3 reasons why connection bonuses do not solve the labor shortage
- Employers are offering hundreds if not thousands of dollars in sign-up bonuses amid the labor shortage.
- This financial incentive might sound like a great reason to apply for a job, but it does pose some problems.
- One of the problems is that it might attract people who only take the job because of the premium.
There’s a massive labor shortage that has accompanied the economy for months, and some employers have decided that signing bonuses might be the solution.
It doesn’t really work.
For example, Union Public Schools of Oklahoma announced a connection bonus of $ 1,000 for certain positions, some airport restaurants also offer significant connection bonuses, and Amazon offered signing bonuses of up to $ 3,000. Monument Health in South Dakota, which suffers from the shortage, has even offered registration bonuses of $ 40,000 to nurses in intensive care and operating rooms.
A quick glance at the job postings on career sites like Indeed and you’ll see various companies emphasizing login bonuses. In fact, data from Indeed shows that postings with hiring incentives, including bonuses, have doubled since last year; around 5% of postings mentioned hiring incentives at the beginning of October.
But an economist told Insider that incentives like bonuses could “get [workers] in the door, but that doesn’t make them stay. With people taking a position and then moving on to another opportunity that may include another login bonus, this can lead to ongoing staffing difficulties.
Here are three reasons why signing bonuses don’t solve the labor shortage.
They can’t be the only benefit offered
Appcast, a programmatic job posting software company, recently used job descriptions to examine benefits and how they affect application rates.
“Despite employers’ efforts to attract applicants with signing bonuses, warehousing and logistics was the only industry to see a correlation between mentions of signing bonuses and increased application rates,” he said. found Appcast.
Instead, Appcast found, when examining the additional pay benefits, that “regular and progressive bonuses dramatically increase application rates.” Appcast noted that this was especially true in customer service and tech jobs.
âPerhaps the problem is that when the job postings mentioned a signing bonus, that was probably the only perk included in the listings,â Appcast wrote, and proposed in isolation, this is probably not enough. to trigger applications on its own.
They can attract the wrong people
Child care providers also face retention and hiring issues. And while some have offered login bonuses, a senior toddler teacher told Insider that the bonuses can have consequences.
“You just set these kids up for failure, the other staff for failure, because what ends up happening is these people are going to come in, get the incentive, leave, and you end up with kids who don’tâ¦ get consistency, âshe said.â They have a different teacher every week. And that’s not good for them. “
The workers are smart enough to recognize that this is just a one-time thing
Some restaurants and fast food companies have also tried signing bonuses, as businesses in the leisure and hospitality industry have particular difficulty finding and retaining workers.
However, Insider’s Rachel DuRose noted that fast food restaurants should instead focus on transforming corporate culture. âGood employers think a little more about how to attract talent, and it’s not just about the money,â Andrew Hunter, co-founder of job search engine Adzuna, told DuRose.
An educator from Massachusetts told Insider that enrollment bonuses can attract new workers to child care, but people should dig deeper into the types of benefits offered and beyond the one-time incentive.
When asked if things like bonuses and wage increases are enough to get people back into those jobs, especially leisure and hospitality employers, ADP chief economist Nela Richardson told Insider in an interview in August that these things could “be [workers] in the door, but that doesn’t make them stay. “
âSo what can you do to get a low-wage worker to work? Richardson said, noting that companies can offer signing bonuses and raise wages. She added that without things like career paths and training, companies “might not be able to keep these workers past the one-year mark.”
âI think a question that was missing in the job market that they might have to ask themselves again is what drives loyalty,â Richardson said.