A shortage of workers driving up starting wages

Stacy Wescoe//May 24, 2021

A shortage of workers driving up starting wages

Stacy Wescoe//May 24, 2021

RISING WAGES: Job seekers can expect higher wages and better benefits as employers compete for workers.
RISING WAGES: Job seekers can expect higher wages and better benefits as employers compete for workers.

It’s a good time to be a worker in the region.

Wages are dramatically higher because of growth in the industrial sector and the demand for workers in retail and hospitality industries that had to let many employees go at the height of the pandemic.

In heated competition for available workers, retailers are upping their wages across the board, and they’re raising them significantly.

Sheetz, the Altoona-based convenience chain, made headlines recently when it announced a $2 per hour wage increase for all of its 18,000 store employees. Sheetz, which has close to 300 stores in Pennsylvania, and more than 600 in the mid-Atlantic region, reports that the permanent increase equates to a $50 million annual investment.

It’s not the only company offering dramatically higher wages since the pandemic.

The Target at Hamilton Crossings in Lower Macungie Township is starting employees at $15. McDonald’s on Cedar Crest in Allentown is offering a salaries starting $16 an hour – more than twice the state minimum of $7.25.

Before the pandemic many fast food restaurants had signs posted in their windows offering starting workers $8 to $9 per hour.

Light industrial

With rapid growth in the light industrial and logistics sectors, low- and no-skill jobs were being created at a rapid pace in the Lehigh Valley even before the pandemic started. But since the start of the pandemic, wage pressure has driven starting pay significantly higher, said Katie

Hetherington Cunfer, director of government & community relations for the Greater Reading Economic Partnership. She said companies that were advertising jobs at $12.05 in 2020 are now offering $15 per hour.

Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corp., said Billboards can be seen on most major roadways in the region offering light industrial jobs for higher wages.

“It’s an issue of supply and demand,” he said. “All of a sudden there’s been a huge demand for workers and those signs are everywhere along Route 22.”

Most light industrial employers in the region are upping their wages. Amazon raised its starting wages past $17 per hour. FedEx recently announced plans to hire more than 1,000 full- and part-time workers for its Breinigsville facility. It’s advertising starting wages $18 and $19 per hour.

Uline is looking to fill nearly 200 mostly warehousing jobs in Trexlertown. It’s offering starting salaries of $23 per hour.

Cunfer said it’s not just higher salaries that companies are offering. Some are offering sign-on and retention bonuses. Palram in Kutztown is offering $2,500 sign-on bonuses plus weekly recognition bonuses. Aerotek is offering a $15,000 raise after 6-months for an electronics production operator at its Breinigsville plant.

“Those get people to come and stay,” she said.

While most companies are actively promoting their higher salaries, some are still hesitant to publicize those numbers and Cunfer is counseling them to rethink that stance.

“Not giving people as much information as you can may be a mistake,” she said. “It may be the motivation for someone applying for a job.”

At a minimum

In a recent interview, Jim Fris, CEO of the PJW Group, which operates P.J. Whelihan’s restaurants in the region, said the pandemic seemed to do what government could not. With all the push to increase the state and federal minimum wage from $7.25 to $15 per hour, market pressure drove wages up to $15 on its own.

However, the hospitality industry has different wage issues, noted Cunfer.

She said wages for tipped workers presented a serious challenge because Pennsylvania business owners only have to pay them a minimum of $2.83 per hour. But, with less customers because of COVID-19 capacity restrictions, many weren’t making enough money to meet traditional minimum wage and were leaving their jobs to take Federal COVID unemployment compensation because their pay wasn’t enough to sustain them.

As a result, Cunfer said she knows of many restaurants in Berks that are starting tipped workers at $4 per hour to help make up the difference.

At the office

One group of workers has yet to benefit from the spike in wages — office and white-collar workers, said Cunningham.

“We really haven’t seen any major changes for more white collar or executive positions other than them working from home,” he said.

But, that doesn’t mean he doesn’t think it won’t reach that segment of the workforce eventually.

As entry-level and minimally skilled positions garner higher wages it may likely cause resentments from long-standing and management workers who aren’t seeing the boost. That, and the increased prices that are likely to come from the higher wages, are likely to drive a demand for higher wages for all.

“We haven’t seen it just yet, but ultimately think it will pressure itself,” he said.

Of course while the higher wages are great news for workers, it has been burdensome on employers, particularly smaller employers who are having trouble meeting the demand for higher wages to keep staffing levels where they need to be.

There are other ways besides higher wages companies can use to attract the workers they need, Cunfer said. Signing and retention bonuses are one way – and they won’t necessarily lead to higher salaries down the line. Benefits such as health care insurance or the quality of life offered by the company, can go a long way to attracting employees.

“It’s about salesmanship,” she said. “It’s an employees’ market. You need to find a way to distinguish yourself and make employees come to you.”