Managing Employee Retention Concerns: Evidence from U.S. Census Data
February 2023
Working Paper Number:
CES-23-07
Abstract
Using Census microdata on 14,000 manufacturing plants, we examine how firms man age employee retention concerns in response to local wage pressure. We validate our measure of employee retention concerns by documenting that plants respond with wage increases, and do so more when the employees' human capital is higher. We doc ument substantial use of non-wage levers in response to retention concerns. Plants shift incentives to increase the likelihood that bonuses can be paid: performance target transparency declines, as does the use of localized performance metrics for bonuses. Furthermore, promotions become more meritocratic, ensuring key employees can be promoted and retained. Lastly, decision-making authority at the plant-level increases, offering more agency to local employees. We find evidence consistent with inequity aversion constraining the response to local wage pressure, and document spillovers in both wage and non-wage reactions across same-firm plants.
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:
payroll,
manager,
employee,
employ,
incentive,
tenure,
bias,
workforce,
salary,
industry wages,
hire,
wage growth,
wage changes,
wage industries,
associate,
compensation
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Metropolitan Statistical Area,
Census of Manufactures,
Annual Survey of Manufactures,
Columbia University,
Chicago Census Research Data Center,
Census of Manufacturing Firms,
North American Industry Classification System,
Special Sworn Status,
Management and Organizational Practices Survey,
Carnegie Mellon University
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