How Companies Cope (With A Tight Labor Market) : The Indicator from Planet Money Wage growth has (finally) been accelerating, but what else are companies doing to bid for workers?

How Companies Cope (With A Tight Labor Market)

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CARDIFF GARCIA: And I'm Cardiff Garcia. And today, of course, we're joined by...




VANEK SMITH: It is indeed Jobs Friday. And today we learned that the U.S. economy added 250,000 jobs in October. And we also learned that wage growth continues to accelerate. In other words, this is a really good jobs report. The labor market's healthy. We're making some more money.

But as always, here at THE INDICATOR, we don't pay tons of attention to the monthly numbers. We kind of like to look at the longer-term trends in the labor market, see what's going on from a little bit of a higher perspective. And so for this Jobs Friday, we wanted to take a closer look at something that has been interesting us for a while.

GARCIA: Yeah. And it's about the bidding war for workers. So as more people keep getting hired, it means that companies that still need workers have to compete with each other.

VANEK SMITH: Which sounds good.


VANEK SMITH: For workers.

GARCIA: Exactly. And one obvious way that these companies compete with each other is by offering workers higher wages, higher salaries. And they are doing that. But what else are they doing to attract more workers? We've been reading so many stories about other things that some companies are doing, things like offering more vacation time or paying more in bonuses than in wages or even paying down their workers' student loans. We just haven't been sure what to make of those stories.

VANEK SMITH: On the show today, what companies are doing, what they're not doing and what they might be doing. We're still gathering evidence.


VANEK SMITH: OK, Cardiff, so we got some pretty solidly great news this Friday.

GARCIA: Tremendous jobs report. We're being honest here.

VANEK SMITH: Not to mention, in the past year, companies have raised wages more than they have in almost a decade, finally. This was something that took a really long time to happen. But to understand what else companies are doing to attract more workers, we wanted to talk to somebody who's just really familiar with all of this jobs data. And that someone is Martha Gimbel. She's the economic research director at the Indeed Hiring Lab.

GARCIA: You remember the last time we spoke, and you referred to your team as, like, the Avengers of labor market data?


GARCIA: Did you guys end up assigning each other, like, specific superheroes?

GIMBEL: Listen, we're economists. Everyone on the team is Tony Stark. We all think we're right, and we feel really strongly about it (laughter).

GARCIA: Nobody wanted to be the Hulk?

GIMBEL: You know, I don't think that anyone wanted to admit that they were ever that driven by emotion in their analysis.

VANEK SMITH: I'll be the Hulk.


GARCIA: I'll be one more Stark.

VANEK SMITH: Anyway, Martha says one thing companies are definitely doing, something that is definitely supported by the economic data, is that they are promoting their part-time workers into full-time jobs.

GIMBEL: So right now, if you're an employer and you need to hire, you can go out, try to poach someone new, or you can take that worker who's currently working for you part-time and just offer them full-time hours without having to increase their hourly rate. And that's actually a lot of what we're seeing in the data right now, is that you're seeing these part-time workers who want full-time hours increasingly moving into full-time roles and actually increasingly moving into full-time roles at the company that they're currently at.

GARCIA: Rather than switching to another company that offers them a full-time job.

GIMBEL: Exactly.

GARCIA: Yeah. I guess that makes a certain amount of sense too because if the worker already has been with your company for some time and is working, say, 20 hours a week, well, giving that worker 40 hours a week means that you don't have to train the worker. That worker doesn't have to be introduced to the way the company operates. It's just easier.

GIMBEL: Right. And hiring is expensive, and you can't know with perfect certainty ahead of time if someone you haven't worked with before is going to be the right fit for your company. So a part-time worker that you have at the moment is a great alternative.

VANEK SMITH: We also wanted to ask Martha about other kinds of compensation that companies are offering to workers besides wages and salary. For example, there's evidence that one-time bonuses have been rising faster than wages. And we've read about how some companies are offering, for example, more generous vacation time and other perks like that.

