In a tight labor market, employers have to do whatever they can to attract top talent. Earlier this week, the San Antonio-based financial services company, the United Services Automobile Association, took just such a measure. The USAA, which serves primarily veterans and their families, announced it would up its minimum wage to $16 an hour and offer more comprehensive parental leave.
Dan Hamermesh, a professor of economics at the University of Texas at Austin says while this measure is common in tight labor markets, it has not happened since the Great Recession 10 years ago.
He says that in the last decade, the number of people either employed or seeking work has decreased by 4 percent, or 6 million people. With a shrunken labor market, it takes more to attract the highest-quality workers, so Hamermesh says that this decrease likely prompted the USAA to increase its minimum wage.
“This extra 6 million people is a shock to economists, nobody ever thought that the fraction of people looking for work or employed would go down so rapidly over this period of time,” Hamermesh says.
What you’ll hear in this segment:
– How this may affect the USAA in the future
– How this may affect the labor market in general
– What has happened in the past when similar measures were taken
Written by Emma Whalen.