Employers across the Quad-Cities are boosting worker wages amid a tight labor market – moves aimed at retaining workers, luring others away from lower-paying or higher-stress jobs and convincing others to return to the labor force.
Nationally, compensation for private-industry workers is up 4.8% year over year, and wages and salaries as a whole are 5% higher than this time last year, according to the Bureau of Labor Statistics.
It’s the fastest pace for wage increases in at least two decades.
What’s that mean for your company?
A worker shortage is driving up wages
In March, Iowa had roughly 102,000 job openings and only 55,000 unemployed, according to the latest figures from Iowa Workforce Development – about 1.8 job vacancies for every unemployed person. In Illinois, there were 426,000 job openings and 300,000 unemployed – about 1.4 openings per unemployed person. Nationally, the figure is 1.8.
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So why aren’t more people working?
Iowa State University economist Peter Orazem said Iowa, pre-pandemic, had a higher labor participation rate among people older than 45 compared to other states. Those in that age group, especially women, left the workforce over the course of the pandemic at higher rates, he said, and haven’t bounced back yet. He said that's likely contributing to Iowa's labor participation being half as quick to recover as the U.S. overall.
The number of immigrants entering the workforce also declined nationally during the Trump administration and the pandemic, meaning fewer new Americans entered the labor force.
In tight labor markets, Orazem said, the number of people quitting their jobs often rises while layoffs decline. In the Midwest, 3.1% of employees quit their jobs in December, but leveled off at 2.7% in March.
According to a national Pew Research Center survey of U.S. adults that quit a job in 2021, the top reasons included low pay, no opportunities for advancement, and feeling disrespected at work. Child care issues and flexibility in hours were also top reasons Americans surveyed left a job last year.
What your company can offer
It might not be as simple as pumping more into payroll.
Some Quad-Cities workers say employers could do a better job retaining talent by improving working conditions and being more flexible with time off.
Silvis resident Amanda Watson quit a high-stress, long-hour nurse management job for more regular hours as a receptionist at a family medical practice. Watson (no relation to the reporter) said if a nurse called in sick while Watson was on call, she would need to report in for work if no other nurses could pick up the 8-hour shift. That meant canceling dentist appointments last minute, missing her 16-year-old daughter’s extracurricular activities, or picking up her daughter early from an evening with friends.
“I don't know how many times I made a dentist appointment and then the day of I'm calling to cancel because someone called in or there was some kind of crisis and I just couldn't get out of work to go,” Watson said. “In fact, they told me if I did it again, I couldn't come back.”
Watson said she took a roughly $10-an-hour pay cut for a job that offered more consistent hours and time at home with her daughter.
But she still can contract for weekend shifts when she chooses if she needs to make some extra money, she said. The difference is, she said, she can pick when she works overtime instead of being forced to work at the last minute.
“(Previously), someone calls in for third shift, and I'm calling her (daughter) and I'm like, ‘I'm so sorry, but you have to come back home. I have to find somewhere for you to spend the night because I have to go into work,’” Watson said.
“So being able to not have to worry about that happening, I love it. I don't like the money but it's worth it to me right now.”
Greg Reed, 58, also recently changed jobs for better conditions. Reed has worked in the military and transportation logistics for most of his life. He accepted a training job that offered slightly higher pay but significantly less physical labor.
"As I'm getting older, I'm finding out very quickly that I can't physically do what I used to be able to do," Reed said.
Softening the blow from Illinois’ minimum-wage ramp-up
Quad-Cities businesses are straddling a minimum wage difference between Iowa and Illinois, which will grow further until 2025. Springfield lawmakers approved phasing in raising the minimum wage to $15 an hour by 2025, which includes a lower minimum for tipped employees, $9, and workers under the age of 18 working fewer than 650 hours a year, $13. The Quad-Cities Chamber opposed the move when it was proposed, citing that such a disparity in minimum wages could spell trouble for the bi-state region businesses competing for workers and lower-cost overhead.
In 2022, employers must pay Illinois workers at least $12 an hour, or $7.20 for tipped employees. That’s compared to Iowa’s minimum wage at $7.25, the same as the federal minimum wage.
In the hot labor market, wages have risen the fastest, however, in the lowest wage tail, including in food service, retail, and hospitality hourly jobs, according to Western Illinois Economics Professor Bill Polley. This is likely to lessen the impact of raising the minimum wage on businesses’ overhead costs, if businesses are already raising wages to attract workers.
Emerging from the pandemic has put upward pressure on wages. But in the most recent Quad-Cities area wage data from the Bureau of Labor Statistics, from 2020, occupations with an average hourly wage below $16 an hour made up just about 15% of the Quad-Cities workforce. The Davenport, Moline, Rock Island metro area had an average hourly wage of $24.12.
