It’s no secret to anyone involved in the restaurant business – or anyone that’s even stepped foot in one these past couple of years – that the industry is facing a staffing crunch of unprecedented proportions.
With more than one million baby boomers retiring from the workforce in 2020, coupled with the four million Americans that have voluntarily left the workforce, there are nearly 11 million jobs that are still in need of being filled, according to the U.S. Bureau of Labor Statistics.
But even before the industry was in the throes of the COVID crisis, a record 70 percent of businesses in the U.S. reported a talent shortage, a stark contrast to the 32 percent of businesses who reported this only five years earlier.
The labor shortage, the most acute since 1968, has employers competing for workers of all backgrounds. Ballooning job openings in fields such as hospitality, transportation and manufacturing, has ultimately given workers the upper hand.
So how can employers attract and ultimately retain talent to keep their businesses running? The answer: financial stability and flexibility.
Recruitment as a Challenge
The National Restaurant Association recently reported that 75 percent of restaurant operators say recruitment and retention are their biggest challenges. And we see how it’s affecting the industry – businesses posting signs or job listings, highlighting an incentive or offer to get new applicants through the door and hired, all while trying to keep service levels up.
But these short-term incentives – like spot bonuses or cash offers – don’t satisfy the needs of employees long-term, nor do they address the fundamental HR challenges of recruitment and retention that every organization strives for.
Employee Incentive Programs
We’re seeing a marked shift in the role of financial wellness as a cornerstone of employee benefits programs, and for good reason. Recent studies are clearly showing what employees are looking for from their employers, and how important financial well-being is to them:
- 72 percent of workers surveyed say they would leave their current employer for another that cares about their financial well-being
- 63 percent of workers surveyed would find it at least somewhat difficult to meet their financial obligations if their paycheck was delayed
- 55 percent of Americans (and 60 percent of millennials) don’t have $500 to cover an unexpected expense
Organizations that aren’t taking a proactive approach to the overall financial wellbeing of their employees over the long term – instead of focusing on short-term gimmicks – will lose out on what employees are most looking for.
Earned Wage Access
Receiving same-day access to pay is a growing trend that’s expected to continue in growth over the coming years. It’s estimated by Gartner that only five percent of employers currently offer some sort of on-demand pay program in place, and this figure is expected to increase upwards of 20 percent over the next two-to-three years.
Adapting to this changing tide is critical, especially when looked at through the lens of what employees are expecting. 83 percent of employees believe they should have access to their earned wages at the end of each day, rather than have to wait out the two-week pay cycle, according to a Harris Poll. Further, 79 percent of those surveyed said this would make them feel more valued as an employee. That can go a long way in helping workers feel supported by their workplace. In fact, the same Harris Poll survey found that 78 percent of employees said free access to on-demand pay would increase their loyalty to an employer.
Thus, addressing this employee need has positive implications for organizations, as earned wage access solutions can drive real business results. It’s important to point out that some EWA providers do administer fees to employees for using their service, effectively charging staff to access their own hard-earned money, usually at a time when they need it most and are financially vulnerable. Every fee charged makes it harder to dig out of the financial hole; you cannot allow a vendor to further tax your employees and claim that it is financial wellness.
Furthermore, from our own independent research, we have learned that customers see an average of 27 percent reduction in employee turnover when workers have fee-free access to their earned pay. This reduction in employee turnover can equate to significant cost and productivity savings for organizations. For example, if half of a company with 2000 employees opted into an EWA program, that company could lower its annual hiring costs by 35 percent – which can equate to over $2 million.
Staffing shortages, expectations of a changing workforce, and new on-demand pay options make for a perfect storm that restaurant operators and organizations can use to their advantage.
Despite the labor and workforce challenges we currently see, the restaurant industry is especially poised to minimize any negative effects that may be felt, by implementing a well thought out, responsible earned wage access program.