- Companies are offering perks such as free accommodation and college tuition to attract staff.
- Others are hiking up wages or offering rewards to applicants just for turning up for interviews.
- The labor shortage is forcing some firms to limit production, cut operating hours, and raise prices.
- See more stories on Insider’s business page.
As the labor shortage continues to hit industries from education and healthcare to hospitality and ride-hailing apps, companies across the US are scrambling to find perks to attract new hires.
Some are offering free accommodation and college tuition to staff, while others are hiking up wages. Some are even giving rewards like free food and a $50 payment to applicants just for turning up for interviews.
The US Chamber of Commerce said that the labor shortage was holding back recovery from the pandemic, calling it a “national economic emergency,” while the
said that it was forcing some companies to limit production, slash operating hours, and raise their prices.
Read more: How Starbucks is defying the labor shortage crisis with transformative perks, not cash teasers like McDonald’s
“Everybody is hiring at the exact same time,” Danny Meyer, chair of the NYC Economic Development Corporation, said.
Some companies have been hiking up wages or offering education perks to attract more workers, while others have turned to one-off payments like sign-on bonuses and free iPhones because they’re cheaper for companies in the long run.
Some companies are introducing education perks to both attract new workers and create better retention rates.
Chipotle is expanding debt-free degree options for employees to include agriculture, culinary, and hospitality programs.
Waste Management, which already paid for employees to earn bachelor’s and associate degrees alongside qualifications in data analytics and business management, is expanding these scholarships to the spouses and children of workers. It told The New York Times that this would cost the company between $5 and $10 million in the first year alone.
Meatpacker JBS USA is also offering to pay for college degrees for workers as well as one child per employee.
Free hotel stays
Omni Hotels and Resorts told The New York Times that it was offering free hotel stays for some summer employees while they work. More widely, it is giving new employees three free nights at an Omni hotel of their choice.
“We have never taken guest rooms out of inventory for housing before,” Joy Rothschild, the company’s chief HR officer, said.
The chain is also providing members of its culinary team with a free set of knives alongside weekly sit-downs with executive chefs.
“We needed to do something to grab the attention of culinary students,” Rothschild said. “I’ve seen a lot of people offering monetary incentives, but we didn’t feel that was enough. The college students coming want something more than the paycheck.”
One McDonald’s restaurant in Altamont, Illinois, is giving away iPhones to new recruits if they stay for six months.
Sign-on and retention bonuses
A late April survey by Korn Ferry found that, of more than 50 major US retailers, 29% said they had introduced a sign-on bonus to attract new hires amid the labor shortage, per Fintech Zoom.
Supermarket chains including Ollie’s Bargain Outlet, Sheetz, and Tops Markets are offering new hires sign-on bonuses as high as $2,000. Meanwhile, Omni Hotels and Resource is offering a $250 signing bonus, plus a $500 retention bonus if they stay until the end of the season.
And a Jersey Mike’s in Santa Cruz, California, is offering $10,000 as a bonus for a new assistant manager, $5,000 for new shift leaders, and $500 for incoming full- and part-time employees.
Amazon is also using signing bonuses of up to $1,000 as it works to recruit more than 75,000 warehouse and transportation workers across the US and Canada. New hires get an extra $100 if they can prove that they’ve been vaccinated, too.
Some companies are hiking up wages to attract more workers.
Low wages could be one reason behind the labor shortage, with Goldman Sachs saying that the lowest wage low-income workers would accept for a new job has increased by 21% since the fall.
A staffing-firm employee told the Cleveland Fed he’d turned away prospective clients that offered starting wages of less than $13 an hour because he wouldn’t be able to find workers at that wage.
“The only way to attract, not necessarily the people who left the [hospitality] industry, but newcomers to the industry, is we have to change the industry,” Amanda Cohen, owner of New York City restaurant Dirt Candy, told The Guardian. “We have to pay more, we have to make this a viable profession.”
More than half the businesses in the Cleveland area that responded to a Federal Reserve survey said they had increased wages over the past two months, while 72% of local pharmacies said in an industry survey that they’d hiked pay to attract new staff.
In a survey of small businesses owners by Alignable, half of restaurant owners said that they were paying workers more now than they had during the height of the pandemic, largely to lure in new hires.
But this isn’t always enough. A manufacturer in the Dallas area said that, even with a starting hourly wage of $14, their company was unable fill more than 20 open positions. Texas uses the federal minimum wage of $7.25.
But wage hikes are working for some. An ice-cream parlor in Pittsburgh told MSNBC that it had received “well over 1,000 [job] applications” after it more than doubled its wage to $15 an hour. Its owners found that customer service improved and its bottom line wasn’t affected by the move.
Whataburger promoted all managers to “operating partner” and raised salaries to at least $100,000, while JBS told The New York Times that it had raised hourly pay by more than 30% over the last year.
And it’s easier for some types of company to pay staff more than others. David Bloom, chief development and operating officer at Wing Zone and Capriotti’s, told Insider that the two fast-casual chains could afford to raise wages because they were “premium” brands, and their customers would still return even if they offset the higher wages with price increases.
“That’s a competitive advantage from our standpoint because of the category we’re in,” Bloom said.
Ryan Stansbury, vice-president of franchise development at PJ’s Coffee, told Insider that the labor shortage was a “challenge” for the chain, but that its take-home pay had helped attract staff. He said that most baristas made more than their state’s minimum wage, alongside $3 to $5 in tips.
“Employers needing to attract people now means that the wage increases are just happening faster than they would otherwise have been happening, but they were happening anyhow,” Bloom said.
Some companies are giving perks to people who just show up to interviews
One McDonald’s in Tampa, Florida, offered $50 to anyone who came in for a job interview. But the owner of the location told Insider that this still wasn’t enough to attract many people to apply — and he was considering raising wages instead.
—Dan Nunn (@danyay) April 15, 2021
And during its national hiring day in May, Applebee’s offered free appetizers to everyone who came for interviews as it tried to fill 10,000 roles. Around 40,000 people showed up, the chain’s president told The New York Times.
What’s causing the labor shortage?
The Labor Department said that about 4 million workers in the US quit their jobs in April — a 20-year record.
Insider’s Áine Cain reported that long hours, unruly customers, and low pay have caused minimum-wage workers to quit their jobs in droves. Other reports suggest that unemployment benefits, COVID-19 health concerns, and caring responsibilities also played a role.
The Federal Reserve said that the squeeze could last months, but Bank of America expects the job market to recover by early 2022.