“Even during the pandemic two years ago, you can see that the average wage in the lowest tier of occupational groups, so this would be the kind of jobs that we traditionally would think are primarily minimum wage or slightly above minimum wage jobs, were significantly above both the Illinois and the Iowa minimum wage at the time,” Polley said.
“And so, what we can really take away from that is that most likely on both sides of the river a lot of those jobs were paying more than even the Illinois minimum wage, and that Iowa's wages — in order to compete with Illinois employers — Iowa's wages would have been significantly above the $7.25 Iowa minimum wage,” Polley added.
Food preparation and serving-related occupations in the Quad-Cities region had the lowest average hourly wage in 2020 at $11.86.
Advice for companies straddling the river
Whitey’s Ice Cream, a staple part-time job for young people in the Quad-Cities, has so far raised its wages on both sides of the river to meet the phased-in Illinois minimum wage, said Annika Tunberg, Whitey’s Ice Cream vice president. But she said, the company hasn’t yet made a decision whether to scale that trend all the way to $15 an hour.
“I can't say that that's what we'll always do as the minimum wage continues to increase, but from our viewpoint, you know, our employees are doing the same great work on both sides of the river,” Tunberg said.
Tunberg said Whitey’s is facing many of the same challenges attracting workers in recent months. Whitey’s is looking to fill three or four positions at its manufacturing plant, and would like to hire more daytime storefront employees. Much of the storefront workforce are younger employees, in high school or college. One successful strategy to hire new workers: Offering a referral bonus to incentivize employees to encourage their friends to apply.
“That's been our best marketing strategy, if you will, to get employees,” Tunberg said. “It's always helpful to work with friends and be in an environment where you like where you work.”
Research by Orazem found that while businesses likely to employ low-wage workers don't move to a state where the minimum wage is lower, but there can be an effect on where those businesses open new locations. Orazem said there is also some evidence that as the minimum wage rises, employers reduce the number of hours.
Bayside Bistro owners Darryl and Latisha Howlett took into account the minimum wage rising in Illinois when they opened a second location in Rock Island last fall. But the new location and its larger dining space ultimately proved the driving forces behind the decision.
Rising food costs have compounded challenges in finding workers. The Howletts canceled the Village's Bayside Bistro’s dinner menu because they couldn’t get enough food to supply the planned nightly menu. So, they concocted a different dinner menu for their Rock Island location and opened it just during dinner hours.
In an effort to reward high schoolers that worked with Bayside Bistro throughout their high school years, the Howletts for the first time last year awarded a scholarship to one of their employees heading to college. Darryl Howlett said they hope to grow the scholarship for future years.
Even with raising wages to attract workers, the Howletts said they're still struggling to hire workers who know how to clean, sweep, and bus tables, and communicate with their supervisors, which has surprised the pair the most.
"If you're getting paid $12 or $15 to come in and wash dishes and sweep the floor and bus tables, or, you know, to answer phones or do something that's really simplistic, and they come in and they don't have the skill set," Latisha Howlett said. "They don't know how to do these things. They're not starting at a wage that could give them incentive to learn how to do these simple tasks."
Higher wage traveling nurses used more to fill a health care worker shortage
In healthcare, one of the region's largest industries, hospitals are turning to traveling workers to fill open positions, often at much higher rates than traditional, full-time employees.
In the Quad-Cities, Genesis Health System is using at least triple the number of traveling health care professionals, including nurses, compared to before the pandemic began.
Before the pandemic, Genesis would contract between 10-20 travelers, according to Heidi Kahly-McMahon, vice president of human resources at Genesis Health System. That includes traveling nurses, contracted respiratory therapists, medical technicians in the laboratory and occasionally surgical scrub technicians, according to Genesis.
Now, Genesis contracts about 60 travelers, including 20 international nurses “to meet our patient’s needs,” according to Kahly-McMahon. The company keeps private what it pays traveling staff and registered nurses.
According to the Bureau of Labor Statistics, the national median pay for registered nurses in 2021 was $77,600 a year or $37.31 per hour. The bureau doesn’t separate traveling nurse wages, but according to Indeed, the average base salary for traveling nurses is $125,679.
Quad-Cities business leaders are brainstorming ways to attract and retain a workforce with an eye to meeting the Q2030 goal of growing the area's population to 500,000 by 2030.
In 2021, there were 265 work stoppages across the nation involving approximately 140,000 workers. Many involved demands for better pay and retirement benefits.