Earning

Retailers, desperate for seasonal workers, are offering 'unheard of' perks like signing bonuses

Retailers need "a huge influx of temporary workers, but they haven't even gotten to that problem yet."

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It's hard to go shopping these days without noticing that nearly every store has a "Help Wanted" sign in the window. Retailers have been eager to hire workers for months, and now that the beginning of the holiday shopping season is less than a month away, that need is even more acute.

There were nearly 1.19 million open positions in retail in August, a jump of 4% from the month before and an 40% increase from August 2020, according to the most recent report from the Labor Department. And job seekers are in no rush to fill them. The national quit rate, the share of people voluntarily leaving their jobs, is also at a historic high of almost 3%.

The overwhelming number of open positions has put many retailers in a tough spot this fall, says Andrew Challenger, senior vice president at job placement firm Challenger, Gray & Christmas. During normal times, most stores would be hiring slews of temporary workers for the holiday shopping season. That isn't happening this year.

"Many of the organizations haven't even announced temporary hiring because they have such a backlog of permanent positions they haven't been able to fill," Challenger says. "They do have a need for a huge influx of temporary workers, but they haven't even gotten to that problem yet."

They do have a need for a huge influx of temporary workers, but they haven't even gotten to that problem yet.
Andrew Challenger
Senior vice president, Challenger, Gray & Christmas

A fear of catching Covid, along with other difficulties the pandemic has created such as insufficient child care for parents, is among the main reasons many people who previously worked in retail haven't returned, Challenger says. There is also a greater sense that workers have the upper hand in choosing where and how they start clocking in again. That's pushing retailers to offer previously "unheard of benefits" for entry-level positions.

Employers are "raising wages, offering signing bonuses, increasing benefits," Challenger says. "They're trying to make jobs more attractive with all sorts of different techniques, and it's not really pulling too many Americans off the sidelines. It's remained a shockingly tight labor market."

Retailers dangle signing bonuses, employee discounts

Retailers hiring temporary workers for the end-of-year shopping season used to be able to rely on perks like employee discounts to attract applicants, says Mark Cohen, a professor at Columbia Business School who specializes in retail.

"I think the real point of attractiveness is the employee discount, and how much of a discount is being made available," Cohen says. "Employee discounts have always been part of a benefit package that retailers have offered, so that's not new, but they may deepen the discounts, make it more compelling. And they may choose to give employees first shot at any kind of merchandise, which has always been sort of available."

However, many retailers have already gone way beyond the simple employee discount and are offering enticements that were previously unheard of, such as $3,000 signing bonuses for new hires who stay between 60 and 90 days, Challenger says. These kinds of bonuses serve to solve two problems with one solution: getting people in the door and keeping them employed.

"They're trying to get at this retention problem at the same time" as they hire, he says. "If you're the only employer offering [a particular perk], it would really bring people in, but when everybody's offering it," it becomes less alluring for workers.

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The problem of filling temporary seasonal roles is particularly pronounced in retail, but it's happening across sectors. Long-haul trucking, which is experiencing a severe labor shortage that has gummed up the domestic supply chain, is another good example, he says. Shipping companies usually hire a lot of seasonal workers during the winter to handle increased demand from online holiday shoppers and consumers mailing gifts. UPS says it plans to hire more than 100,000 workers; FedEx wants to hire 90,000.

"We've already seen some hard evidence, like quarterly reports from FedEx, that the bottom line is being clearly affected by the inability to fill positions, to fill transportation routes," Challenger says. "So I think we'll see evidence in the numbers that the labor shortage is holding back the economy."

The 'arms race for talent' means workers have options

The labor shortage is a big headache for employers, but it could be a boon for workers, who have the most leverage in naming at least some of the terms of their employment that they've had in a long time, says Morgan Llewellyn, chief data scientist at applicant tracking software company Jobvite. The so-called Great Resignation has created an "advantage to the job seeker."

"Trucking is a great example," Llewellyn says, where "for years, there has been a continual arms race for talent."

In the case of long-haul truckers, the shortage is so severe that many prospective hires are now not only able to negotiate higher pay but also get better working conditions, such as fewer nights spent on the road. Getting a good rate of pay or a nice signing bonus is almost a given at this point in time, Llewellyn says.

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Employers who really want to seriously compete for talent are at the stage where they need to up the ante on what used to be ancillary concerns related to employment. "It's all these other things that are going to put [employers] over the top," he says.

To that end, some companies, like UPS, have innovated very quickly, Challenger says. They're now contacting prospective hires within 30 minutes of receiving their application, playing on people's love of instant gratification.

"That is totally novel, hyperspeed recruiting," Challenger says. "At a time when people have lots of opportunities and lots of potential offers, being the first [offer] to them. That type of response, I felt was really unique."

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