Fewer drug tests, less job experience: New hiring norms as labor shortage hits employers

By David Pendered

Employers in the Southeast have eliminated some drug testing because of the labor shortage. The Southeast is the only region in the nation where cutbacks in drug testing were mentioned in the latest edition of the Federal Reserve’s Beige Book.

Apartment construction

Construction workers continue to enjoy rising pay levels as employers raise their pay to attract and retain workers, according to the latest report from the Federal Reserve on wages in the Southeast. Credit: David Pendered

Drug tests aren’t the only casualty of the lean labor market in the Southeast.

Experience requirements have been lessened. Employers have relinquished total control of the time clock to workers, who are getting to use flex time set their own hours as employers struggle to hire and retain staff, according to the Sept. 4 edition of the periodic report the Fed provides of current economic conditions around the nation.

The entire nation is short of workers, according to the national overview in the Beige Book. The situation has, “continued to constrain growth in overall business activity,” according to the report.

Only in the Southeast has the Beige Book cited reports from employers who reported cutbacks in drug testing. Here’s the specific language that speaks to employers’ response to the labor shortage:

  • “Employers continued to report that while they had increased wages to attract and retain workers, efforts to improve employee benefits offerings, enhance work arrangement flexibility, eliminate some drug testing, and reduce experience requirements remained prominent attraction and retention tools.”

The Dallas Fed observed some job seekers are balking at the pay employers are willing to provide. This suggests some employers aren’t budging on pay. Employers also aren’t budging on minimum experience requirements, according to the Dallas Fed’s report:

  • “A lack of qualified candidates continued to challenge businesses across sectors and skill levels, but shortages remained most severe for mid-skilled positions. … Wage pressures remained elevated. Many respondents said they were struggling to fill positions partly because applicants were looking for higher pay than was offered.”
atlanta-fed_labor-report-snapshot_one-month-employment-change-ranked-by-industry-hourly-earnings

Workers in professional services, construction and health care continue to accrue higher pay as employers seek to fill openings, according to a report by the Atlanta Fed. Credit: frbatlanta.org

As reported by the San Francisco Fed, workers seem to be getting paid at levels they are willing to accept, with the Fed observing:

  • “Wage growth rose further over the reporting period due to brisk competition for qualified workers across sectors.”

Employers in the district aren’t willing to reduce their requirements, and the result at one payment-processing center was that, “job openings remained unfilled for longer than they did a year ago,” according to the report from the San Francisco Fed.

The shortage appeared in the job report released Friday by the U.S. Labor Department.

The national unemployment rate of 3.7 percent marked the 18th month the rate has been at or below a benchmark reading of 4 percent. The August unemployment figure is 6 million civilians who aren’t institutionalized, according to a Labor Department report of seasonally adjusted numbers.

The number of individuals who want to work but have given up looking for a job stands at 5.3 million, aged 16 years and older. The number who have multiple jobs – for whatever reason – stands at 8.3 million, aged 16 and older.

Unemployment rates for African Americans set a new record low at 5.5 percent, matched by a record low of 4.2 percent for Hispanic Americans, according to a statement released Friday by Acting Labor Secretary Patrick Pizzella.

The average worker earned $966.98 a week in August, according to a computations using the Fed’s analysis of the Labor Department’s report.

The figure is based on the average nominal earning of $28.11 an hour, and an average workweek of 34.4 hours.

 

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Average hourly earnings have continued to escalate as employers and employees have adjusted to the economy that’s emerging since the Great Recession, according to the Atlanta Fed. Credit: frbatlanta.org

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

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