U.S. Factories Luring Workers With Hefty Perks

Summary

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WSJ Your Money Briefing

Episode: U.S. Factories Luring Workers With Hefty Perks
Date: January 14, 2020
Host: J.R. Whalen
Guest: Austin Hufford, Wall Street Journal Reporter

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Episode Overview

This episode explores how U.S. factories, confronted by a tight labor market and a major shortage of qualified workers, are offering unprecedented perks and creative incentives—beyond just higher pay—to attract new employees. Reporter Austin Hufford joins host J.R. Whalen to discuss the innovative strategies factories are using to fill hundreds of thousands of open positions amid low unemployment and increasing automation.

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Key Discussion Points & Insights

Labor Shortage and Unique Perks

• Opening Statistic:
  U.S. factories have 500,000 open jobs—the most in 20 years—due to a 50-year low in unemployment.
  (00:42)

• Creative Incentives:
  Factories now offer:

  • Signing bonuses
  • Relocation expenses
  • Steel-toed boots
  • Better cafeteria lunches
    (00:34, 01:22)

  "Employers really are having to get creative, as one economist said, to ensure that they have the workforces they need."
  — Austin Hufford (01:24)

Real-World Examples: Caterpillar’s Approach

• Relocation Benefits:
  Caterpillar’s Lafayette, Indiana plant offers up to $5,000 in relocation assistance for new hires from 75+ miles away.
  (01:54)

  "$5,000 is pretty significant for an hourly worker."
  — Austin Hufford (02:03)

• New Territory for Manufacturers:
  Many companies have never previously offered such relocation incentives, highlighting the drastic change in recruitment.
  (02:13)

  "This is a new thing, that definitely not since the recession and probably before then they'd never done this before... it's the tightest labor environment that she's seen in 25 years."
  — Austin Hufford (quoting HR executive) (02:13)

Recruitment Tactics: Reaching a Stationary Workforce

• Online Outreach and Targeting:

  • Posting in Facebook groups for people who are moving states.
  • Targeted online ads aimed at community colleges and even competitors’ employees.
    (02:36)

  "They're sending ads at community colleges and even some competitors to try to get employees to apply."
  — Austin Hufford (02:43)

• Challenge: Americans Aren't Moving

  • Mobility statistic: Only 9.8% of Americans moved last year—the lowest since tracking began in the 1940s.
    (03:09)

  "Since the 1980s, there's been a decline in the percentage of Americans who move every year...last year it was 9.8%."
  — Austin Hufford (03:09)

Automation and Skills Gap

• Automation Increases Requirements:
  Automation makes technical and specialized skills more essential, such as welding or machine programming.
  (03:27)

  "For many of these positions, they're trying to find people with specific skills, whether it's welders, whether it's people who know how to program machines."
  — Austin Hufford (03:32)

• Training Pathways:
  Some skilled roles can be accessed via short-term training (e.g., two-month welding courses), so a four-year degree isn’t always required.
  (03:58)

  "They aren't requiring four-year bachelor's necessarily."
  — Austin Hufford (03:58)

• Education Shortfall:
  Companies hope community colleges and training programs will step up to supply more skilled workers.
  (04:17)

  "They really do think that there is an actual shortage and that if every company was able to hire people, the economy might even grow even faster."
  — Austin Hufford (04:28)

Wage Growth and Economic Implications

• Wage Increases in Manufacturing:

  • December saw a 3% wage increase—the highest since 2016.
  • Manufacturing wage growth now outpaces the rest of the U.S. economy for the first time in years.
    (04:45)

  "It's not only benefits, but it's hard cash that's increasing."
  — Austin Hufford (04:48)

• Growth Limits:
  If factories can't hire enough workers, they simply can't grow or meet demand, impacting their ability to expand or even fulfill existing orders.
  (05:09)

  "If a company can't hire enough workers, they in many cases, won't be able to produce the goods they want."
  — Austin Hufford (05:22)

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Notable Quotes & Moments

• "Employers really are having to get creative...almost half a million open manufacturing jobs today." (01:24)
• "$5,000 is pretty significant for an hourly worker." (02:03)
• "Since the 1980s, there's been a decline in the percentage of Americans who move every year...last year it was 9.8%." (03:09)
• "Some of these companies say they hire welders who've only taken a two month intensive course." (03:58)
• "US Manufacturing wage growth is actually now outpaced wage growth for the economy as a whole." (04:52)

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Timestamps for Important Segments

• [00:20] — Episode introduction: Scope of the labor shortage
• [01:22] — Creative perks and incentives
• [01:54] — Caterpillar’s $5,000 relocation bonus
• [02:36] — Recruitment tactics: Facebook groups, targeted ads
• [03:09] — Decline in American worker mobility
• [03:27] — Automation and skill requirements
• [04:45] — Wage growth statistics
• [05:09] — Consequences of unfilled jobs

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This episode provides a clear snapshot of the evolving U.S. manufacturing labor market, indicating both the opportunities for skilled workers and the significant challenges employers face in recruiting and retaining talent. The discussion is fast-paced, data-driven, and filled with frontline insights from manufacturing executives and labor economists, making it essential listening for anyone interested in the intersection of labor markets, automation, and American industry.

