Hiring and Labor Market Update

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A lot of information has been published recently on the latest state of the labor market and hiring. Here are the highlights as it relate to agencies

  • 428,000 jobs were added in April, marking the 12th straight month of gains exceeding 400,000 (Labor Department).
  • Lower wage employers dominated the hiring market (Restaurants, hotels, leisure and hospitality).
  • Average pay has increased 5.5% in the last 12 months.
  • 63 million employees have been added in the last 12 months – an all-time record. However, the total 1.2 million employees are still missing compared with 2019. Vaccinations and higher pay has lured employees back, but child-care and early retirement continues to reduce the size of the available labor pool. The share of under 54 is about the same as in 2019, but the share of 55+ is down.
  • COVID fears continue to deter people from working. 3 million potential workers may fall into this group.
  • There were 11.5 million job openings.

Worried about retention? Amazon has a 100% turnover rate for hourly paid employees, according to the New York Times.

According to MITC data from 100 providers with 40,000+ employees:

  • Employee termination rates increased to 42.82%, lower than some surveys report but more than enough to cause significant problems for many providers. Surveys are generally not as accurate as real data.
  • However, for providers, turnover felt worse because many providers were unable to fill a record number of positions! The 100 providers had 1,635 more terminations than new hires during the year, the highest number since MITC started complying these statistics (4 years).
  • The rate of new hires was therefore lower than the termination rate at 36.12%.
  • Termination rates varied widely by provider
    • 4 providers had termination rates of over 8%.
    • 6 providers had termination rates less than 20% but these providers managed self-directed programs.

Providers need to update job descriptions and hiring follow up procedures. Software is not usually the problem; content and communication is often not adequate.

Working From Home Might Never End

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It’s now been more than two years since many workers were sent home, and while the pandemic is easing, some just aren’t coming back to the office. This blog looks at what this means for hiring and retention as many employees regard working from home as worth anything from a 5-10% pay raise!

In a new report, HSBC economist James Pomeroy noted office attendance rates are struggling to get back above 40% to 50% of where they were before the coronavirus hit. Data from Kastle Systems for the U.S. shows the current highest rate of office occupancy is Austin, Texas, and that’s still only 53%. The lowest is San Francisco at around 30%.

And it’s not just the US. As of February, Transport for London data recorded only 70% of 2019’s journey volumes, suggesting commuting is still down.

Employer HR now faces a new competitive issue when it comes to hiring and retention. What is your working from home or hybrid working policy going to be? How will it impact organizational effectiveness? How will it help attract new talent and retain existing talent? This could be “forever”.

That’s all despite restaurants, cinemas and flights seeing as much as 90% of the 2019 volumes, which implies people are confident going out — just not to the office.

“With offices only half full in most of the developed world, many will be expecting office occupancy to grind higher,” said Pomeroy. “However, it’s worth keeping in mind the alternative: that occupancy could already be close to a peak.” This could be forever.

The trend is evident in other data. WFH Research reported earlier this month that according to its survey of more than 32,000 people in 25 economies, the average worker values a day from home as much as a 5% pay rise.

Serbians associate flexibility with 10% more pay, while Americans reckon it’s worth a 6% hike.  

Furthermore, 15% would seek out a new job if their current employer forced them back to the office five days a week. The numbers are higher in the U.K., Australia and Canada.

This is not surprising. Employees faced with the prospect of going into New York City regularly sited additional costs of up to $10,000 a year in travel costs (Vehicle depreciation, mileage, public transportation, lunch, additional dry cleaning, etc.) plus lost personal time.

An employee driving 20 miles a day to work is spending 10,000 miles, or around $5,000 a year, in after-tax income just to get to work and back.

There’s also a gap between the hopes of workers and employers. WFH Research’s survey indicates employee’s desire about two working days at home each week. Bosses are generally planning offering just one even though the same study suggests staff are 4% more efficient when at home versus business premises.

Pomeroy sees various economic implications from the latest data:

  • Businesses will need to compete in different ways to attract talent, be it by offering a hybrid experience or more flexible hours.
  • Rent and house prices are now being driven by demand for suburban and rural properties rather than homes in city centers. Many employees have, or want to, relocate to lower cost areas.

What does this mean for hiring and retention?

