Factory work used to pay far better that fast-food jobs - but thanks to the labor shortage, the gap is quickly closing, and manufacturers are losing staff
Factories are struggling to raise wages as quickly as fast-food chains during the labor shortage, the WSJ reported.
Restaurants can offer perks to attract new workers, but manufacturers say it's more difficult for them.
"Everybody is fighting for the same people," one expert said.
Fast-food chains are pushing up wages amid the current labor shortage - and factories are struggling to raise theirs as quickly, which is one of the reasons a stream of workers is leaving the manufacturing industry, according to a report by The Wall Street Journal.
Factories have historically offered better wages than restaurants and retail companies. They still pay workers much higher wages on average, The Journal reported, but fast-food chains are now raising their wages at a much faster rate.
Factories are now struggling to find enough workers to meet the booming demand for furniture and other goods, manufacturing experts told the paper.
"There is just more opportunity to work somewhere else than there was in the past if you are looking for a living-wage job," Julie Davis, head of workforce development for the Association of Equipment Manufacturers, told The Journal.
"Everybody is fighting for the same people," Daniel Quintanilla, director of talent acquisition at Michigan automotive supplier Gentex, told The Journal.
Hourly factory workers made an average of $23.41 an hour in April, or 56% more than restaurant and fast-food workers, according to the Journal's analysis of federal data. This was down from 83% 10 years ago.
Grocery stores, restaurants, and hotels are offering perks from higher wages and education benefits to cash bonuses and even free iPhones as they scramble to find new hires as the economy reopens and customers return.
Manufacturing executives told The Journal that as well as struggling to find workers, they're also being hit by higher prices of raw materials including fuel, lumber, and packaging amid the current shipping crisis, making it harder for them to afford new staff perks.
Some restaurants have been hiking up prices to offset the higher wages. But Paul Isely, a business professor at Michigan's Grand Valley State University, told The Journal that it's harder for manufacturers to raise prices because they have to compete with factories around the world, not just nearby restaurants.
Lawrence Mishel, an economist at left-leaning think tank the Economic Policy Institute, told the publication that global competition, outsourcing and contractors, and lower unionization rates were also causing manufacturing jobs to lose their wage premium.
As a result of all these changes, the proportion of US workers employed in the manufacturing industries was shrinking. Less than 9% of US workers are currently employed by manufacturers, The Journal reported. In the early 1980s this was more than 20%.
One manufacturer told the Dallas Fed for June's Beige Book that even with a starting hourly wage of $14, the company was unable to fill more than 20 open positions. Texas uses the federal minimum wage of $7.25.
The Federal Reserve said that the tight labor market could last months, but Bank of America expects the job market to recover by early 2022.
Grace Dean
Tue, June 22, 2021,
Karen Stamand, a housekeeper at Nonantum Resort, cleans a room. Ben McCanna/Portland Press Herald via Getty Images
Some workers are getting jobs at hotels but not turning up to first shifts, a NYC hotel owner said.
He told Fox Business that some staff had left the company for minor salary bumps, too.
The industry is offering perks like free accommodation and fitness machines amid the labor shortage.
Hotel workers are quitting their jobs for better pay during the US labor shortage, making recruitment a huge challenge, the owner of a New York City told Fox Business.
"Hiring has been incredibly challenging," Michael Achenbaum, founder and president of Gansevoort Hotel Group, which owns a 186-room room in NYC's Meatpacking district, told the publication.
He added that some employees weren't showing up for their first ship. He didn't elaborate.
"Not only is finding qualified candidates difficult but there is a consistent acceptance of offers and then no-shows on the first day," Achenbaum.
Read more: How Starbucks is defying the labor shortage crisis with transformative perks, not cash teasers like McDonald's
Achenbaum said that some staff were leaving the Gansevoort Hotel Group to work at other hotels "for minor salary bumps."
Hotels are scrambling to both recruit and retain employees amid the US labor shortage hitting industries from healthcare to hospitality and ride-hailing apps. The lack of workers is causing some businesses to cut operating hours, slash production, and raise prices, and the US Chamber of Commerce said it could hold back the country's economic recovery from the pandemic.
The Labor Department said that about 4 million workers in the US quit their jobs in April - a 20-year record.
Insider's Áine Cain reported that long hours, unruly customers, and low pay have caused minimum-wage workers to quit their jobs in droves during the pandemic. Other reports suggest that unemployment benefits, COVID-19 health concerns, and caring responsibilities also played a role.
Grocery stores and restaurants have been offering perks from higher wages and education benefits to cash bonuses and even free iPhones to attract new hires as the economy reopens and customers return. Some hotels have been offering free accommodation to staff, while Achenbaum told Fox Business that his hotel, the Gansevoort Meatpacking Hotel, gave senior staffers a $1,345 connected-fitness machine when they returned to the hotel after working virtually for eight months.
Teenage fast-food workers are landing $50,000-a-year manager jobs at a Texas chicken restaurant thanks to the labor shortage
Anna Cooban
Mon, June 21, 2021
A restaurant chain in Texas has promoted young workers to manager roles amid a labor shortage. Getty Images
Layne's Chicken Fingers promoted some workers in their late teens to managers, The WSJ reported.
CEO Garrett Reed said the fast-food chain was losing staff to Walmart and McDonald's.
Some of these younger workers were now earning more than $50,000 a year, he said.
A Texas chicken-restaurant chain has promoted workers in their late teens and early 20s to managerial positions that pay more than $50,000 per year because of a staff shortage, its CEO told The Wall Street Journal.
Garrett Reed, the CEO of Layne's Chicken Fingers, a fast-food chain with six restaurants across the state, told The Wall Street Journal he was training 16- and 17-year-olds to run new stores because he was so short on staff.
Layne's was struggling to hire and had lost employees to larger employers such as Walmart and McDonald's, Reed told The Journal.
"We're so thin at leadership that we can't stretch anymore to open more locations," he told the Journal. "I've got a good crop of 16- and 17-year-olds, but I need another year or two to get them seasoned to run stores."
The hospitality industry is facing a severe labor shortage. Job openings in the accommodation and food-services industry rose by 349,000 in April, the highest of any industry that month, data from the Bureau of Labor Statistics showed, and some restaurants have hiked wages to attract workers.
Reed said in an interview with the Dallas publication D Magazine in May that he hoped to open between 100 and 120 franchise locations in Texas by 2028. The company recently opened applications for new franchises on its website.
But Reed had delayed signing leases for four new restaurants in Dallas because he couldn't find enough workers, particularly managers, he told The Journal.
"The biggest challenge for small companies to grow right now is your labor force," Reed said. "We'd be growing at twice the rate if we had more people."
"There's only so much I can pay and remain profitable without raising prices too much," Reed told The Journal.
Layne's did not immediately respond to Insider for comment.
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