anecdotal data suggests that we are seeing the front edge of wage growth here, so some of the quantitative data may actually be lagging indicators. We’ll see.
The data does show that we are at full employment — both in Wisconsin and the country in general. There are initiatives to pull non-traditional workers off the sidelines and recruit new workers to the state; still the laws of supply and demand cannot be suspended forever. Wages will begin to increase and companies that aren’t paying attention will be surprised and stunned.
These conditions make it critical for everyone to have a narrative to mitigate the body gap. Do you know your critical people? Are you defending them from poachers? Can you provide compelling reasons for someone to work for you or your company? Have you established a strong brand with a clear vision of how you make a difference? You should be able to tell a concise, compelling story about your operation in order to attract and retain the best talent.
The best workers are in high demand and will be locked in early. If you can’t share a vision about your organization, you will need to rely on traditional talent approaches. Traditional approaches to attract these workers are both limited and expensive. Most focus on some combination of pay and benefits to secure talent. Fair compensation is important, but few companies have ever been able to afford pay as their key attraction/retention element.
Wisconsin’s growth trajectory makes a talent strategy critical for future survival. Two large companies — Haribo and Foxconn — are coming and will put a severe strain on the present workforce. On the positive side, they will also attract many new workers to the state. These arrivals create a small window for present employers to react.
You have two choices: Take advantage of this window or be left behind. Many workers will come to Wisconsin and not work for Foxconn or Haribo. Some will not be hired or will decide that being a small cog in a large machine is not for them. Others will be trailing spouses or extended family moving with the employee. A strong brand and compelling narrative can bring these workers to your door.
The alternative will be disastrous for many companies. They will not be able to attract new workers without lucrative pay packages. These companies will also need substantial compensation to retain their key employees. Not many companies have ever been able to afford to pay top-level wages and stay profitable and competitive.
You have less than a year to establish your brand and talent narrative. Create a compelling story about your company and the difference you make in the world. Engage with companies in your community to build a strong ecosystem that attracts the best talent. Accomplish this and you will be well positioned to take advantage of future trends.
The best leaders are already taking action. Are you?
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