Salaries in America have risen in the past year. How does that affect auto retail?

The Bureau of Labor Statistics reported on Friday that employee pay in the form of wages and salaries increased by the highest rate on record through the third quarter of 2021. Between the beginning of July and the end of September, pay increased by 1.5% and the cost of benefits increased by an additional 0.9%.

But those numbers aren’t one-off, standalone figures. Cumulatively, wages and salaries for private industry workers jumped 4.6% in the 12 months ending in September 2021, and benefit costs rose 2.6%. The BLS reports that “among private industry occupational groups, compensation cost increases for the 12-month period ending in September 2021 ranged from 3.2% for management, professional, and related occupations to 6.1% for service occupations.”

Some of the pay increases are simply keeping in line with the cost of inflation – the highest rate seen in more than a decade at 5.4% over the past year. However, many of the staffing costs are simply an attempt to get workers back to work, particularly in the customer service industry. According to BLS statistics from August 2021, vacancies in Leisure and Hospitality are at 10.1% while retail trade has 7.2% of job positions open and ‘other services’ have a 7.8% vacancy rate. Those rates are 50% higher than August 2020.

Despite increasing salaries, positions are being vacated at an alarming rate in the “Great Resignation” as demands for better benefits and more flexible working hours aren’t met. It’s creating an HR nightmare for SMBs, auto retail notwithstanding.

Dealers susceptible to staffing issues

Employers are losing their best employees as they search for greener pastures with more attractive benefits and working hours, particularly. The additional pay they’re receiving appears to be an added bonus since the companies that are successfully hiring right now are in tune with the needs and wants of participants in the mass job exodus. Although those resigning are often called mid-career employees and rates are highest in tech and health care, customer service is also highly affected.

No staff members are exempt, but dealers need to be cognizant of their skilled professionals and customer service workers specifically. Technicians are in extremely high demand, and those who have the itch for a change can easily find a replacement job at another dealership or, even more attractive, a mobile repair service with flexible hours. Also susceptible to a move are service workers like service advisors, “directors of first impressions”, and sales professionals with loyal clients.

How can dealers manage?

The BLS salary and wage data provide an excellent jumping-off point for dealers to begin addressing the shortage of workers across all industries. Proactive wage increases at or above the rate of inflation are crucial since every employee is painfully aware that their cost of living has gone up while their paycheck hasn’t. For highly competitive positions like technicians, consider additional incentives for loyalty like an annual cash bonus that grows according to years of service.

Benefits appear to be a significant driver for employment among those getting on board with the Great Resignation. Revisit the benefits your employees receive, then consult with key people on your team to find out what improvements can be made that are within reach.

Increasing wages and salaries, boosting benefits, and incentivizing loyalty all seem to be items that are expenses for the dealership. It’s true – they come at a cost. However, the alternative is a team that could be fractured by dissatisfaction and disruption to the service you can provide your customers.

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