Transcript

[A]

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. [e-mail] Washingtonwise.

[B]

Here's your Money briefing. I'm J.R. whelan at the Wall Street Journal in New York. U.S. factories are having a hard time finding qualified workers to fill hundreds of thousands of open jobs. To fill those slots, factories are offering more than just higher wages.

[C]

They're also offering signing bonuses, relocation expenses, even steel toed boots and better cafeteria lunches.

[B]

That's Wall Street Journal reporter Austin Hufford. He'll tell us how automation in US Factories has made the task of staffing up all the more challenging. That's. Unemployment is at a 50 year low and that's sending US factories scrambling to find workers to fill 500,000 open jobs, the most openings in 20 years. Wall Street Journal reporter Austin Huffer joins us to discuss how factories are searching nationwide and sweetening their offers to lure workers and convince them to move. So Austin, what kinds of perks are factories offering people to relocate?

[C]

Well, in addition to rising wages, they're also offering signing bonuses. We relocation expenses, even steel toed boots and better cafeteria lunches. You know, employers really are having to get creative, as one economist said, to ensure that they have the workforces they need. And even with all these benefits, it's still not enough. You know, there's almost half a million open manufacturing jobs today.

[B]

You spoke to folks at a Caterpillar plant in Lafayette, Indiana. What are they doing to entice prospective employees to move?

[C]

So at Caterpillar, they're offering some workers up to $5,000 in relocation benefits if they're 75 miles away from the plant in Indiana. You know, $5,000 is pretty significant for an hourly worker.

[B]

That is a lot. And it sounds like that's something they probably have not done for a long time, if at all.

[C]

Right. A lot of manufacturing owners tell me that this is a new thing, that definitely not since the recession and probably before then they'd never done this before. One HR executive said it's the tightest labor environment that she's seen in 25 years.

[B]

How are factories getting open jobs to show up on the radar of people who live in other cities?

[C]

So I spoke to one executive and they are actually posting in a Facebook group for people who are leaving Illinois, basically saying, hey, come over here. There's plenty of jobs in my city. I spoke to another executive and he's actually using targeted online ads based on location. And so they're sending ads at community colleges and even some competitors to try to get employees to apply.

[B]

Seems like it's a good idea to be in a Facebook group to target people who are moving, but a challenge here is that people are not moving as often as they once did.

[C]

Yeah, I mean, this has been discussion among academics for several years now. Is that basically since, since the 1980s, there's been a decline in the percentage of Americans who move every year. Last year it was 9.8%, which is basically the lowest since they've been keeping track in the 40s.

[B]

Also, the increase in automation in factories has made it extra tricky to find the right people.

[C]

Right. Because for many of these positions, they're trying to find people with specific skills, whether it's welders, whether it's people who know how to program machines. You know, it's not as much for the average day laborer. You know, in most economies, in most parts of the country, you could hire a day laborer for relatively affordably, but finding a welder is really difficult almost everywhere.

[B]

So they're looking for people with specialized skills.

[C]

Yes, in many cases. But remember though, just because they're specialized doesn't mean it takes forever to get them. You know, some of these companies say they hire welders who've only taken a two month intensive course. You know, so they aren't requiring four year bachelor's necessarily.

[B]

And what have recruiters told you about trying to find workers?

[C]

I mean, frankly, companies say that there just aren't enough to go around and that they really are hoping that community colleges and other programs kind of step up and produce more welders in the years to come and other types of skills. They really do think that there is an actual shortage and that if every company was able to hire people, the economy might even grow even faster.

[B]

And have you seen hourly wages increase at factories as they look for more workers?

[C]

Yeah. So In December, wages grew 3%, and that was the highest since 2016. And so, you know, that's a really good sign for these workers is that it's not only benefits, but it's hard cash that's increasing. Interestingly also is that US Manufacturing wage growth is actually now outpaced wage growth for the economy as a whole. And, and that was the first time that's happened in several years.

[B]

So Austin, if factories can't find the right people, what happens then?

[C]

So what that means is they basically can't produce enough products. And so that means that even though they want to grow, they want to expand, and they want to provide, whether it's garbage trucks or caterpillar engines, if a company can't hire enough workers, they in many cases, won't be able to produce the goods they want.

[B]

All right. That's Wall Street Journal reporter Austin Hufford with us. Austin, thanks for coming on the show.

[C]

Thank you.

[B]

And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.

[A]

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day, but what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. [e-mail] WashingtonWise.