Restaurant chain Denny’s recently mobilized its 53-foot kitchen truck. But instead of serving up pancakes and coffee to natural disaster victims, as it has done in the past, it had a different mission: a nationwide tour to tempt potential employees.
Employers are going to new lengths to attract workers. CVS Health dropped its requirement that entry-level workers have a high school diploma. And Walmart is offering bonuses to warehouse workers for staying on the job throughout this summer and fall.
For many low-wage workers, the tighter labor market means that the tables have suddenly turned. The need of companies to quickly fill job openings has taken on more urgency, as retailers gear up for the holiday season and restaurants race to make up for months when they were subject to lockdown restrictions.
In recent months, Chipotle Mexican Grill has raised hourly wages and introduced referral bonuses, while McDonald’s is splashing out millions to help its franchisees pay workers more and even piloting a new childcare program.
“We’re in a situation where the bargaining power and the labor market has shifted toward job seekers, especially in recent months,” said Nick Bunker, economic research director for North America at the Indeed Hiring Lab.
Several data points help flesh out the picture. Job openings in the U.S. hit a record of more than 10 million in June. Quit rates have grown the fastest among industries often associated with lower pay, led by the leisure and hospitality industry and followed by manufacturing and retail trade, according to Indeed’s analysis of Bureau of Labor Statistics data. And for the first time, the average wage of restaurant and supermarket workers rose above $15 an hour, according to the BLS.
As of July, unemployment rates for eating and drinking places and the retail industry were higher than the overall U.S. rate of 5.4%, at 8.4% and 6.4% respectively, according to the Bureau of Labor Statistics.
CVS Chief Executive Karen Lynch said the competitive environment has forced the well-known drugstore chain to make plans to boost its minimum wage from $11 an hour to $15 an hour by next summer. It is also giving a raise to higher-paid employees, such as technicians.
“There is a very tight labor market, and we are addressing that with our overall wage increase,” she said in a note.
Likewise, McDonald’s announced an average of 10% higher wages for hourly restaurant workers at company-owned locations in May and encouraged its franchisees to take similar steps. The iconic fast-food giant operates roughly 5%, or about 650, of its U.S. restaurants.
McDonald’s U.S. Chief People Officer Tiffanie Boyd said the move is already paying off. She said that in June, the last full month of data available, the burger chain had its “largest month of hires in the last couple of years.”
Elsewhere, Target is also rolling out a new perk this fall: a debt-free college education for part-time and full-time workers. CEO Brian Cornell said it’s one way that Target aims to be an industry leader for retail pay and benefits.
“We think it can make a big difference for our teams and just make sure Target is a preferred place to work,” he told CNBC in a recent interview.
So far, more than 10,000 employees have signed up to get more information about the program, which launches in the fall, company spokeswoman Shandra Tollefson said.