Things are certainly looking up for the U.S. labor market. Companies are hiring, wages are increasing, and there now appear to be more job openings than there are workers to fill them. But what can be good for the economy overall can be challenging for employers. How so? By increasing the competition for an ever-shrinking labor pool.
Over the last 18 months we have gradually come to the place where employers are desperate to find new workers. This is a good problem to have. It indicates a strong economy and a bright future. Nonetheless, such rosy economic conditions do not necessarily make it any easier to recruit qualified workers. That's where employee benefits come in. They could be your company's recruiting secret weapon.
Employment Costs in the New Economy
The Wall Street Journal recently reported that "U.S. workers received their biggest pay increases in nearly a decade over the 12 months through June." The WSJ relied on Labor Department numbers that showed America's employment-cost index rising nearly 3% during that same period. In simple terms, it means that employers are paying more as a percentage of their total employment costs in wages and salaries. It also means they are likely spending more on benefits.
As explained by the WSJ, wages and salaries are the single largest cost tied to employment. Some 70% of all employment costs are tied up in paying workers. So when the employment-cost index rises, it's a good indication that workers are earning more. Again, that's a good thing. But can wages alone give your company the competitive edge when recruiting? Probably not.
Benefits Are Equally Important
The Society for Human Resource Management (SHRM) says that the remaining 30% of employment related costs are consumed by employee benefits. Of those benefits, the lion's share are health insurance benefits. Employers then add retirement plans, wellness benefits, paid time off, career development benefits, and more.
This is where employers can be more competitive in the recruiting process. As an example, consider a company in need of a handful of IT professionals who already possess the knowledge, skill, and experience to jump right in. That sort of job comes with general salary expectations that are pretty equal across the board.
Candidates applying with this company are likely to get similar wage or salary offers from multiple employers. Why? Because IT jobs are worth only so much in the marketplace. With wages and salaries being equal, the only way to set one company apart from the other is to offer better benefits.
A good health insurance plan is a must. A solid 401(k) is pretty important as well. After that, employers look to offer benefits packages based on what their workers are most likely to appreciate. Note that this can change not only from one employer to the next, but also from one sector to another. It really depends on the kinds of people a company is hiring.
Help with Benefits Administration
We understand that some employers are hesitant about expanding their benefits packages because they are fearful of administration. The good news is that today's plan administrators are more helpful than they have ever been before. New and innovative plans are also available, plans that make offering benefits easier on the bottom line.
As a national leader in payroll services and benefits administration, we can testify to the importance of employee benefits as a recruiting tool. In the midst of stiff competition for the best talent in your industry, a good benefits package might be the secret weapon you need to win the recruiting battle.