GARCIA: Yeah. And the reason we were curious about this is that we wondered if companies are trying to avoid paying their workers higher wages by offering more of those other benefits.

GIMBEL: What really matters is not one small aspect of compensation but what's happening with compensation overall. So are employers shifting into forms of non-wage compensation like vacation, also bonuses, things like that? And if you look at the data overall, that's really not happening.

So we just got data on this this week. And for private sector workers, wage and salaries are up 3.1 percent, but overall compensation is up about 2.9 percent. And that's been true for a while now. Compensation overall has been growing slightly slower than wages and salaries. So it really doesn't look like it's a story of employers shifting away from traditional wages and salaries that's holding back wage growth.

GARCIA: So yeah, companies are offering more perks. And some companies might even be offering workers better perks or higher bonuses instead of higher wages. But overall, those other perks are actually growing more slowly than wages are growing.

VANEK SMITH: I feel like I'm on board with that. I mean, I'd rather have higher wages than, like, a company ping-pong table.

GARCIA: Give me the money.

VANEK SMITH: Give me the money.

GARCIA: Show me the money. Come on.

VANEK SMITH: Frozen yogurt machine.


VANEK SMITH: I wouldn't say no to a frozen yogurt machine, though. I'm going to say that right now. Finally, we asked Martha whether companies have been relaxing their traditional job requirement. So they're opening up a little as far as who they're going to hire.

GIMBEL: There was some research that came out a while ago that said, since 2012, the share of job postings requiring at least three years of experience have fallen by about a fifth. So employers do seem more willing to invest in developing and training workers than they have in the past.

VANEK SMITH: Martha says there's some anecdotal evidence that companies have been willing to hire people with, for example, criminal backgrounds than they have been in the past. We don't know yet, though, just how much this is happening throughout the whole economy.

GIMBEL: There's poor evidence about employment outcomes for people with criminal records. We don't collect that. But at, we can see what people are searching for, and searches for things like no background check, felony friendly have doubled since the beginning of this year. So that does say that, if nothing else, those workers are perceiving that the landscape is improving for them.

GARCIA: What about drug testing and other kinds of requirements that also historically have come with some job applications?

GIMBEL: Yeah. So there, we're still in the realm of anecdote. There isn't great data on that. That being said, you know, one of the places where we are - where we have seen a lot of improvement in the indicators is in the - what we refer to as the prime-age employment-population ratio, so the share of the workforce between ages 25 to 54 with a job. And that's been going up. And so that does suggest that people who might have had a harder time in the past, like people who might have failed a drug test, are finding it easier.

VANEK SMITH: And finally, there's some anecdotal evidence that companies are trying to hire more parents who left the workforce to raise children, especially because there's been a lot of public discussion recently about how hard it is for a parent to go back into the workforce after taking parental leave.

GIMBEL: Right. And we have seen on increasing searches for things like flexible work, work from home. So companies who can appeal to those job seekers who do need that flexibility can possibly get some great hires.

GARCIA: So to sum everything up, companies are giving their part-time workers more hours. Companies are not substituting benefits for wages. And there is anecdotal evidence, rather than data-supported evidence, that companies are relaxing their job requirements.

VANEK SMITH: And finally, Cardiff, we have a shout-out today...

GARCIA: Oh, yeah.

VANEK SMITH: ...To listener Gina Leggit (ph). She tweeted at us that she was at a Big Freedia concert. And apparently Big Freedia uses an air horn in some songs. And when the air horn came on, Gina says she jumped up and yelled...


GARCIA: Oh, yeah.

VANEK SMITH: And we love her with all our hearts. You know what I think this calls for?


BIG FREEDIA: I'm the one and only Big Freedia, the queen diva all the way from New Orleans, La.


VANEK SMITH: The air horn has another gig (laughter).


BIG FREEDIA: (Singing) You don't pay no rent, no, no. All this time I've spent, still don't pay no rent, nope. You don't pay no rent, no, no. You don't pay no rent, no, no. All this time I've spent, still don't pay no rent, nope.

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