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Industrial & Production Trades Report Losing One of Three Skilled Workers, According to MRA Survey
MILWAUKEE, WI (July 25, 2023) – Turnover continues to be a significant challenge for manufacturers. Companies that employ production, maintenance, services, and trade workers felt the impact even more significantly, reporting losing one of three skilled employees. In addition, nearly half of unskilled laborers/helpers separated from their employers in the past year, according to MRA’s Industrial & Production Trades survey.
“With unemployment at a record low, organizations are struggling to retain and recruit new employees. And manufacturers have the added long-term shortage of skilled tradespeople, machinists, maintenance workers and the like. As a result, they are at the forefront of developing proactive strategies to overcome these challenges,” said Jim Morgan, Vice President, Business Development & Workforce Strategies.
MRA’s Industrial & Production Trades Survey reports that most separations were due to attendance. Earning a better salary is a top driver of separations for mid-career employees. Approximately half of all companies reported separations involving employees with five or more years of experience. Companies losing employees with five years or more tenure lost them due to better salary and benefits and finding a similar job elsewhere. For separation of those with 10 years or more, two in three separated because of retirement.
A significant increase since last year was turnover for nonunion technicians and laborers/helpers (from 8 to 16 percentage points).
One proactive strategy employers utilize is the use of overtime pay. Organizations that operate on multiple shifts have commonly used overtime as a staffing solution. Most organizations have both voluntary and mandatory overtime policies. In the past 12 months, MRA’s survey shows that 25 percent of organizations have decreased mandatory overtime and 18 percent have increased voluntary overtime.
In addition, one of the biggest challenges for organizations operating on multiple shifts is finding employees willing to work those hours. Many employers offer shift differential or premium pay to incentivize working these shifts. It can be an effective way to attract interested candidates.
The average 2nd shift premium is $1.30 compared to $1.35 last year; however, this is no comparison to the 2021 level of $.86. Third-shift premiums are an average of $1.75, which has climbed steadily since last year’s $1.55 3rd shift premium.
Organizations also often turn to salary increases as a strategic tool to address the challenge to attract and retain top talent. By offering competitive salaries, organizations can better position themselves to attract and retain skilled employees while reducing turnover and ensuring a stable and experienced workforce. Despite set budgets, many organizations exceeded them when considering employee pay increases.
This year, organizations are attempting to slowly taper off last year's budget-breaking increases. However, unskilled and semiskilled turnover continues to be high enough that reducing increases could be difficult. MRA's Compensation Trends Survey projected increases to level off at 4.4 percent and 3.7 percent respectively, for nonunion and union production/maintenance employees.
Another important consideration is pay compression. Pay compression happens when established employees make less than new hires within the same position. MRA cautions employers to be aware of pay compression. Over time, if pay compression isn’t addressed, it can cause demotivation, reduced employee morale, and increased turnover. By proactively identifying and resolving pay compression, organizations can foster a fair and competitive compensation structure, enhance employee satisfaction, and maintain a productive and engaged workforce. Those companies with a formal pay structure find it easier to adjust when pay compression becomes an issue.
Companies are bracing for continued inflation and hoping for a return to more normal starting wages and pay increases. With high consumer prices, employees are more likely to go to the employer that pays the best. However, with nearly half of unskilled laborers/helpers separating from their employers in the past year, it won’t be easy for employers to significantly reduce starting wages or increases for this group, who often look for the highest-paying employer.
“The loss of long-term employees creates disruption and stress for everyone. The emphasis on developing employees who feel valued, engaged, and fairly compensated are leading indicators for better retention rates. Every effort should be made to keep top performers and essential employees from leaving,” added Morgan.
“These are challenging times. Employers need to balance the economic climate and the needs of their employees to have the most success.”
To see the full Industrial & Production Trades survey results, visit the MRA website. Methodology for this Survey: 855 organizations participated and 232 jobs were surveyed between March and April 2023.
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About MRA—The Management Association: Founded in 1901, MRA is a nonprofit employer association that serves 4,500 employers, covering more than 1 million employees worldwide. As one of the largest employer associations in the nation, MRA helps its members thrive by offering comprehensive HR services, talent management, learning and organization development opportunities, and total rewards planning. MRA helps organizations build a successful workplace and a powerful workforce. Headquartered in Wisconsin, MRA has regional offices in Iowa, Illinois, Minnesota, and now Ohio. To learn more about MRA, visit www.mranet.org.
