What a Chick-fil-A’s Wage Hike Could Signal for Talent Competition

To compete for workers, more employers are willing to increase new hires’ pay

Stephen Miller, CEBS By Stephen Miller, CEBS June 5, 2018
What a Chick-fil-A’s Wage Hike Could Signal for Talent Competition

A Chick-fil-A franchise in Sacramento, Calif., is raising its starting pay to at least $17 an hour, up from the $12 hourly minimum it previously paid.

Those figures are far above what's legally required. California's minimum wage is currently $11 an hour and will rise to $15 an hour by 2022. The national minimum wage is $7.25 an hour.

"As the owner, I'm looking at it big picture and long term," the Sacramento Chick-fil-A's owner and operator, Eric Mason, said in an interview with a local ABC affiliate. "What that does for the business is provide consistency, someone that has relationships with our guests, and it's going to be building a long-term culture."


(Sacramento Chick-fil-A owner Eric Mason)

Mason said his motive is to pay workers a living wage so they can avoid taking a second job. With record-low unemployment, however, many enterprises are finding it difficult to hire and keep low-wage workers.

About 23 percent of small-business owners cited difficulty finding workers with the necessary skills and qualifications, the highest share since 2000, according to a National Federation of Independent Business survey. The share of small businesses that said they raised compensation in May climbed 2 percentage points to 35 percent, the highest month-to-month increase since 1986.

"Record-low unemployment is finally spurring the wage growth economists have been looking for," said Rebecca Henderson, CEO of talent acquisition firm Randstad Sourceright. "Employers are under enormous pressure to invest as much as necessary to attract the best talent and retain their best employees."

At the $17 an hour that Mason's Chick-fil-A is offering, a prospective employee is "going to try very hard to get that job, and [is] going to be a very good, diligent productive worker," Sylvia Allegretto, a labor economist at the University of California, Berkeley told CNNMoney.

Wage Growth Nationally

Throughout the U.S., according to a June 1 Department of Labor report, 223,000 new jobs were created in May, and unemployment dropped to 3.8 percent, its lowest in 18 years. "Wages for nonsupervisor workers are rising at a faster rate than overall wage increases for the first time since 2014," the Wall Street Journal reported. "The nonsupervisor increase, 2.8 percent in May from a year earlier, was the best annual gain since mid-2009, when the recession just ended," but it is still appreciably below the prerecession annual wage growth of 3.9 percent that was recorded for nonsupervisors in April 2000.

[SHRM members-only guide: How to Establish Salary Ranges]

Higher Pay for Summer Hires

A new seasonal-jobs survey provides more evidence that wages could be headed higher to attract new talent.

Snag (formerly Snagajob), an online platform for hiring hourly workers, released results from its 10th Annual Summer Hiring Survey on May 23. The survey, conducted in March, polled 1,000 employers that hire seasonal workers during the summer months, mostly in the restaurant, retail and hospitality industries.

Comparing this year with 2017, the survey found that:

  • More employers hiring summer workers are willing to offer the maximum hourly wage they feel their business can afford (46 percent, up from 31 percent) rather than the minimum required by law (12 percent, down from 18 percent).
  • 74 percent plan to pay an hourly wage of at least $11, compared to last year when only 53 percent of employers planned to pay the same or more.

Faced with labor shortages that are making it harder to hire seasonal employees, "nearly all [surveyed] employers are adding extra shifts this summer on top of hiring more hourly workers," Peter Harrison, CEO of Snag, said.

With unemployment under 4 percent and more available jobs than at any time since 2000, it's time for employers to pay new hires more money, said Jed Kolko, chief economist for job search engine Indeed, SHRM Online reported last month. "We're already seeing some wage growth, though not as much as many people expected," he said. "Paying people more needs to be a starting point."

Chick-fil-A's Mason would seem to agree.

Related SHRM Articles:

Unemployment Rate Falls Again, over 200K New Jobs Added, SHRM Online Talent Acquisition, June 2018

Recruiting in a Tight Labor Market? Pay People More, SHRM Online Talent Acquisition, May 2018

Fast-Food Chains Enrich Their Education and Financial Wellness Benefits, SHRM Online Benefits, April 2018


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