Not long ago, we were contacted by MSNBC's Eve Tahmincioglu, as she was researching an article for her new blog within the MSNBC universe, YourBiz. She had stumbled across the tool we created that estimates the impact of a minimum wage increase upon a small business, which she featured in her second official blog post!
Pretty good timing as the first phase of the recently approved increase in the federal minimum wage just took effect last week!
After noting that the overall effect upon the economy should be pretty minor (see our post here), which is largely due to the continually decreasing numbers of people earning the minimum wage in the U.S. in the past two decades, Eve noted another challenge for U.S. businesses:
There may be yet another bigger work force problem looming for small business owners – a lack of skilled workers.
Many of the nation’s fastest growing privately held firms view the lack of enough skilled employees as one of the top growth inhibitors for their companies.
A survey of more than 300 CEOs from smaller companies released this year by PricewaterhouseCoopers found that the availability of qualified, skilled workers was cited by 50 percent as a potential barrier to growth. The problem was equally bad in both service and manufacturing sectors.
So even if you pony up the cash, there might not be enough qualified workers to go around. Maybe Ironman can create a calculator for that.
That seems like our kind of challenge! Except, we don't need to go to the trouble of creating a tool to solve this particular problem.
In fact, we suspect this problem could be fully solved in less than four years - and all these CEOs need to do is to commit to paying people more for the specific positions for which they want to attract qualified candidates.
The quickest, easiest way to attract large numbers of new candidates to any position is to pay really well, as the Suffolk County Police Department has discovered, or if money is an issue, to offer alternative forms of compensation that individuals might value more.
They need to commit to doing so, both now and to continue doing so in the future, mainly for the sake of signaling students in college or in trade schools, for those positions that require additional education and training. This way, the students can direct their studies in such a way that they become ideal job candidates for these positions when they graduate.
The commitment to pay more in the future is purely for the sake of retention. Otherwise, why would a qualified applicant stay in a position if they can do the same or similar work elsewhere for greater rewards?
That these CEOs seem unwilling to do so is more a reflection that they're not yet serious about really addressing the situation.
The CEOs' dilemma also provides a window to the current job market. That the problem the employers have right now is a shortage of qualified job candidates is a really good indication that the job market is very strong. The BEA's advance news release for 2nd Quarter 2007 GDP last week confirms that's been the case for a while - in addition to releasing the latest GDP data and revisions, they also revised real (inflation-adjusted) disposable income upward to show an annualized rate of increase of 2.8% for the period from 2003 through 2006 (they previously had the figure at 2.5%.) Translation: employers are already paying people more, which confirms a strong job market.
Further translation: Paying people more for having highly-in-demand skills is already happening. In our view, at least 300 small company CEOs ought to accept it and adjust their compensation plans accordingly.
Eve is the author of From the Sandbox to the Corner Office: Lessons Learned on the Journey to the Top,
Labels: jobs, minimum wage
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