Local employers' challenge in 2016: Paying more to retain workers

DVL Group's Mike Beck can't find technicians for his Bristol air-conditioning company. Or even fresh electrical engineering graduates: "They want more money than ever," he said.

At Penn Jersey Paper Co. in Northeast Philadelphia, human resource manager Adam Carne would like to know how to retain $15-an-hour warehouse workers. "It's a little bit of a challenge," he said. "The company is hiring at all levels."

"Retention, retention, retention - that's our number one initiative for 2016," said Kelly Andress, president of Sage Senior Living, a Springfield, Delaware County, company that owns and operates assisted living facilities. And no wonder. To attract staff, Andress has to pay more than she did last year in starting wages, meaning that everyone in the organization gets a bump up.

Local executives at a business breakfast Friday ratified what a survey released that morning had concluded:

Despite the slide on Wall Street, despite angst over China, and despite concerns locally about the 1,700 employees the DuPont Co. is laying off starting this month, the region's employers are optimistic.

Business will be better in 2016, local business owners said in the survey, released Friday by the MidAtlantic Employers' Association, host of the breakfast. Sales will be up, and 91 percent say they will either expand or maintain current staffing levels in 2016. The association is part of a network of 33 regional employers' associations, and provides human resources and economic consulting to medium-size companies, those employing about 100 to 150 workers.

In fact, if there's any challenge for these companies, it's finding enough workers, on all levels - from replacing middle managers laid off during the recession to finding low-wage workers at the bottom of the pay scale.

To cope, 51 percent of employers are raising starting salaries, the survey said.

"Entry level is becoming more challenging," Kevin Robins, chief executive of the association, told the group. "Three or four years ago, we would have said that's not a challenge."

The main speaker at Friday's breakfast was the economist Joel Naroff, whose basic message was, "I told you so."

Over the last two years, Naroff, who writes monthly for The Inquirer and regularly speaks to the group in January, predicted a labor shortage, and warned employers that they would have to raise wages and implement retention practices if they did not want to fall behind in the competition for bodies, let alone talent.

"We're in a situation of emerging labor shortages across the board," he said. Naroff predicted that the national unemployment rate, at 5 percent, would fall to 4.3 percent or 4.4 percent nationally and a bit higher locally.

He said, and the survey buttressed his opinion, that finding employees is a bigger challenge than the cost of materials or energy.

"Get your retention plans in place," he said. "If you haven't already gotten them in place, you are already in trouble."

Falling energy costs are benefiting companies and consumers, he said, unless companies are in the energy business. In 2015, Naroff said, energy companies shed 130,000 jobs, not including those in companies that service the industry.

One of those is Gallagher Fluid Seals Inc., in King of Prussia, which reduced its staff from 60 to 55 last year.

"Our business is down 5 percent than the year before," company president Joseph Gallagher said. His company distributes seals used by equipment in the oil drilling business. The company had record sales from 2010 to 2013: "This oil and gas thing caught us by surprise."

Source: Philly.com