🔒Businesses offer bonuses, higher pay in bid to reverse worker shortage

Employers across Connecticut are offering new incentives, including generous signing bonuses, in an effort to draw in job applicants amidst what they describe as an unprecedented labor shortage.

Last month, Bristol-based amusement park Lake Compounce announced that starting pay for certain positions requiring an adult — those at least 18 years old, or graduating high school seniors — will be $15 an hour, with added perks such as season passes for employees and up to three immediate family members.

Mohegan Sun, in the process of ramping up its operations ahead of Connecticut’s anticipated May 19 reopening, says it’s making $2,000 bonuses available for certain culinary jobs, including cooks.

Meanwhile, numerous businesses are now offering fully remote work, at least for the next few months, to mainly white-collar job seekers who may be looking to keep their distance from the office, even as vaccination rates climb.

Anthony Avallone, president of Branford-based staffing firm Reitman Associates, said companies he’s working with are getting creative as they become increasingly desperate for capable employees.

“It’s unprecedented,” Avallone said of the apparent worker shortage. “Last year, at the beginning of the pandemic, it was easier to hire people than it is right now.”

The most common strategy to lure applicants seems to be a sign-on bonus, usually around $1,000, he said. These payments need to be structured, however, to ensure applicants do not take the job, collect the bonus and then immediately quit.

Other businesses are raising their starting pay, Avallone said, but that tactic can prove tricky if beginner salaries start to bump up against compensation levels for people who have been with the company for some time. One client, he noted, is offering a monthly bonus of $250 for perfect attendance.

Avallone said he’s advising clients interested in offering new incentives to advertise a signing bonus, perhaps around $1,000, with $500 paid relatively soon after hiring and $500 paid later on.

Other strategies, including temporarily boosting pay to attract applicants, are a little more complicated and may not be worth it in the long run, as workers will almost certainly come to expect increased wages.

“You can never turn back the clock,” he said.

Duncan Forsyth, a partner at Hartford law firm Halloran Sage who specializes in labor and employment law, said businesses should remain mindful of their due diligence obligations even as they scramble to fill positions. Depending on the employer’s industry, that may include background checks and drug testing.

Like Avallone, Forsyth also said companies should phase-in or prorate any signing bonuses they plan to offer.

Paying more

Richard Sgueglia, vice president at Branford-based IT services firm Advanced Office Systems, said it’s become increasingly difficult to find talent, as many qualified workers have left Connecticut for lower-cost states.

The company has responded by raising wages, but compression — or the shrinking gap between what new workers and more experienced employees are paid — remains a top concern, especially with Connecticut on track to adopt a $15 minimum wage by 2023.

“Anybody making $16, $17, $18 an hour is saying to themselves, ‘I’m only really two or three dollars above minimum wage,’ ” Sgueglia said.

Because Advanced Office Systems works with sophisticated technology, properly training a new hire can take between three to six months, he noted, but the market demands are difficult to shrug off when empty positions need to be filled.

“Starting people off where we used to start them is just not realistic anymore,” Sgueglia said.

Centrix Dental, a Shelton-based dental products manufacturer, is running into similar problems.

“We’re seeing a lot fewer applications than would be normal,” said Donna Rees, vice president of human resources. “It’s recently fallen off tremendously. We’re maybe getting one-fifth [of the number of applicants] we would usually see.”

Rees said Centrix has responded by stepping up implementation of the state’s phased minimum wage increases for unskilled positions, meaning the company pays next year’s minimum wage earlier than scheduled.

“Our challenge is that we’ve got some compression and we have to figure out how to deal with that,” she said.

Underlying causes

Rees said she suspects that unemployment benefits, authorized at the height of the pandemic, are allowing at least some people to delay returning to work, and she worries the applicants shortage could last until those payments eventually expire.

Late last month, Federal Reserve Chairman Jerome Powell said that continued remote learning in many school districts, paired with a lack of affordable child care, was keeping many people, especially women, from returning to the labor force. Powell also said he suspects that some job applicants may be applying to positions they lack the skills for, while others are staying home out of fear of contracting COVID-19 and possibly spreading the virus to family members.

There is no official count of how many employers are offering expanded benefits or higher pay in Connecticut in light of reduced job seekers, and it could be that worker shortages are limited to certain geographical or industry-specific pockets, as often happened before the pandemic.

Powell, the Fed chairman, noted that wages so far haven’t been rising significantly, which typically happens in a tight labor market.

Still, the trend is exacting a toll on the state’s economy, as businesses, especially restaurants, cut hours due to staffing shortages.

“We’ve got to figure out a way to get past this,” Avallone said. “Employers are really in a bad predicament. The business opportunities are there, but they can’t deliver on what they’re supposed to be delivering on.”

“Companies will have to figure out how to manage until things go back to normal,” he added.