Small and medium-sized manufacturers know that to attract talent they need to boost their entry level wage; but they simultaneously fear that additional labor costs will overwhelm productivity gains, making this boost only a feasible opportunity for large companies. So while local wage data from TeamNEO shows that less than 25% of entry-level workers are making more than $18 per hour regardless of longevity with their employer, smaller businesses are working to understand how to improve this statistic.
No need for them to look further than their own backyard for positive results of increasing starting wages. Cuyahoga County offers many examples of manufacturers that prove wage increases can lead to greater productivity; and these examples are not limited to the largest manufacturers.
Check out Cleveland-based Custom Rubber Corp (CRC), whose wage-raising success was recently highlighted in a Wall Street Journal feature. CRC raised their starting wages by more than $4.50 per hour last year. In the article, CRC President Charlie Braun explains the many competing factors he considered to make this move, all of which you’ll find are applicable to manufacturing companies regardless of size.
Up front about the challenges of implementing an entry level wage increase, Braun references a previous attempt to raise entry level wages in 2016 that did not consider raises for existing employees. Longtime staff were not happy with the change as they had worked for a long time at lower wages. As a result, a “years of service” bonus was added, paid out on the employee’s anniversary starting with their fifth anniversary.
His focus this time, however, is on the necessity of a bold move like this to keep his business strong going into the future. One key insight Braun offers is that higher wages are the “price of admission” in today’s labor market, where competition from Amazon and other large national chains is relentless and here to stay. He also acknowledges that workplace safety and company culture improve talent retention at Custom Rubber, but that without those higher wages they could not attract and get viable candidates in the door.
Braun recently updated us here at MAGNET on the benefit of his increased wage move, saying, “Raising our wages has allowed us to bring on the talent we need to fulfill our customers’ demand. We still have some turnover, but we can recruit and retain much more effectively to sustain and grow our business.”
The opportunity is there for more manufacturers to follow Custom Rubber, to become local leaders and employers of choice, and we look forward to highlighting the successes of those leaders in the coming months. For now, local manufacturing leaders need to harness the chance to forge a path to in a way that will build momentum in manufacturing. Companies that take smart, bold action – sooner rather than later – will yield the benefits.