Employers desperate for workers turning to signing bonuses

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Some companies are turning to signing bonuses to attract workers as they struggle to fill positions.

While most often associated with higher-paying jobs that require secondary education, signing bonuses are increasingly being tied to job applications for low- and middle-wage jobs — a sign that some say is a symptom of a labor shortage. The increased usage comes as some economists argue that supercharged federal unemployment benefits are holding back the labor market, and more than two dozen states have ended, or are planning to end, the payments early.

Amazon, whose warehouse workers have made headlines recently during a unionization drive, announced that it is seeking 75,000 workers across its fulfillment and logistics network with sign-on bonuses worth up to $1,000. Similarly, the Transportation Security Administration is also looking to hire about 6,000 workers and is also employing $1,000 signing bonuses to do so.

A recent study by employment and job search website Indeed found that signing bonuses, retention bonuses, and one-time cash payments have been on the rise as businesses struggle to recruit employees. During one week this month, 4.1% of job postings advertised hiring incentives — more than double the 1.8% figure about a year prior.

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“This report shows that employers are increasingly looking for ways to attract workers, and they’re doing it through advertising hiring incentives,” AnnElizabeth Konkel, an economist at Indeed Hiring Lab who conducted the research, told the Washington Examiner.

She said that data show there has been an acceleration in posts advertising signing incentives since April, which was right about the time that the United States began lifting mask mandates and sectors of the economy became even more invigorated. She said it’s not just a few sectors that are offering bonuses either, but rather a plethora.

Hiring Incentives

For example, electric scooter rental company Spin has been offering $250 bonuses after two months of work. They are touting the incentive for positions such as light repair technicians and scooter delivery drivers.

A spokeswoman with the company told the Washington Examiner that while Spin has offered signing bonuses in the past, the number of bonuses being offered has increased over the past few weeks. The spokeswoman also pointed out that in conjunction with the bonuses, the company hiked wages in November and recently did so again “well above what our competitors are offering.” She said that despite the company seeing high hiring numbers because of the strategy, there are still call-outs or no-shows.

“That’s why we are taking an aggressive internal referral strategy combined with a sign-on bonus,” the spokeswoman said. “It’s peak ridership season, so we are trying to attract as much talent as we can.”

There is also an allure to signing bonuses because they are a one-time cost, whereas raising wages could end up costing employers more in the long run. After the company has the full number of employees it needs to recruit, it can drop the signing bonuses, as opposed to being forced to continue to pay higher-than-wanted wages.

And signing bonuses are often aimed at keeping workers at the company for longer. Rachel Greszler, an economics research fellow at the Heritage Foundation, said that finding new workers is costly for employers, so it behooves them to hire people who will not leave the role quickly. She said that bonuses might only become available after a set period of time, or one might have to pay them back if they quit early.

“From an employer’s perspective, these are something where not only does it get the worker in the door, but it also keeps them there,” Greszler told the Washington Examiner.

Another post-pandemic economic abnormality in the U.S. is its high quits rate. Four million workers quit their jobs in April, which is a big loss for employers who not only have to find a replacement but also invest time and money into training that replacement, all while having no idea if that second worker might also be out the door early.

While the exact reasons behind the labor shortages are unclear and hotly debated, Greszler pointed at expanded federal unemployment benefits, which provide recipients with $300 per week stacked on top of what each state already provides. About half of the states are opting out of the program early in hopes of spurring more employment, although another study by Indeed found that job searches did not increase in the states that have already opted out.

In addition to smaller states such as Alaska, Iowa, Mississippi, and Missouri, last weekend Arkansas, Florida, Georgia, Ohio, Oklahoma, South Dakota, Texas, and Utah all also ended unemployment benefits. South Carolina will do so on June 30, Maryland and Tennessee on July 3, Arizona on July 10, and Indiana on July 19.

Some states, such as Montana, are offering their own incentives for workers who get jobs. Big Sky Country is offering $1,200 bonuses for residents who return to work. New Hampshire is also offering $500 and $1,000 bonuses to those who start part- or full-time jobs.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

A recent poll conducted by the U.S. Chamber of Commerce found that the bonuses could pay off. About one-in-four of those who lost their jobs during the pandemic and are not actively looking for work said that a $1,000 hiring bonus would increase their urgency to return to full-time employment, according to the survey.

Chamber Poll

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