Skip to content

Hiring employees After the COVID-19 Lockdown

I have heard and read many complaints by small businesses that they can’t’ find and hire new employees after the COVID-19 lockdown.  The federal government supplemented state unemployment during the shutdown with $00 per week.  Many PIBA business members are in the hospitality industry (restaurant, hotel, motels and tourist entertainment) and typically pay minimum wage of $7.25 per hour which is $290 per week or about $15,000 per year.  The federal government supplement paid $600 per week which is $15.00 per hour or about $31,200 per year to the unemployed.  That is a strong incentive not to work.  Governor Abbott rejected the federal supplement effective June 26, 2021.  That should bring workers back into the workforce.

Hospitality industry businesses typically have high fixed costs such as rent, utilities for heating and air conditioning, water, sewage, and waste disposal, and extremely low variable costs such as food ingredients costs and maid service.  Businesses must pay their fixed cost whether they have a few customers or many customers.  The revenue from each new customer sales dollars goes mostly to new bottom line profit.

In that situation, businesses need to re-evaluate their wage scales.  Many large companies have.  Amazon increased its minimum wage for warehouse workers to $15.00 per hour and gives $1,000 sign-on bonuses.  They have a large, fixed cost in distribution warehouse capital cost, inventory cash cost, and utilities.  The revenue produced by each new worker’s orders filled is mostly profit.  Likewise, Walmart has increased its minimum wage to $15.00 per hour for warehouse workers and store sales force.  It has a large capital cost for its warehouses and stores, cash costs for inventor and utilities.  The revenue produced by each new warehouse worker and salesperson is mostly profit.

If your business offers new employees $15.00 per hour, you will have to raise all present workers to $15.00 per hour or higher to maintain harmony in your workforce and retain present workers.

First, start trying to rehire workers you had to lay off during the lockdown.  They are already trained, and you know their capabilities.  Walmart has one or more stores in each US city.  Their minimum $15.00 per hour will probably establish the new US minimum wage at that level.

With the end of the supplemental $600 per week unemployment payments, PIBA business members should make a new major effort to hire any new workers they need.  New revenue from new sales is the best of times in the business cycle.  Do not miss it by being too frugal on your wage rates.

Author: Ralph Coker