“It’s a nightmare,” says a chief operating officer of a popular sit-down restaurant with a thick menu. Exasperation seeped through our 8 a.m. Zoom call. “I’m dealing with restaurants that I have to close because we don’t have enough staff.”
Many industries are feeling the pain of The Great Resignation, but people working in traditionally deskless jobs (such as food service and gig workers) consistently top the quitting leaderboard. About 750,000 leisure and hospitality workers are dropping out every month, according to this year’s Bureau of Labor Statistics.
What gives? When asked this question, most will say they need to be paid more, which makes sense. Rising costs are catastrophic in America today. Workers now need to make $42 an hour in order to spend the recommended quarter of their income on an average one-bedroom apartment (in June 2021, this amount was $1,711). Meanwhile, the average hourly wage for restaurant workers is $11.52.
Raising wages is a critical piece of the puzzle, but beyond that, it comes down to the fact that most businesses can’t afford to go from an hourly wage of $11.52 to $42, so we need to dig deeper to provide value for employees.
The hourly-worker benefits gap
It’s clear that businesses with largely hourly workforces do not understand the day-to-day problems their employees face. This gap can be attributed to any number of causes, including the fact that those in charge of choosing benefits are typically salaried, while those who desperately need them are traditionally not. To avoid hemorrhaging staff, businesses need to offer new benefits that meet hourly workers where they are.
After personally connecting with a few workers and employers grappling with the modern work landscape, I noticed a few key themes in what these workers were experiencing.
Income volatility is a growing concern
Alison, a gig worker, is delivering burritos through one of the big mobile apps as I ride along with her. If you’re looking to understand users’ needs, shadowing is often the fastest way.
“One of my girls [at the restaurant] convinced me to try the app,” she laughs. “I tried it and quit [the restaurant] the next day. What I love about it is, when I do a delivery, it shows me how much I made, like, right away. It’s really motivating.”
At the fast-casual burrito place, with her schedule changing so much, sometimes Alison took home $800, other times only $500. As a result, she struggled to plan her finances and often didn’t have enough money to pay bills. This problem, known as income volatility, disproportionately affects hourly workers. Not knowing how much money you’re going to have, and whether it’ll be enough to make ends meet, is incredibly stressful.
Research shows that allowing employees to see the wages they’ve earned in real time increases both employee engagement and retention, because it gives them a feeling of certainty and control over their finances. Employers can provide these modern financial solutions without changing payroll or time and attendance.
Pay on demand
“I lost a lot of folks to them [the on-demand apps].” Mark, a former manager at a fast-casual place tells me about the gig economy apps. “The ‘work-today-get paid-today’ aspect was hard to compete with. I kept telling [the team at] corporate we needed to do something about it.” For background, delivery apps not only show drivers what they’re making in real time, they also allow drivers to cash out instantly.
Hourly and gig workers who do not have the flexibility of earned wage access are often forced to resort to predatory creditors like payday lenders to make ends meet between pay cycles. A single $350 payday loan ends up costing $575 on average, according to Pew Trusts. It’s a regressive tax that hits hourly workers the hardest.
By working with one of many third-party providers of earned wage access, management can help workers de-stress cash flow problems and avoid exorbitant fees without changing payroll.
Predictable schedules as a benefit
“If you’re in the kitchen, you get paid decently enough, but your shift times are never set in stone,” Matt, who graduated from culinary school, tells me by text. We connected through my research process. Matt has a background in the culinary arts, but he is also a sergeant in the Army National Guard infantry. “You can’t make plans. You can’t look forward to time off. [Each morning,] I’d wake up anxious if I was going to be called in. You can’t have a life.”
Matt often threatened to quit over his unpredictable schedule, but cooks with leadership skills are hard to find, so management gave him raises to incentivize him to stay. “I was getting paid, but it got to the point where it wasn’t about that,” he says. “I needed a life.” Now he’s an apprentice for the carpenter’s union. Notably, he now has set hours.
The value in consistent schedules with guaranteed minimum and maximum hours cannot be overstated. This may seem like a tall order, but modern workforce management software simplifies the task of figuring out how many people to hire and keep on staff to efficiently meet requirements.
The benefits a modern workforce wants
The truth of the matter is that the current benefit system we have in place is no longer serving us. This shouldn’t be surprising. Most aspects of how we work have changed since then. We need a new system of benefits that supports our modern workforce, which includes gig workers, deskless workers, remote staff, and everything in between. As employers seek to rehire, they need to search for ways that they can support and provide value to their staff, or risk losing employees to those who are.
Employers can start by doing research within their own workforces. For instance, what specific problems are workers facing? Which of these problems can the employer help alleviate? Firms catering to employee satisfaction, such as TalentKeepers or People Element, can help get to the root of what employees really need, and equip employers with information that they can act on. More today than ever before, employees are speaking up for what they need from their employers. In order to rebuild our workforce better than it was before, employers need to commit to listening.
Jon Schlossberg is the founder and executive chairman of of Even, a financial benefits platform for hourly workers offered by employers like Walmart, Compass Group, PayPal, and Humana.