One of the biggest challenges to businesses operating while the Gulf Coast is rebuilding is finding adequate labor. With so many homes destroyed by Hurricane Katrina, some workers have left the area because of lack of available housing.
Businesses are responding by offering higher wages per hour, and in some cases benefits are also increasing in importance as a tool to attract and retain a quality workforce.
“There are a number of people in the workforce who are primarily concerned with the amount they can get on a per-hour basis,” said Jay Moon, president and CEO of the Mississippi Manufacturers Association. “For other people, benefits are more important. People who are looking at it from a longer-term standpoint are looking at a combination of salary plus benefits.”
Manufacturers have historically paid more and better benefits than many other sectors of the economy. Outside of the government sector, manufacturers are one of the highest providers of additional benefits to employees such as health insurance. In most cases, benefits apply to family members, as well.
Employers offering benefits have been struggling because of the spiraling costs of providing health insurance coverage. Moon says the cost of healthcare insurance is second only to increasing energy costs as a top concern for manufacturers.
“We’re seeing 20%, 30% and 40% increases in premiums each year,” Moon said. “A lot of employers, particularly in manufacturing, are implementing deductibles and co-pays to try to slow down and augment some of those cost increases. It hits smaller manufacturers harder because they don’t have as much bargaining power because they don’t have as many employees.”
Benefits are important in these days when surgery and a short stay in the hospital can run $40,000 to $50,000. Moon said because people can be bankrupted by high medical bills, some people are reluctant to move to another job unless there is assurance they will still have benefits coverage.
“One stay in a hospital even for a minor surgical procedure can be enormously expensive,” he said. “If you don’t have insurance to set off some of that cost, it can hurt your current financial situation. When people retire and have those kinds of medical situations, it can severely impact their retirement income.”
As the cost of healthcare continues to rise, benefits are more important than ever, says Barbara McDonald, benefits director for IP Hotel & Casino in Biloxi, which currently employs more than 2,000 people.
“Benefits are an important aspect when individuals are pursuing employment,” McDonald said. “People realize the high cost of quality healthcare and will compare benefits when seeking employment. Employers compete for qualified applicants with their benefits packages. There are some associates who are working strictly for benefits. Others are willing to accept a lower rate of pay if the employer offers a more attractive benefits package.”
McDonald said employers seem to be offering more and more products in order to stay competitive with each other. Prior to Katrina, as more casino properties opened, it became necessary for them to offer a larger variety of products.
“Anyone who has had a serious illness can understand just how important a good health plan is,” McDonald said. “Most employers are paying the majority of the cost towards health coverage. Benefits will continue to be an important factor when applicants are seeking employment. The employer with the most attractive package will likely be the applicants’ first choice in accepting employment.”
Coast restaurants that survived Hurricane Katrina have been doing a booming business. While finding enough labor has been a challenge, most restaurants are competing by offering higher wages — not benefits.
“We haven’t seen an increase in benefits,” said Mike Cashion, executive director of the Mississippi Restaurant Association. “There has just been a substantial wage increase either in hourly wages or bonuses. Some are paying weekly, monthly and quarterly bonuses for hourly and salaried employees.”
Cashion estimated a 20% to 25% increase in labor costs across the board. Those making minimum wage have seen their salaries go up $1 an hour.
Employees who were making $8 to $10 per hour are now making $10 to $12 per hour.
“Obviously, there is a housing problem that impacts the number of employees to draw from,” he said. “With a smaller pool of labor, wage rates become more competitive.”
While restaurants that have been able to reopen have reported strong sales, many are on modified schedules. The labor shortage means they have had to cut the number of hours they are open, or are running very short on staff.
“There is no question that everyone is earning their paychecks,” Cashion said. “Everyone is working hard to meet the demand of the public. But business has been good. Going out to eat is a great way to get away from the pressures and the frustrations that have come from the hurricane, and a good opportunity to have fellowship with friends, neighbors and family.”
It could be a couple of years before things start to get back to normal. And then, Cashion said, people are not sure what normal will look like.
“Until the housing situation gets resolved and more casinos get back on line to draw more people into the area, it is going to be up in the air,” he said.
Contact MBJ contributing writer Becky Gillette at email@example.com.