With the recent minimum wage boost to $10 per hour, staffing agencies are struggling to find qualified laborers for the construction field. By addressing the change now, recruiters will have a better idea how to transition when the minimum wage increases to $15 per hour by 2025.
Additionally, in response to COVID-19, the American Rescue Plan Act has been extended through September 6. This alone has caused a major labor shortage. With the unemployed population still receiving CARES Act benefits, some companies simply can’t compete without raising their billing rates.
What are the benefits of the CARES Act?
The CARES act was originally made to provide government funding to large and small businesses, industries, individuals, families, gig workers, independent contractors and hospitals. The primary benefactors of the act were households and small and large businesses, accumulating 76 percent of the budget. One of the benefits provided through the act is unemployment payments of $600 per week that will continue through early September, making unemployment more profitable than many other jobs.
The federal government says that only certain people qualify for these payments. Eligible parties include people who lost their jobs because of the pandemic. These parties received their standard unemployment wages in addition to the weekly $600 CARES Act stipend. If these unemployment benefits had been exhausted, the act provided 13 additional weeks of stipend support. Under the CARES Act, the scope of those allowed to apply for unemployment widened. This allowed those who were not traditionally eligible for unemployment—including the self-employed, contractors and workers with a limited work history—the ability to benefit.
What are staffing agents doing to win workers back?
In order to offer higher wages and attract workers, recruiters at companies like StaffZone have no choice but to immediately increase their prices. “In an effort to sustain our operations and continue to recruit a viable workforce, we are forced to increase pay and bill rates immediately and are unable to wait until Amendment 2 initiates on September 30, 2021.”
In addition to higher wages for workers, recruiters have to compensate for increases in state unemployment taxes and Workers Compensation regulations.
How does this affect construction employers?
In order for construction companies to remain in business, it is crucial that they hire reliable laborers to carry out their many projects. For that reason, many companies like Live Oak Contracting work with staffing agencies that specialize in their specific industry.
With a seemingly increased competitive market, construction employers should expect a significant shift in how they distribute their monetary funds throughout the company. They’ll need to pay their recruiters more so they can continue to hire dependable workers and, in turn, refuse a decrease in productivity and quality products.
However logical this may seem, the reality is that construction employers were already struggling to keep their businesses afloat. The pandemic has caused a lumber shortage, spiking prices and delayed delivery times. With supply being as low as it is, prices have increased by almost 300 percent this year.
After a challenging economic year, the minimum wage increase came as a pleasant surprise to many. But it is just one more challenge for the construction industry to face on top of the already looming lumber shortage. Expenses continue to skyrocket and businesses struggle to find a means to an end. The minimum wage increase has the potential for better labor practices in years to come, but in the meantime, we continue to face challenges.