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A $500 Sign-On Bonus To Deliver Pizzas? Here's What To Know About Hiring Incentives

Jul 6, 2021
Originally published on July 6, 2021 8:39 am

Time now for a quiz.

What do Amazon, Disney World and Dickie Jo's Burgers in Eugene, Ore., all have in common?

a. They employ low-wage workers.

b. They're in desperate need of workers this summer.

c. They're offering $1,000 sign-on bonuses.

d. All of the above.

If you answered d, you're right. (Sorry, we're not paying cash for correct answers!)

With a record 9.3 million jobs open in the U.S. as of April, and a workforce in no hurry to get back to work, a growing number of employers are looking to hiring bonuses to fill their ranks. Long a tradition on Wall Street, sign-on bonuses are rare in low-wage work such as fast food, warehousing and food delivery. Now, as the economy has picked up, hiring bonuses are everywhere.

On the jobs site Indeed.com, postings advertising some kind of hiring incentive have more than doubled since last July, according to economist AnnElizabeth Konkel of the Indeed Hiring Lab. Searches for terms such as "hiring bonus" have also doubled, indicating job seekers are intrigued.

Before you leap, here are some things to know about these cash payouts.

A hiring bonus is unlikely to change your life

Hiring bonuses can be a useful tool for employers because they're a one-time cost, Konkel says. Companies can also stop offering the incentive as soon as they're fully staffed.

In need of workers, a Domino's franchise in Washington, D.C., is offering a sign-on bonus for all positions.
Andrea Hsu / NPR

On the flip side, for many low-wage workers, a $1,000 bonus may be little more than a quick fix.

"It's certainly better than not getting a bonus," says David Madland, senior fellow with the Center for American Progress. "But it's not likely to enable them to sustain a higher quality of living."

That's because of the one-off nature of bonus incentives. A worker would almost always be better off negotiating a higher starting wage that continues to pay dividends in the long run. But that's just not something low-wage workers typically do, Madland says. Nor are employers traditionally open to such negotiations.

"They don't want to set a precedent, because then they might have to raise wages for the next person who comes along, or the people who are already in the job," he says.

Hiring bonuses aside, wages are going up

Employers still hold most of the power, but workers have applied leverage this year — by staying home and forcing employers to bump up pay.

Wages for workers in restaurants, hotels, theme parks and other entertainment venues rose by 2.3% in June, according to the Labor Department. That follows a survey from the National Federation of Independent Business that found a third of small businesses increased pay in May.

Restaurants in particular are grappling with staffing shortages, closing early or seating fewer guests. Several million workers left the industry in the pandemic, says Saru Jayaraman, president of the advocacy group One Fair Wage. She doesn't think the sign-on bonuses are enough to lure them all back.

"It's not enough to have a worker who's decided, I'm going to walk away and change my life, to then flip back for a temporary boost," she says.

You usually don't get the whole bonus upfront

Another thing to keep in mind about hiring incentives: You often have to stay in a job for months before getting the full amount.

For Teonna Mitchell, a restaurant server in Miami, the job didn't prove to be worth it.

Already working one part-time restaurant job, Mitchell took on a second job at a fancier place that was offering $1,000 bonuses to new hires. But she quickly realized the tips weren't better, and because of severe staffing shortages, she was being asked to work all the time.

It was too much. After two months, she quit, forfeiting the second half of her bonus that would have been paid out at the three-month mark. For now, she's back to working one restaurant job and studying to get an insurance license on the side. She says she's done chasing sign-on bonuses.

Keep your focus on the long term

As tempting as sign-on bonuses may be, Paolo Varquez, career services specialist at Coastline Community College in Orange County, Calif., says it's more important to keep your focus on the long term.

"The better question to ask yourself is: Is this job going to provide me relevant experience and skills for my career goal?" says Varquez.

That should be the motivating factor, he says, not hundreds of dollars of cash.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

LEILA FADEL, HOST:

Time now for a quiz - what do Amazon, Disney World and Dickie Jo's Burgers in Eugene, Ore., all have in common? Well, they're all offering $1,000 sign-on bonuses right now. That kind of cash payout may sound tempting, but NPR's Andrea Hsu says that for low-wage workers, it may be little more than a quick fix.

ANDREA HSU, BYLINE: With a record 9 million jobs open in the U.S., AnnElizabeth Konkel has noticed more and more job postings with the words hiring bonus in them.

ANNELIZABETH KONKEL: I mean, it's eye-catching.

HSU: Konkel is an economist with the Indeed Hiring Lab. She's found such postings on Indeed's job site have doubled since a year ago. Employers are clearly desperate for workers and offering cash to lure them.

KONKEL: Just in the nursing category, it goes from 100 to $30,000. That is a tremendous amount of money.

HSU: After all, these are not Wall Street jobs, where big bonuses are the norm. For employers, sign-on bonuses can be a great tool. For starters, Konkel says...

KONKEL: It's a one-time cost.

HSU: In other words, you're not stuck paying a higher wage week after week, year after year. Also, it's flexible.

KONKEL: Once they get enough staff, they can drop the hiring incentive if they choose.

HSU: Now, those reasons are also why hiring incentives are not always so good for workers.

SARU JAYARAMAN: We are not fans of one-time relief. In general, wages need to go up.

HSU: Saru Jayaraman is president of the advocacy group One Fair Wage. They've been calling for higher wages for workers who earn tips. She says, think about it. For someone working in food service, a one-off $1,000 bonus is hardly life-changing.

JAYARAMAN: That might cover maybe groceries, maybe a part of my rent for a month. And then I'm back where I started. And so if I thought this job didn't work before, in a month, it's still not going to work.

HSU: You're much better off negotiating a higher starting wage. But David Madland of the Center for American Progress says that's not something low-wage workers can typically do.

DAVID MADLAND: Almost by definition, low-wage workers have very little bargaining power.

HSU: Sure, you can ask for a few dollars more an hour instead of the signing bonus. And who knows? Maybe in this labor market, you'd succeed. But traditionally, Madland says, employers have not been open to such negotiations.

MADLAND: They don't want to set a precedent because then they will - might have to raise wages for the next person who comes along in the job or the people who are already in the job.

HSU: What workers can do and have been doing this year is refuse to take a job at the wage being offered. That's forced employers to bump up the hourly pay. A survey of small businesses found a third of employers raised pay in May. But if you are considering that big signing bonus, here's another thing to know. You often have to stay in a job for months before getting the full amount. Tiana Mitchell (ph), a restaurant server in Miami, recently took on a second job at a fancier restaurant that was offering a $1,000 bonus. But she quickly realized the tips at the new place weren't better, and it was too many hours.

TIANA MITCHELL: It was severely understaffed. That's why I was working so much.

HSU: So after two months, she quit, forfeiting half her bonus - $500 - which she would have gotten at the three-month mark. Now she's back to working one restaurant job.

MITCHELL: But nothing as far as searching for the next signing bonus.

HSU: Instead, she's using the time to study. She wants to get a license to sell insurance. It's a move Paolo Varquez would approve of. He's a career counselor at Coastline Community College in Orange County, Calif. He says, yeah, signing bonuses might sound great, but your focus should be on the long term.

PAOLO VARQUEZ: You know, is this job going to provide me with relevant experience and skills for my career goal?

HSU: That, he said, should be the motivating factor, not hundreds of dollars of cash.

Andrea Hsu, NPR News.

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