  1. If you have positions that could be done from home, or are being done from home, make sure the working from home option is a big part of your job postings.
  2. If retention is a concern, develop a hybrid working plan so existing employees can take advantage of working from home if they want to.
  3. Working from home is not for everyone or every organization. Make sure your hybrid working plan addresses the needs of all types of employees, including those who enjoy coming into the office.
  4. Establish clear rules for working from home and regular remote meetings. Consider mandatory video calls.
  5. Employees still want to socialize with colleagues. Consider taking savings in rent from the reduction in leases/square footage. Use that money to fund team building events.
  6. Consider paying employees who work from home a non-taxable stipend for using their mobile phone.
  7. Some companies allow extra flexibility for employees with young children to manage disrupted day care and school schedules.

Extra Unemployment Pay Has Disappeared, So Why Haven’t the Workers Returned?

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Earlier this year, a change came: $300-a-week federal supplement for unemployed Americans was cut off. Many people, they argued, would then take the millions of jobs that employers were desperate to fill.

Yet three months after half the states began ending that federal payment, there’s been no significant influx of job seekers.

In states that cut the $300-a-week federal supplement, the workforce has risen no more than it has in the states that maintained the payment.

That federal aid, along with two jobless aid programs that served gig workers and the long-term unemployed, ended nationally Sept. 6.

Yet America’s overall workforce actually shrank that month. “Policymakers were pinning too many hopes on ending unemployment insurance as a labor market boost,” said Fiona Greig, managing director of the JPMorgan Chase Institute, which used JPMorgan bank account data to study the issue. “The work disincentive effects were clearly small.”

Labor shortages have persisted longer than many economists expected, deepening a mystery at the heart of the job market. Companies are eager to add workers and have posted a near-record number of available jobs. Unemployment remains elevated. The economy still has 5 million fewer people working than it did before the pandemic. Yet job growth slowed in August and September.

An analysis of state-by-state data by The Associated Press found that workforces in the 25 states that maintained the $300 payment actually grew slightly more from May through September, according to data released Friday, than they did in the 25 states that cut off the payment early, most of them in June. The $300-a-week federal check, on top of regular state jobless aid, meant that many of the unemployed received more in benefits than they earned at their old jobs.

An earlier study by Arindrajit Dube, an economist at University of Massachusetts, Amherst and several colleagues found that the states that cut off the $300 federal payment saw a small increase in the number of unemployed taking jobs. But it also found that it didn’t draw more people off the sidelines to look for work.

A range of factors are likely keeping millions of former recipients of federal jobless aid from returning to the workforce.

  • Many Americans in public-facing jobs still fear contracting COVID-19
  • Some families lack child care
  • Early retirement
  • 700,000+ Americans have died plus some who recovered have long term COVID related issues

Plus not all employers are doing the best possible job to attract the applicants who are out there

  • Some employers lack transition and training plans to entice applicants from “other” industries
  • As the recruiting market has got more competitive, employers with out-of-date hiring systems and job posting content are losing out to competitors with state-of-the-art systems

The pandemic appears to have caused a re-evaluation of priorities, with some people deciding to spend more time with family and others insistent on working remotely or gaining more flexible hours.

Some former recipients, especially older, more affluent ones, have decided to retire earlier than they had planned. With Americans’ overall home values and stock portfolios having surged since the pandemic struck, Fed officials estimate that up to 2 million more people have retired since then than otherwise would have.

And after having received three stimulus checks in 18 months, plus federal jobless aid in some cases, most households have larger cash cushions than they did before the pandemic. Greig and her colleagues at JPMorgan found in a study that the median bank balance for the poorest one-quarter of households has jumped 70% since COVID hit. A result is that some people are taking time to consider their options before rushing back into the job market.

Nationally, the proportion of women who were either working or looking for work in September fell for a second straight month, evidence that many parents — mostly mothers — are still unable to manage their childcare duties to return to work. Staffing at childcare centers has fallen, reducing the care that is available. And while schools have reopened for in-person learning, frequent closings because of COVID outbreaks have been disruptive for some working parents.

Exacerbating the labor shortfall, a record number of people quit their jobs in August, in some cases spurred by the prospect of higher pay elsewhere.

Learn how to boost your hiring, and increase your chances of finding qualified applicants with myApplicants. Download the fact sheet to learn more.

The Limited Labor Market

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The labor market should be awash with job seekers swamping demand for work, but that is not happening. The Wall Street Journal recently published a very revealing article on this topic.

