Because pay is an important job characteristic for almost all applicants, companies that have a policy of compensating employees at higher than the current market wages (a “lead the market” approach to pay) have a distinct advantage in recruiting. A good example of this can be seen at Walgreens, where the company is offering up to $75,000 bonuses to boost their ability to recruit pharmacists. These bonuses also help on the retention side of the equation because most come with some requirement that the employee must stay in the job for one or two years if they take the bonus.
When it comes to competition for recruiting pharmacists, employers like Walgreens confront a shortage in supply for two reasons. First, this is a highly skilled job that takes year of training before one can assume the role. Pharmacists are required to a have a Doctor of Pharmacy professional degree that takes up to four years to acquire, only after receiving a four-year undergraduate college degree. In addition, even with degree in hand, every pharmacist must be licensed in their state, and in some cases, their municipality, which means passing one or two additional tests. Thus, one cannot simply decide to become a pharmacist overnight and hence all employers are competing for a fixed and slow-changing population.
Second, the Covid pandemic was especially hard on those working in the industry. For one, many faced expanded hours of work administering Covid tests and vaccines, on top of their other traditional responsibilities. In addition, being on the front lines of the fight against the pandemic meant that they could not work from home, and therefore, faced the stress of acquiring the same virus from which they were protecting others. This led to a great deal of burnout in the industry, and many left the occupation, creating a void that as we noted above, cannot be filled very quickly.
In some regions of the country, the shortage of pharmacists has created a public health crisis. For example, state regulators in Vermont alleged that insufficient staffing levels at some Walgreens locations were leading to unsafe conditions and medication errors. The state’s pharmacy board suggested they were going to “revoke, suspend, reprimand, condition or otherwise discipline” the licenses of 32 Walgreen locations, which is hardly a formula for success.
Questions for Students
1. In addition to pay, what other aspects of the work might a company like Walgreens think about changing when it comes to attracting the best talent?
2. Given the public health consequences of the pharmacist shortage, should the government take any steps to alleviate this shortage, and if so, what steps seem prudent?
Notes for Instructors
This is a classic example of discussing a labor shortage where supply cannot be ramped up quickly, and hence, organizations must directly compete in a very intense way and where success for one implies a problem for the competition. This is very much at the heart at how private sector companies compete. However, the public health nature of this problem also suggests that the government may need to play a role when it comes to protecting the citizens of their state and local area. This should set up a nice discussion of potential public/private sector cooperation aimed at a critical front-line job.
Sources: S. Terlep, “Walgreens Pays Bonuses Up to 75,000 to Recruit Pharmacists,” The Wall Street Journal Online, August 11, 2022; M. Ngo, “Angry Customers, More Work, and Longer Hours Strain Pharmacists,” The New York Times Online, February 10, 2022.