Businesses are handing out bonuses like it's Christmas amid a hiring crunch, according to recent data from a payroll firm.
More than 1 in 10 paychecks issued in May contained a bonus. That's a 50% increase from a year ago, according to an analysis from payroll firm Gusto of the businesses it works with. And the bonuses employees are receiving are also getting bigger, with Gusto finding the average bonus in May almost doubled to $567. Indeed Hiring Lab found that job postings are increasingly dangling incentives to lure applicants, in some cases with bonuses of up to $30,000.
The surge in the frequency and size of bonuses signals that employers are doing more to both hire and retain workers amid a labor crunch, experts say. Restaurants and other service businesses are having trouble hiring as the pandemic recedes and the economy booms. At the same time, employees areat record rates to take higher-paying positions elsewhere.
"We're seeing this staggering spike in bonuses we would only see in a typical December," said Luke Pardue, an economist at Gusto. "There has certainly been a shift even in the last month or so in the balance of power between workers and business owners."
That shift comes as millions of workers remain on the sidelines even as the economy reopens, an issue that some Republican governors have blamed on enhanced unemployment benefits. Twenty-six states are in the process ofbefore they're due to expire in September, blaming the extra aid for the workforce crunch.
Yet economists point to a more complex group of factors at play, ranging from older workers choosing to take an early retirement during the pandemic to ongoing childcare headaches and remote schooling for parents of young children.
Gusto's research was sparked by anecdotes of employers offering perks and bonuses to attract and keep workers, Pardue said. While it's difficult to track data on non-monetary incentives, Pardue said that some small businesses are using strategies such as flexible scheduling to hire parents who continue to struggle with daycare, while other companies are offering free meals and other benefits.
"The pandemic demonstrated how much the economy relies on childcare for workers to reenter the workforce," Pardue noted, adding that some workers with children are likely going to remain on the sidelines until schools fully resume in-person instruction and the childcare crunch eases.
Trucking industry loads up on incentives
From last July through mid-June, the share of job listings offering hiring bonuses has more than doubled, according to recent data from Indeed Hiring Lab.
Employers across many industries are relying on hiring bonuses to recruit, but the analysis found that the trucking, dental and nursing industries have the largest share of job postings that include incentives, Indeed Hiring Lab economist AnnElizabeth Konkel said.
About 16% of June job postings for drivers mentioned a hiring bonus, while that share slipped to about 14% for dental jobs and 11% for nurses, Indeed Hiring Lab found.
"The speed of the recovery may have taken employers by surprise," Konkel said, noting that recessions typically take longer to dig out of than the rate of the current recovery.
While the trucking industry had been facing a worker shortage even prior to the pandemic, health care jobs may be feeling the strain from early retirements or workers deciding to switch careers given the stress of the health care crisis, she noted. Nearly a quarter of public health workers reported feeling bullied, harassed or threatened due to their work as the pandemic was unfolding, according to afrom the Centers for Disease Control and Prevention.
Not all industries with hiring difficulties are offering incentives. Despite reports of worker shortages in restaurants, only 3.1% of job postings for these businesses mentioned incentives, the study found. Restaurants might not have the budgets to offer hiring bonuses, or could be holding out for a wave of job seekers later this summer, Konkel noted.
Whether or not that summer wave is coming, it is likely that the worker crunch will ease later this year, according to a June 21 report from Goldman Sachs economists. The labor force participation rate, or share of working-age adults who are employed or looking for work, will likely regain some ground by the end of 2022, but a surge in early retirements and other issues could leave the workforce short of 1.2 million workers, they noted.
"It's a wacky labor market right now," Konkel said. "There are bumps, changes — it's not an off and on switch."