Is $300 enough to say yes to that job?
Some companies offer hiring bonuses for the first time amid labor shortage
Restaurant group One Off Hospitality is offering a $300 signing bonus to attract workers for its seven Chicago locations.
Ace Handyman Services, in the city’s Avondale neighborhood, is offering a $500 bonus to fill its full-time construction helper position as demand increases for home renovations during the COVID-19 pandemic.
And a social services nonprofit is offering a $2,000 bonus to find candidates for open supervisor roles.
Across the Chicago area, companies big and small are facing a labor shortage as people avoid work because of child care responsibilities or health concerns associated with the pandemic, or because they’re making more on unemployment. As a result, short-staffed businesses are beginning to offer monetary incentives to entice workers and retain staff. Major corporations like Amazon and Costco are competing for talent as well and have announced they are raising wages.
Still, companies can’t fill open roles fast enough.
Some 42% of small-business owners reported having job openings they could not fill in March, according to the latest monthly survey from the National Federation of Independent Business, a Washington, D.C.-based small-business association. The findings are based on 514 respondents surveyed in March.
And 28% of owners said they were raising wages, seasonally adjusted, an increase from 25% of respondents in February and
“A lot of people on unemployment are happy because they are getting paid more on unemployment benefits than they think they can get from a job, or going back to their old job at the kitchen or a restaurant.”
the highest figure in the past year, according to the association.
Finding workers has been an unexpected challenge coming out of state and city restrictions on indoor dining service, said Karen Browne, CEO of One Off Hospitality.
The restaurant group, which manages Avec West Loop, Big Star and the Publican, started an incentive program to attract workers earlier this year. The company is offering a $300 signing bonus to new hires after 90 days of employment. The bonus is also paid to current staff who refer new employees who stay at least 90 days.
Browne said the number of applicants has shrunk as many restaurant workers have switched careers during the pandemic.
“Talent overall is looking scarce. But the prep cook and line cook is where you’re going to see the most shortages right now,” Browne said.
Companies offering incentives span a range of industries, from dining and hospitality to construction and social services. Job postings online listed a $150 signing bonus for a part-time front desk clerk at a Waukegan hotel; a posting for garage attendant at a Highland Park dealership offered a signing bonus of $500.
But the pandemic remains a concern for many who are out of work.
In Illinois, about 10% of unemployed residents listed coronavirus-related issues, including caring for children who are not in school and fears of getting and spreading COVID-19, as reasons they weren’t looking for work, according to a U.S. Census survey of nearly 3.8 million residents conducted in mid- to late March.
Companies also are competing with enhanced federal jobless aid and lax rules on who qualifies for unemployment benefits, said Bill Dunkelberg, chief economist for the National Federation of Independent Business.
Prior to the pandemic, states required the unemployed to be actively looking for work in order to receive unemployment benefits. The $2.2 trillion coronavirus relief legislation enacted last year gave states more flexibility on those rules as more people became unemployed during the health crisis.
The federal jobless aid program for gig and self-employed workers only requires that a person be unemployed, partially unemployed or unable to work because of the pandemic to be eligible for benefits.
“A lot of people on unemployment are happy because they are getting paid more on unemployment benefits than they think they can get from a job, or going back to their old job at the kitchen or a restaurant,” Dunkelburg said.
The problem has driven some companies to raise wages, he said. Though the association doesn’t collect detailed wage information from member companies, Dunkelburg said some businesses are increasing wages in modest amounts.
Last month, Target said it would pay $18 an hour for 2,000 workers it plans to hire for a distribution center it’s opening in
— Bill Dunkelberg, chief economist for the National Federation of Independent Business
Little Village this summer. Amazon, which already pays new hires at least $15 an hour, announced it will start increasing pay, anywhere from 50 cents to $3 an hour more, starting in May. Amazon said the pay increase was part of an effort to increase hiring as more people shop online during the pandemic.
Costco boosted its minimum wage to $16 an hour from $15 earlier this year. The increase is part of the company’s effort to boost worker retention and productivity, CEO Craig Jelinek said at a Senate Budget Committee hearing in February.
Unlike wage increases, incentives like hiring bonuses offer companies a temporary way to attract candidates in a limited talent pool.
Charles Cole, the owner of the Avondale Ace Handyman Services franchise, said it is taking several more months to find qualified applicants for a construction helper. Before the pandemic, he would hire a couple of people a month after posting a job online.
So for the first time, Cole has started offering a $500 signing bonus to attract workers, payable after 90 days of employment. The company has been looking to fill the position since March, and the vacancy is starting to have consequences, he said.
“It makes it harder for us to keep up with demand from customers,” Cole said.
Kaleidoscope, a Chicago-based child welfare nonprofit, has had two supervisor openings unfilled for about nine months, said Kathy Grzelak, executive director. The nonprofit has suffered a labor shortage for years because fewer students are graduating with a degree in social work, but the pandemic has made it harder to recruit, she said.
Grzelak said she suspects some candidates aren’t applying because of fears of getting infected with COVID-19.
“We were still essential throughout the pandemic, going out to homes because of the nature of the work that we do,” she said.
In addition, the nonprofit is having issues retaining workers because of low pay, which is partially funded by the Illinois Department of Children and Family Services, Grzelak said. The nonprofit is offering a $2,000 signing bonus, payable after 90 days of employment.
“If we don’t have the people, the workload is spread among everyone else,” she said.