Companies Raise Summer Wages to Compete for Seasonal Workers

Roy Maurer By Roy Maurer June 11, 2018
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​Employers are offering their summer workers higher wages this year, according to recently released surveys.

With unemployment matching a record low at 3.8 percent, more companies are willing to offer the maximum hourly wage they feel their business can afford rather than the minimum required by law, according to a survey of 1,000 hiring managers in the retail, restaurant and hospitality sectors, conducted by Wakefield Research.

About 74 percent of respondents 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. Just 12 percent said they would pay the minimum wage this summer, down from 18 percent in 2017.

The survey was conducted in March 2018 for Snag (formerly Snagajob), an online employment site for hourly workers and employers, based in Richmond, Va.

Twenty-five percent of employers hiring for the summer polled by CareerBuilder in April said that they plan to pay summer hires more than $15 an hour on average, double the federal minimum wage of $7.25. Most employers (87 percent) plan to pay $10 or more per hour on average, and 56 percent expect to pay $12 or more per hour, according to the national survey of 1,012 hiring managers and HR professionals.

"We've reached a level of unemployment that is below what many economists believe to be full employment," said Katie Bardaro, the chief economist at Seattle-based compensation market site PayScale. "Therefore, lack of jobs isn't the issue, but instead lack of workers. As the demand for qualified labor increases and the supply is limited, the price of labor increases, which is what we are finally seeing here for hourly workers."

A common misconception about summer jobs is that they pay only minimum wage, said Irina Novoselsky, president and chief operating officer at CareerBuilder. "Employers are grappling with a tough hiring environment, and summer workers are reaping the benefits," she said.

Bardaro said that wages since 2006 have increased by nearly 13 percent for full-time, private-sector hourly workers. "As organizations in these industries compete for talent in this tight market, offering pay higher than the minimum will be a strong play in the battle for qualified workers," she said.

Employers are also offering more benefits to seasonal summer workers to attract candidates, according to the Snag survey, including paid time off (52 percent), health insurance (49 percent) and employee discounts (38 percent).

This is consistent with what hourly workers want, said Peter Harrison, the CEO of Snag. According to the company's State of the Hourly Worker report, more hourly job seekers are focused on full-time work and are looking for jobs with paid time off, health insurance and 401(k) packages.

Summer Hiring Forecast

Summer hiring is expected to be strong for a second year in a row, with 41 percent of employers planning to hire summer workers, about the same as last year, according to CareerBuilder.

Although summer seasonal jobs are commonly associated with recreational and outdoor work, many employers whose companies are hiring for the summer say they are hiring for a variety of professional and support positions, including roles in IT (25 percent), engineering (18 percent) and manufacturing (16 percent).

Nearly all the hourly employers told Snag that they are adding more shifts for the summer season, and more than half (58 percent) said they intend to hire more summer workers than last year.

"We're thrilled to see nearly all employers are adding extra shifts this summer on top of hiring more hourly workers," Harrison said. "This is doubly good news because it likely indicates that current employees are getting more hours. Wage growth is super important, but on its own it's not enough to combat the staggering underemployment that still persists in America."

Not All Summer Jobs Are Temporary

The vast majority (88 percent) of employers expect to transition some summer hires into permanent roles, up from 79 percent last year, according to CareerBuilder.

"Historically, companies have approached summer hires as people that are just there to cover for the full-time employees," said Brian Kropp, HR practice leader at global business advisory and technology company CEB, an affiliate of Gartner.

Employers need to change that mindset with the economy at full employment, he added. "They need to approach the employees they are bringing on for the summer with the goal of trying to convince the best ones that they should take a full-time job with the company after the summer, or as soon as they are able. Rather than treat summer hires as fill-ins, they need to create a great experience for them to get them to accept a full-time offer."

Companies can increase the odds that employees accept a full-time offer by setting the expectation that summer hires make real contributions to the overall performance of the organization, Kropp explained.

"This is important for two reasons," he said. "First, jobs where employees feel like they are making a contribution become meaningful, making it more likely they will take a full-time job after the summer. Second, it creates a real assessment of the contributions that the summer hire can make."

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