The COVID-19 pandemic has been a global health crisis as well as an economic one. Throughout the United States, companies are struggling to hire hourly workers. Employees are reevaluating their options and are no longer satisfied to return to industries that proved particularly vulnerable during the pandemic. Several large organizations have already increased starting pay or their internal minimum wage, or both, to attract and retain employees. So far, though, increasing pay to attract hourly workers doesn't seem to be effective. What else are employers doing to get much-needed hourly workers?

Base Pay Is Rising

While there is much discussion about looming increases in either federal or state minimum wage, it turns out that's not the obstacle most employers are struggling to overcome. Although the current federal minimum wage remains at $7.25, more than half of the states or municipalities have a minimum wage already above that. In Mercer's 2021 US Compensation Planning Survey, special July edition: The Hourly Workforce, 95% of the participants reported paying above the federal minimum wage, and 77% reported paying above the state or municipal minimum wage. Although some regional variation exists, most respondents indicated that their internal minimum wage is between $12 and $19.99 per hour.

A Fresh View on Incentives

If higher wages aren't bringing hourly employees back to work, given that the talent crisis is continuing, what else can employers do? Some are offering other cash incentives, such as sign-on bonuses. In the past, sign-on bonuses and retention bonuses were for salaried managerial positions. Employers are now turning to methods typically used at higher levels to attract and retain these employees. For low-skilled and skilled positions, more than 40% of employers indicate that they are providing sign-on bonuses for at least some jobs or are considering it for 2021.

 

In addition to increasing the starting pay in jobs for internal candidates, some employers have started offering retention bonuses or are considering doing so this year. Another action companies are taking is to increase the shift premium paid to those working an "undesirable shift." However, both retention bonuses and increasing shift premiums are much less common than hourly wage increases.

 

Other employers are looking at ways to offer flexible scheduling, understanding that many hourly workers either go to school, have a second job or that maybe they're supporting and serving their family. This had led employers to consider various additional benefits, such as free or discounted meals or free or discounted uniforms. It's about refreshing benefits that are in line with what's valued by the community they serve.

 

Retail giant Amazon is looking to hire 40,000 workers if they can get them in the door. To keep staffing levels healthy amid a record labor shortage, Amazon is hosting a career advice live-stream event and offering hourly workers a full ride at their college of choice.

Look Beyond Pay

In today's job-seeker-friendly labor market, hourly employees are looking for more than just a pay increase. Many are evaluating how their employer treated them at the beginning of the pandemic. And many more are reevaluating how they spend their time and what's important to them in a job. Going back to working in the same capacity is not desirable. They've come to appreciate flexibility and time with family, as well as the need for a supportive relationship from their employer.

 

Over the summer, Mercer conducted a digital focus group with over 600 participants in the US to dig further into the hourly talent crisis. When asked what was most important to attract employees, the majority cited pay and incentives, underscoring the need to have accurate hourly pay data and adjust wages accordingly. Beyond pay, this group of employers also provided insight into other things to attract and retain hourly employees.

 

The employers indicated that they provide retirement account contributions, healthcare benefits, and disability and life insurance. In addition, they commented that providing immediate eligibility and discounted Healthcare along with student loan assistance would make attracting employees even more accessible.

 

Once unheard of, employers are now offering paid time off for hourly employees. In a time where employees need flexibility more than ever, this is a real benefit. However, many employers are still figuring out how to provide flexible working hours while still meeting the needs of their customers.

 

Employers also indicated that providing backup childcare, time off by closing the doors on national holidays, and employee appreciation programs would help pique candidates' interest.

In Pursuit of a Brighter Future

The whole relationship between the employer and the hourly employee is changing and will continue to change. In a job-seeker-friendly labor market, like the one we're experiencing today and for the foreseeable future, increasing pay is the minimum action that employers must take. To successfully attract and retain an adequate workforce, employers need to provide benefits and perks previously reserved for the salaried employees to their entire workforce. Employers need to create a culture where employees want to work and build a distinct employee value proposition that delivers a compelling employee experience. This will involve redesigning work to make jobs more meaningful and purposeful, and leveraging tools like automation and AI to focus time on more value added activities.

 

Hourly employees demand that they be given a new value proposition that shows them how much they are valued. Flexibility, health benefits, and other offerings to make their work and home life more manageable are now expected. Hourly workers are looking for a brighter future.

Andre Rooks
Andre Rooks

Principal and Compensation Consultant