In the latest sign of the tight US labor market giving candidates the upper hand, many construction contractors in the US are now offering cash signing bonuses to skilled craft workers to sweeten the value proposition for joining their team, Jim Parsons reported at the Engineering News-Record this month:
“Signing bonuses are not new, but they are becoming more prevalent,” says Jeff Robinson, president of compensation consulting firm PAS Inc. Unlike the common practice of providing what he calls “mobilization pay” to compensate for relocation costs, contractors now are offering one-time bonuses ranging from a few hundred dollars to upwards of $1,500 per worker.
According to Robinson, a foreman might be offered as much as $3,000, although there may be an expectation that the person will bring other workers along to join the employer’s workforce. “The advantage of a bonus is that it’s a one-time payment that doesn’t affect base pay,” he says, adding that the incentives usually include a 60- to 90-day employment requirement before they can be collected.
The 2017 survey of workforce shortages by the Associated General Contractors of America reported that nearly a quarter of contractors used bonuses for craft personnel because of difficulty filling positions. The trend appears particularly strong in areas where labor demand is extremely high.
Construction is often thought of as a low-skill occupation where one’s qualifications depend more on strength and stamina than knowledge and experience, but in fact it employs a range of skills, while contractors, like most employers, prefer to hire experienced workers if they can, especially for delicate construction tasks that require high levels of skill and craftsmanship. Construction workers are in high demand as commercial and residential building is booming in many parts of the US, and so these workers are becoming harder to find and more expensive to hire.
What would you do with a $3,000 bonus? Take a trip to Walt Disney World? Well, if you’re working as a chef at the Florida resort this summer, that might be where you got the bonus in the first place. In its effort to fill 3,500 seasonal roles at its sprawling entertainment complex, Disney is offering outsized signing bonuses for some of these hires, including unskilled and part-time employees, Orlando Sentinel business writer Paul Brinkmann reported last week:
A housekeeper hired this year at Disney World’s resorts can get a hiring bonus of $1,250 for a job that pays $10.50 per hour. That’s up from last year’s $500 hiring bonus. And it’s for full-time or part-time hires. Full-time or part-time lifeguards this year can get a $1000 hiring bonus, double what the entertainment giant offered last year, and that is for full-time or part-time jobs, according to job postings. Seasonal lifeguards get a $500 bonus.
Bus drivers can get a $500 hiring bonus – the same as last year. Culinary chefs can get a $3,000 bonus. The bonuses are given after training periods and 30 days on the job.
Universal Orlando, the other major theme park in central Florida, is also hiring 3,000 seasonal workers this year, to whom it is offering “competitive salaries and comprehensive benefits packages.” Both parks are in the midst of holding job fairs to fill these thousands of positions. Disney World’s double bonuses are just the latest anecdotal indicator of the historically tight labor market in the US today. They also illustrate how the state of the labor market, combined with other trends, is affecting seasonal hiring specifically.
The “fiduciary rule,” which the US Department of Labor announced this week will go into effect on June 9 as scheduled, will require financial advisors to act in their clients’ best interests when advising them about retirement—or in other words, it will forbid them from steering clients toward products that would maximize the advisor’s own commission or fee. Financial firms and business groups like the US Chamber of Commerce oppose the rule, which they say will hurt growth, lead to a deluge of frivolous lawsuits, and limit the options of employee investors.
Another reason financial institutions may dislike the impending rule, Bloomberg’s Hugh Son explains, is that it is forcing them to change their recruiting practices. Morgan Stanley, Merrill Lynch, and UBS have all said they are cutting back on the use of signing bonuses based on the revenue brokers generated in their previous jobs, which the government had warned them might go against the rule:
Last year, the Department of Labor briefed banks that the industry’s typical signing bonuses could run afoul of the agency’s incoming fiduciary rule. Upon joining a new firm, star brokers were often granted awards of more than three times the revenue they generated in the past year, with the bonus structured as a loan that’s forgiven as the employee stayed with the company and hit targets.
The briefing prodded firms including Morgan Stanley and Merrill Lynch to restructure their enticements, and now brokerages are moving to make more permanent changes.