  • Median wage growth was 3.4% in February
  • Earnings were up 2.8% for Q4 2020
  • This month’s Federal beige book reported a shortage of applicants for many lower-paid positions from drivers, child-care, nurses, landscapers, and restaurant staff
  • 4 million jobs were open in February
  • 5 million fewer people are looking for jobs than before the pandemic

Why?

  1. Many available workers are in the wrong part of the country, or have the wrong skills. Workers laid off in Florida from Disney World can’t apply for a position as a care giver in New York.
  2. A significant number of potential employees have withdrawn from the labor market to look after their children.
  3. Covid-19 itself is keeping lots of workers out of the job market. In March, 2.6 million people were not working because they were sick or caring for someone who was sick.
  4. 2 million people were staying at home because they were afraid of catching or spreading Covid-19.
  5. Stimulus checks and extended/enhanced unemployment benefits, which was extended to gig workers, may have kept potential job seekers on the sidelines. However, several studies in 2020 found the aid didn’t depress employment, rather, the above factors mattered most. Many potential employees simply are not “available”.

That is likely to change if vaccination rates continue to rise as virus-related obstacles to working should recede. Economists expect the labor force to rebound during 2021.

Either way, providers can’t do much about the economy, but having the best systems in place for attracting applicants, hiring and retention is key. Check out the 12 Top Tips for Boosting Applications and Hiring in 2021 to learn more.

2020 Minimum Pay Increases

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More than 20 states will see updated rates as the calendar turns to 2020.

The following state changes will go into effect either Dec. 31 or Jan. 1, 2020. (Note: This information does not take into account city and county minimum wage rates, which may take precedence depending on the jurisdiction.)

Alaska

State law requires a minimum wage adjustment each year based on the Consumer Price Index (CPI). State officials have announced the new rate for next year: $10.19

Arizona

Arizona’s next increase is scheduled. Next year, the new rates will be: $12

Arkansas

In 2018, voters passed Issue 5 to increase the state minimum wage, with the 2020 rate going to $10.

California

California has different rates for small and large employers. Small is defined as having 25 employees or fewer; large means 26 or more. One of the most progressive states in the nation, California will have a $15 minimum wage in 2022.

The new 2020 rates are $12 for small employers, $13 for large employers.

Colorado

Come 2020, the new rates will be: $12

(Also of note for employers: Colorado recently gave cities the power to set their own rates.)

Florida

Effective Jan. 1, 2019, Florida tied its minimum wage to an annual indexed rate. Starting in 2020, the new rates will be: $8.56

Illinois

In February 2019, Gov. J.B. Pritzker signed into law the first minimum wage increase in Illinois since 2010. It will reach $15 in 2025. Meanwhile, starting Jan. 1, 2020, the minimum wage will be $9.25.

Maine

Maine has a planned increase for its minimum wage: $12

Maryland

Minimum wage will increase by 90 cents to $11 an hour. Note that starting in January 2021 the state will have different rates for large and small employers. (Large being 15 or more workers and small defined as 14 or fewer.)

Massachusetts

In 2018, Massachusetts passed legislation to increase minimum wage to $15 by 2023. In the meantime, the new rates for 2020 will be: $12.75

Michigan

Increase its minimum wage, but only slightly. The 2020 rates will be: $9.65

Minnesota

Different rates for large and small employers. But the definition of large or small isn’t tied to the number of employees. Instead, Minnesota uses gross receipts — more than $500,000 is considered large, less than $500,000 is considered small. (The state has no separate rate for employees who receive tips.)

New rates in 2020: $10 for large employers, $8.15 for small employers

Missouri

New law: While the rate won’t hit $12 until 2023, annual increases of 85 cents are in place.

In 2020, meanwhile, the rates will increase to: $9.45

After 2023, the rate will be increased according to the CPI.

Montana

Minimum wage workers will see a small increase next year, with the rate going to $8.65. The rate is tied to changes in the CPI for Urban Consumers.

New Jersey

Enacted a new law which resulted in increases in July. Moving forward, the rate will increase based on the CPI or at least $1, whichever is greater. (The rate will hit $15 for most employers in 2024.)

