10 Ways to Loosen the Tight Labor Market’s Grip
By Amanda Hosey
Hiring struggles in the carpet cleaning and restoration industry are far from new. Each year, when we conduct our surveys of each side of the industry, it never fails to be one of the most-reported issues facing owners, and more often than not it is the number one issue. Last year was no different, especially given the current very tight labor market. And you can see the results of our recent poll on hiring in which a whopping 77% of respondents said hiring now is much more difficult in the current climate.
The state of the labor market
In November, about half of businesses could not get the employees needed to succeed, and 93% had no (or few) qualified applicants for open positions, according to the Journal Record. Businesses everywhere are raising wages and offering incentives to draw in applicants. The shortage isn’t expected to go away soon. Despite a rise in people working—employment was up by 1.1 million in November—the labor shortage continues.
Why is this? According to a U.S. Chamber poll of those who lost their jobs during the pandemic, under half are actively job searching, and of those who are not searching, a third do not expect to be back working before Q2. Reasons vary, with 29% citing COVID fears and 24% serving as a caregiver, among other reasons.
We have also seen a huge spike in early retirement among people still in their prime working years (ages 25-54). Of those polled 8% said they never planned to return to the workforce, with about 1.5 million retiring early.
Around a third of respondents also said they wanted to change industries. Many reports show much of the refusal to return to the workforce and desire to change jobs come down to emotional effects of the pandemic: Watching so many die, losing loved ones, being quarantined, etc. has made people question what they want and rethink the lives they lead.
Many are also expecting more from employers—higher pay, better benefits, etc.—and they know, given the current labor availability, they have the upper hand. Wage increases have been a hot topic for several years now, and the current labor market gives workers leverage in the pay-raise battle.
Excessively rising inflation is expected to continue well into the year, according to the Wall Street Journal, and this, too, puts pressure on employers to raise wages to help employees with rising costs, with more than 40% planning large raises for current employees this year. This is likely to result in an inflation “spiral” wherein raising wages and inflation continue to push each other up. Inflation is currently rising at its highest pace in 30 years.
Restrictions on immigration have also lowered the number of available workers. The influx of immigrants has always helped fill out the labor market, but tighter restrictions put in place over the last few years have limited that resource. Also, the rise in acceptability of remote work has limited service companies’ ability to draw from the available labor pool as more people opt for the safety, comfort, and location flexibility of remote jobs.
Lessen labor market effects
All indications suggest the current labor market is not changing any time soon, so it is imperative to the survival of businesses in our industry that depend on employees to utilize any means possible to draw in and keep employees. Explore the following strategies for fighting against the labor shortage, and use and combine them however you can in the face of this challenge.
1 | Make hiring smoother
Put real effort into bettering job posts, and you’ll increase applicant numbers. A few ways to do this include:
- Be succinct: Provide the essential job duties and expectations and let job seekers know who you are, but make it brief. With so many jobs available, applicants don’t want to spend much time getting to the pertinent information.
- Be transparent: Be upfront about benefits, sign-on incentives, and any extras you offer. Not supplying this information often results in wasted time for you and applicants when your expectations are misaligned.
- Provide a clear timeline: List a job closing date and expected start date so an applicant doesn’t accept another job offer while waiting for a response from you.
- Hire quickly: Remember everyone is fighting for employees right now. Be sure to scoop up good ones before they’re gone.
2 | Offer an incentive
Sign-on bonuses are nothing new, but they have become increasingly popular in the current market. U.S. Chamber’s poll found that a $1,000 hiring bonus was the incentive most likely to draw in workers.
3 | Pay more
You don’t want to hear it, I know, but given the labor shortage and inflation, higher wages are key to getting new employees. Of course, raising new employee pay also means raising existing employee pay. The Wall Street Journal says, “Those who switched jobs between August and October  saw a median wage increase of 5.1% versus 3.7% for those who stayed in their current job.”
So, it behooves companies to raise existing company wages along with new hire wages to avoid losing existing employees when the pay gap between the two gets too small. Find out what competitors are paying, and be sure to stay comparable.
4 | Offer better benefits
This doesn’t just mean insurance; it consists of many things that make employees’ lives better overall, like training opportunities, mental wellbeing programs, financial wellness programs, etc., according to Business Wire.
Talk to your current employees to see what benefits they’d like to see added. Hearing them out and then providing some of their requests can go a long way to maintaining employee satisfaction. The Small Business Journal says, “Raise wages or other types of compensation, such as 401(k)s, but not so much as to decrease margins or to increase revenue to offset the higher expense level.”
5 | Consider applications outside the norm
If an applicant is inexperienced but enthusiastic, give them a shot. Businesses might also consider hiring disabled workers who are capable of performing the work with reasonable accommodation.
Also, applicants with criminal history are often immediately dismissed, but consider meeting with them and deciding objectively whether they could succeed in the position.
Consider “stealing” workers from other industries. Served by a friendly, hardworking retail worker? Consider discussing with them open positions, including the likely much-higher pay.
6 | Offer more flexibility
The U.S. Chamber poll found 43% of applicants are looking for more flexibility in their jobs. Our industry highly values the full-time worker, but consider offering part-time positions to give workers the flexibility they crave. Two half-time employees work the same number of hours as a full-time worker and with fewer benefits.
7 | Invest in the company
Spend money on updating equipment or processes that will speed jobs or require fewer manhours. This could mean adding modern restoration equipment or software that feeds job stats remotely, leading to fewer on-site check-ins and costly problems left too long, or it might mean investing in more-efficient wands for speedier, easier cleaning.
8 | Let staff help
Use your current employees to recruit people they know will fit in and do a good job. Consider offering an employee-referral bonus. You might split the bonus to avoid short-term stays, providing half initially and half after their recruit stays three months. This way your employee has an incentive to make sure their recruit succeeds.
9 | Create a healthy culture
As we emerge from the pandemic, more than ever employees are looking to be “happy” in their jobs. Work to build a team based on trust. Perform regular team-building exercises with staff, whether formal or informal.
Also, be sure to provide access to leadership for employees—a system through which they can easily and safely share grievances, ideas for improvement, or desires for advancement. Let employees be heard.
10 | Help employees develop
In the current market where employees hold all the cards, it’s extremely important to show them there is room to grow. Now is a good time to provide needed training and certification courses as well as to promote employees who deserve it. If promotion is not an option, consider developing a mentorship program though which experienced employees can feel more valued and useful and new employees can gain knowledge.
Every company is struggling with labor. Unfortunately, just following the same old methods for hiring and retention is unlikely to work. Major efforts to improve the overall employee experience are what it will take for the foreseeable future.
- “Small Businesses Make Financial Gains”
- “How SMBs Can Attract Talent in a Tight Labor Market”
- “Companies Plan Big Raises for Workers in 2022”
- “Shallow Labor Pool Top Concern for Businesses”
- “U.S. Chamber of Commerce: A Current Snapshot of Those Unemployed During the COVID 19 Pandemic”
Amanda Hosey is the managing editor of Cleanfax. She has worked as an editor and writer for more than a decade, including seven years with Cleanfax. Reach her at [email protected].
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February 21, 2023