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MNI:US Employers Offer Hiring Bonuses to Combat Labor Shortage


Some companies are offering annual bonuses if workers stay on for one full year.

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A labor shortage threatening to derail the job market recovery is driving employers to offer greater benefits like hiring bonuses to coax workers back to the market, industry experts told MNI.

"There are some instances where employers are using signing bonuses as a way to get people in the door," said Nick Bunker, an economist at employment website Indeed, and using the one-time payments as a way to attract workers without having to raise wages altogether. That allows smaller firms that are less well-positioned to stay competitive for now.

Some experts say higher wages are needed to bring workers back to the market, with employers hard-pressed to find people willing to work for just the minimum hourly wage. Recruiters told MNI this week that pre-pandemic pay rates are a "thing of the past," and increased employee bargaining power is driving wages higher as businesses fight to stay competitive.

But offering higher wages may be an unsustainable option for some businesses, Bunker said, while a signing bonus allows firms to provide just a single payment to overcome a "temporary concern," rather than pay out larger salaries over a longer period of time.

Employers right now "have to bid up wages more than they would absent these temporary factors, and if they were to pay a bunch of people starting at these temporary [higher] wages, their labor costs will be higher now than if they just did a signing bonus."


Some companies in high-contact industries, like restaurants, are offering one-time bonuses for new staff as indoor occupancy restrictions, in place for more than a year, are rolled back. Businesses in the leisure and hospitality sector in particular, hard-hit by pandemic shutdowns, are struggling to reopen fully amid the labor shortage.

Monthly wage data from the Bureau of Labor Statistics doesn't reflect payments like bonuses because of the way the establishment survey's questions are structured. That data won't be available until the Q2 Employment Cost Index, which captures things like one-time payments, is published in July. The ECI for Q1 surprised last week, growing 0.9% when markets had expected an increase of 0.7%.

In addition to hiring bonuses, some employers are promising annual bonuses if workers stay on for a full year, Scott Blumsack, senior vice president of research and insight at online job board Monster, told MNI in an email.

"Employers express concern that they aren't getting enough applications, citing competition from other companies that may be able to offer more generous benefits," he said. Just over a quarter of employers that are hiring are having trouble filling open positions, according to data from Monster.

Some of that stems from health concerns, and workers in industries like warehousing and manufacturing are "hesitant to return to such close working conditions amid the pandemic," he said. Half of college graduates recently surveyed by Monster said they worried their employer may require them to work onsite before they felt it was safe.

In an effort to make the workplace safer and entice some hesitant workers back to the market, some employers are offering bonuses to get the Covid-19 vaccine, Julia Pollak, an economist at ZipRecruiter, told MNI.

"There are lots of companies that are providing two to six hours of paid time off to get vaccinated," she said, and more are offering other incentives like extra vacation days.