Business are getting creative in their efforts to attract and retain workers amid a labor shortage caused by the coronavirus pandemic.
Ray Bales, president of a Seniors Helping Seniors franchise in Knoxville, Tennessee, implemented a special bonus program to entice caretakers back into the workforce. In addition to raising hourly wages and offering a $150 signing bonus, the business donates $50 to a local charity supporting Alzheimer’s research in the name of the employee.
“It’s a whole new way that caregivers are able to give,” said Bales.
During the pandemic, the business — which pairs elderly clients who need in-home care and companionship with seniors who are still interested in working — had to lay off its entire workforce. But now, it’s busier than ever. After adding the signing bonus plus donation, Bales got 12 applications in a week and hired two new caregivers.
More from Invest In You:
How to get monthly child tax credit without a permanent address
Lack of workers hurts small business ability to keep up with demand
How this 26-year-old TikTok creator makes over $100,000 per month
Still, he needs to fill 30 to 40 jobs. “Hopefully a lot of these [applications] we will go ahead with and we’ll be back to work,” he said. “We have a long list of folks that are waiting for help and that’s the thing that just breaks my heart.”
The coronavirus pandemic left millions unemployed over the last year and resulted in additional benefits from states and the federal government for those out of work, including extra money every week. Now, while hires picked up to 6.7 million in June, job postings are also higher than ever — job openings were 10.1 million in June, according to the Labor Department.
That may outpace the number of people actively looking for work. The July jobs report showed that there are some 8.7 million unemployed looking for jobs.
Economists point to a few reasons why some businesses — and especially those that offer lower-wages and require face to face interaction — may be struggling to find workers. First, the threat of illness is still present given the rise of the delta variant. Some workers, mostly mothers, may be unable to find childcare and so elect to stay at home.
Also, some say the extra unemployment benefits are a disincentive for people to go back to work, though many states have cut off the additional money and the federal program will end in September.
This has culminated in an environment where workers have more power than before the pandemic. Companies are getting extra creative with perks that benefit employees. Job postings on Indeed, an employment website, shows hiring incentives doubled from July 2020 to July 2021, and searches for jobs offering incentives increased 134%.
“The big picture is that employers right now are really trying to figure out how to attract workers, because there are still challenges,” said AnnElizabeth Konkel, an economist at Indeed.
Giving workers 401(k)s
Many give workers a financial boost. Some restaurants are now offering 401(k) accounts or profit sharing to their employees, which gives workers a boost in saving for retirement and helps ensure they will stick around.
Adam Bergman, a partner with IRA Financial Group, said that before this year, he’d seen maybe one or two restaurants looking to offer retirement plans. Now, the group is getting multiple phone calls each week from restaurants looking to set up plans.
“They’re trying to encourage people to stay,” he said, adding that many of the clients they’ve recently had sign on structure plans so that employees working on the last day of the year automatically get a 5% match.
Peter Vauthy, owner and executive chef of RED South Beach, a steakhouse in Miami Beach, Florida, has offered 401(k) plans and health insurance to his employees — including waitstaff and kitchen staff — for years.
“A 401(k) makes all the sense in the world,” he said. “It’s minimal cost to me, we do a match up to a certain percent, we have basically 90% of the staff on it and they loved it.”
Though his restaurant was shut down during the pandemic, about 90% of the former staff came back, he said. Still, he’s had considerable trouble finding new workers to fill in the gaps.
“It’s been impossible” to hire, he said, adding that it took him seven months to get to full staff after reopening in January. He boosted wages across the board just to get people in the door. He’s also considering increasing the 401(k) match and implementing a profit-sharing plan, he said.
Even larger corporations are now offering creative perks. Target and Walmart recently announced tuition reimbursement programs to help employees with the cost of higher education. Other employers such as Best Buy, Amazon and Facebook offer elder- and childcare benefits.
Wages are also rising, and signing bonuses are becoming more prevalent in food services and retail. Papa John’s, McDonald’s and Chipotle are among restaurants that are boosting pay and giving out signing bonuses.
Of course, it is still too early to see what will stick in the labor market and what will get people back to work, according to Kathryn A. Edwards, an economist at the RAND Corporation. There’s still progress to be made for workers, especially those in lower-paying jobs.
“A nominal wage increase or hiring bonus is not the same thing as having a stable and safe job,” she said, adding that further benefits such as paid sick leave would give people even more security to go back to work.
And, ultimately, the greatest unknown impacting the labor market still hangs in the balance, she said.
“What is true now was true in March of last year,” she said. “The economy will not recover until the pandemic is contained.”
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.