Also note that rates differ depending on employer type. In 2020, the minimum wage will be:

  • $11 for most employers
  • $10.30 for seasonal and small employers (fewer than six workers)
  • $10.30 for agricultural employers

New Mexico

Passed a new law in 2019. The initial increase is a big one, too – up $1.50 from the current rate.

In 2020, minimum wage will be: $9 The rate will top out at $12 in 2023.

New York

The 2020 the rate is going up to $11.80.

Ohio

Minimum wage in Ohio is tied to a company’s gross receipts, with $319,000 as the threshold defining a “large” employer.

Come 2020, the new rates will be: $8.70 for large employers. $7.25 for small employers (the federal rate)

South Dakota

The minimum wage is adjusted annually via the CPI (though the rate can’t be decreased). In 2020, the new rates will be: $9.30

Vermont

Began indexed increases in 2019. Minimum wage workers will see modest bumps in 2020: $10.96

Washington

Passed a minimum wage ballot initiative in 2016. The new rate in 2020 will be $13.50.

10 Ways to Increase DSP Job Applications and Hires

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Finding good, qualified applicants to fill your DSP roles is not always an easy task.

Getting more job applications only causes extra work if the percentage of applicants accepting positions and staying longer than 30 days is low. Hiring is important. Weak hiring leads to higher overtime and training costs.

Don’t focus on competing with McDonalds, fast food outlets and retail chains. Agencies need different types of employees. Agencies need someone to care about their job. McDonald’s employees don’t need that quality. Emphasize the caring part of the job!

Depict the job by providing examples of “wonderful outcomes”. Employees love to know what it is in for them. Make sure you highlight any potential growth or long term outcomes of working with your agency.

Think of your ideal candidate and write the application with them in mind. Who is your star DSP? If you want more employees like them, create an application that includes their qualities.

There is a lot to keep in mind when looking for your perfect DSP, so we did some research and put together our top 10 tips to keep in mind in the hiring process.

  1. Think about the job descriptions. Avoid wordy, cold and impersonal lists of responsibilities and skills
  2. Make sure your stability and “extras” are highlighted
    • Benefits
    • Paid training
    • Bonuses
    • BYOD plans
    • Overtime opportunities
    • How the job will make you feel
    • Advertise the typical weekly gross pay of a DSP after 30 days including benefits instead of the hourly rate
  3. Don’t use content that creates barriers:
    • Industry jargon
    • Acronyms
    • Unspecific text
  4. Paint the applicants a picture of what they’ll be doing day to day. Stress the impact on them and others. “Make a difference in someone’s life”, “Be special”, “Want to be more than a cog in a wheel”.
  5. Write different job profiles for different roles – it is easier to get a response from your ideal candidate.
  6. Make sure your adverts appear on all job boards. Indeed is the leading, but not the only source of DSP applicants. Employee references are very beneficial and Facebook ads work if you have a “great story”.
  7. If you go to job fairs, only go to specialized job fairs. This will narrow down your search and guarantee that are you are only looking at applicants that are interested in, and qualified for the position.
  8. Respond quickly to applicants. Make sure they know that you are interested in them, so you won’t lose them to another organization.
  9. Work on your online content and forms:
    • Make applying easy.
    • Tell applicants what they should expect next in the process.
    • Keep it simple – name, email, phone and option to upload resume is all you need.
    • Apply to your own jobs via mobile phone – over 60% of applicants do so on their phone.
    • Don’t link the homepage of your website or Facebook or Instagram – applicants get lost down rabbit holes.
    • Don’t require driver’s license number, social security number, emergency contact, or anything the applicant might not have readily to hand at the time – this is not necessary on an application.
    • Don’t link to PDF applications – not smart phone friendly.
    • Avoid a slow loading page – Google reports people move on if it takes longer than 2-3 seconds.
  10. If listing a hiring contact, do so as personally as possible.
    • Give name
    • Extension
    • Personal email address 

Learn more about applicant tracking; download the myApplicants fact sheet.

Quiz for HR Professionals2018 MITC

Quiz for HR Professionals

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This short quiz helps determine which workforce management solution best fits the needs of your agency, from an HR perspective.

Human Resources professionals have a surprising amount of insight into the health of an agency. You regularly work to increase hiring and retention success. You may manage employee training and payroll. And you often get a glimpse into time & attendance, billing, and even scheduling. If anything is amiss, you are usually among the first to notice.

Take the quiz to test your knowledge of the agency and learn where you may have a weak spot.