Why can’t local businesses hire, and why are they offering sign-on bonuses?

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This May 5, 2021 photo shows hiring signs posted outside a gas station in Cranberry Township, Butler County, Pa. The number of Americans applying for unemployment benefits dropped last week, reported Thursday, June 24, a sign that layoffs declined and the job market is improving. (AP Photo/Keith Srakocic)

NEW YORK (WSYR-TV) — Target and Walmart are both hiring workers for their distribution centers and Target is even offering an up to $2.000 sign-on bonus. Sign-on bonuses are becoming more common for different high-demand jobs and you may be wondering why they’re necessary to attract applicants.

The reason different businesses are struggling to hire has been debated a lot in the last year. Some economists have thoughts on the matter, including Assistant Professor of Economics Pritha Chaudhuri from Hamilton College.

In an interview, she told WUTR in Utica: “I think one reason is there were a lot of jobs that were lost, but also people have re-adjusted their preferences, what would they accept in terms of benefits. Not just starting bonuses but even the benefits the jobs provide which is why I think there are certain industries that are having a hard time hiring.”

Professor Chaudhuri also mentioned that unemployment benefits were another cause of worker shortages. However, she said, since many of those benefits were recently cut in September, the remaining shortage can have to do with factors such as safety from COVID-19 exposure, as well as the global shift to remote work that seems less risky and more cost-effective for many.

Another factor could be wage disparities, Chaudhuri explained. For example, according to Glassdoor.com, a website that compares salaries based on employee reports and reviews, the average hourly wage for an Applebee’s cook is about $14 an hour.

There are paycheck calculators online to find out how much you take home after taxes. For a job that pays $14 per hour, for example, your bi-weekly pay for a full time position (assuming 80 hours over two weeks) would be $884, after 13.19% is taken out for taxes and 7.88% is taken out for FICA and State Insurance taxes. This can be calculated by entering your hourly rate of pay and hours per pay period on a site like smartasset.com.

With this rate, that would mean your weekly rate would be about $442, and monthly you would take home $1,768, assuming you took no time off and the job was full-time. This calculates to an annual take-home salary of $21,216.

You can’t talk about wages without considering the cost of living. Notably, paying rent. According to Apartments.com, one-bedroom apartment listings in the Albany area in October 2021 range in price from $950 to $2135 per month. Assuming someone applied for the cheapest apartment at $950, to qualify for an apartment they would need to make three times the rent as a rule of thumb for landlords and leasing offices.

This means that to qualify for a $950 per month one-bedroom with no roommates, a person needs to make a minimum of $2,850 take-home pay each month.

Of course, there are other options such as finding roommates that would alleviate the cost, as well as moving in with family members, that many young people are now turning to.

In fact, according to a study from the Pew Research Center, in July of 2020 the number of 18 to 29-year-olds living with their parents jumped to 52% as young adults moved back in, citing reasons such as losing their jobs or other pandemic-related reasons.

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