Founder and CEO at Legion Technologies, a provider of AI-powered solutions that help companies manage and empower their hourly workforces.
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Job creation is important on many levels. It helps grow our economy by creating earnings, which creates demand. In addition, it helps reduce poverty, which has been shown to also reduce crime — and with the Covid-19 pandemic estimated to push as many as 150 million people into poverty by the end of 2021, this has become more important than ever.
But not all jobs are created equal, especially when it comes to the hourly workforce, which makes up nearly 60% of the U.S. workforce today and includes the majority of the front-line workers who stock our shelves, work in our distribution centers, deliver our shipments and ring up our purchases.
While many people agree that hourly jobs aren’t typically considered “good” jobs, it’s difficult to agree on what can be done to make them better.
For employers in every industry, from technology to retail to hospitality, an hourly workforce presents a host of issues, with labor efficiency and productivity being typical concerns. In addition, many hourly employees don’t consistently work the same days and shifts, which makes it difficult when it comes to training, performance management and optimized scheduling (that avoids local compliance issues). Employee engagement and retention are also major problems. According to a 2015 survey, the annual turnover rate for hourly employees is 49%, with an average cost of $4,969 per employee.
From an hourly employee's perspective, job — and pay — security is a necessity for a “good” job. However, the pay for these types of jobs is typically low. The federal minimum wage, which was set in 2009, is only $7.25 per hour. Cities and states have the option of setting their own minimum wage, and many now have a minimum wage rate that is slightly higher than the federal minimum wage. However, the fact remains that nearly half of U.S. workers are considered “low-wage” employees, with median hourly wages of $10.22 per hour and median annual earnings of approximately $18,000.
The result is that hourly workers often struggle to make ends meet rather than get ahead, with many now working two to three jobs just to make ends meet. This is one of the reasons we’ve seen an increase in the number of people working gig jobs (e.g., Uber, Lyft, Instacart, etc.) to supplement their traditional brick-and-mortar jobs. However, while gig jobs make it easier for employees to earn additional income, they don’t provide benefits such as health insurance or paid time off — another necessity for a “good” job.
Employees are only eligible for benefits if they work more than 30 hours per week or 130 hours per month. However, the majority of the hourly workforce doesn’t meet this requirement. In fact, it is estimated that approximately 80% of hourly workers are considered part-time workers, clocking in less than 35 hours per week. This means they aren’t eligible for benefits, leaving them — and their families — extremely vulnerable.
In addition to being unable to cover unexpected healthcare costs, hourly employees are often afraid to take time off if they or a family member are sick. They can’t afford to lose shifts or be removed from a schedule in favor of a more “reliable” employee. In addition to being unfair to these hourly workers, it is no longer a safe option due to the current pandemic.
On top of all this, many of today’s hourly workers are millennials (or younger). They are a digital generation, expecting everything — including the support they receive from their employers (e.g., onboarding, scheduling, etc.) — to be fast, efficient and online. In addition, they want more transparent communication channels and greater ownership (and subsequent flexibility) of their schedules. Unfortunately, many businesses that rely on an hourly workforce still tend to depend on rigid paper-based or verbal communication methods, presenting yet another reason gig jobs are seen as an attractive alternative to traditional brick-and-mortar jobs.
So, what can we, as employers, do to help turn hourly jobs into “good” jobs?
- Pay hourly employees a living wage and reap the rewards of increased worker morale and health, as well as improved quality of service.
- Provide basic benefits to help attract and retain talent and differentiate your business from competitors.
- Offer flexible scheduling options to increase productivity while reducing employee turnover.
- Modernize communication channels with an intranet, mobile app or other digital tool that helps your employees stay productive and engaged by offering a place for them to collaborate, communicate and connect with others.
While higher pay and healthcare benefits are obvious options, it’s important to note that providing employees with schedule flexibility and a better digital experience are just as impactful. In fact, 86% of hourly workers consider having control of their work schedules to be extremely important, with more than half willing to leave jobs where they don’t have control over their schedules.
As business leaders, our focus has traditionally been on the bottom line — in other words, how does a particular job impact our business’s productivity or total labor costs? However, creating good jobs for hourly workers does have a positive impact on our costs. Good jobs create happier, more productive employees who are less likely to quit. At an average cost of $4,969 per employee who quits, imagine how much money could be saved if they stayed on board.
Hourly jobs can become good jobs for employees and employers. And it’s up to us to make it happen.
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