Solving the Hospitality Labor Shortage by Prioritizing Employee Financial Wellness
In July, Business Insider reported employment in the hospitality sector was still down by 2.2 million from February 2020, despite an added 343,000 jobs. And according to Joblist’s second-quarter survey of around 13,000 job seekers, one third of former hospitality workers said they won’t return to the industry, primarily due to low pay and bad benefits.
This has forced many businesses in the industry to increase wages, but even that is not solving the problem fast enough. It’s a worker’s market: With lessening restrictions, many businesses are re-opening – and they’re all hiring at the same time.
Help Wanted Everywhere
Three-fourths of restaurants (74%) say their top challenge is recruiting employees, according to the National Restaurant Association's mid-year supplement to the 2021 State of the Restaurant Industry Report. Operators have been offering incentives for new hires and added benefits for existing employees. Tech tools can help to increase job satisfaction for a more positive workplace culture, which is highly correlated to retention.
To resolve this labor shortage, hospitality leaders must think outside the box to attract potential employees and incentivize them to stay. While increasing wages can’t hurt, offering earned wage access (EWA) solutions as part of a complete financial literacy and planning program might provide employees just the perks they need to re-enter the hospitality job market.
How EWA works
Think about the last time you purchased something. Odds are you used a simple app to buy what you needed with the swipe of your finger. Today’s employees want that same ease and flexibility in how they work and get paid.
EWA is an employer-provided third-party service that permits employees to withdraw wages they’ve earned without waiting for the end of the customary pay cycle. EWA solutions, delivered through apps, virtual cards, prepaid cards and mobile wallets, empower workers to tap into their earnings quickly, even if they don’t have a bank account.
And EWA works as a stand-along offering for businesses, further simplifying and streamlining traditional payroll costs. It is a much better alternative to expensive payday lenders, check-cashing services and overdraft fees, and costs nothing for businesses to implement.
Why EWA works
There are several reasons why employees place a lot of value on EWA solutions. The first, of course, is the easy and early access it provides to earnings. According to a 2020 survey, nearly two-thirds of Americans live paycheck to paycheck and resort to expensive solutions to financially bridge their needs between pay periods. Additionally, servers, bartenders and cleaning staff often need immediate access to their tips, as this money represents the majority of their income. EWA tools offer employees an easy and secure way to manage their wages and allow businesses to eliminate maintaining cash on-site.
Perhaps the biggest benefit of EWA solutions is their ability to foster financial literacy. Regardless of upbringing, education or background, many people lack the ability to effectively manage their finances or save for the future. A free financial literacy education provides employees with the understanding and skills to budget and better manage their money.
A recent report shows EWA services are the third most popular benefit employers can offer, coming in after healthcare and 401(k) plans. And by offering a tool like EWA, a business can show it cares about the financial wellness of its workers, which helps with retention.
Finally, EWA reduces stress, which takes a toll on a person’s physical and mental health and their job performance. According to multiple surveys, the number-one trigger for stress nationwide is money, or rather, lack thereof.
EWA allows employees to access and use wages when needed, eliminating added financial stress. For instance, by enabling workers to access earned money before payday, employers help them pay bills on time, thereby avoiding pricey overdraft fees and payday lenders.
How to incorporate EWA in your business
Empowering hospitality employees with innovative financial wellness solutions like EWA is easy. Consider a robust platform that’s cloud-based, flexible and API-driven so it can easily integrate into your existing mobile strategy. Doing so will help bolster your financial wellness program by supporting employees in their financial lives, which is a great way to both attract and retain workers.
Solving the hospitality labor shortage will not be accomplished overnight, but by offering EWA solutions, you can help design a workplace that provides employees with easy and early access to earnings, a free financial literacy education and a stress-free environment – at least when it comes to money. And that will put us all on the right track to a thriving hospitality industry once again.