Why hourly workers should have the same benefits as salaried ones

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Dan Schawbel, Managing Partner, Workplace Intelligence

• There is growing recognition of the rights of hourly workers, including at legal level in California.

• A new survey shows that hourly workers would benefit from greater flexibility.

• Offering such arrangements also benefits employers in the recruitment phase.

Before COVID-19, hourly workers were rarely deemed essential and were treated like second-class citizens. Now, many of these employees are seen as necessary for civilization to run. Nearly every state governor has issued executive orders that outline industries considered “essential” during the pandemic, including healthcare, food service and public transportation; in April 2020 it was estimated that there were roughly 48 million workers in essential occupations, constituting about 42% of the US workforce. Among these workers, many are hourly or part-time, and most (57%) earn less than $20 an hour. In fact, essential employees earn an average of 18.2% less than employees in other industries.

As mass layoffs due to the pandemic, force more people to unwillingly take up part-time work, the future of the hourly or gig worker is one of the biggest labour issues facing the Joe Biden administration. With California recently reclassifying gig workers as employees instead of independent contractors, there is no doubt that hourly workers will soon be treated similarly to salaried employees in terms of benefits and the perceived value they add to their organization. Research from Gallup shows hourly workers currently report being significantly less satisfied than salaried staff with their vacation time, retirement benefits, pay, safety conditions, job security, opportunities for promotion, health insurance benefits, recognition for accomplishments, and flexibility of hours.

To better understand the perceptions around benefits for hourly workers, my research firm Workplace Intelligence collaborated with MyWorkChoice to survey 2,000 US HR leaders and hourly workers. The study revealed that we’ve reached a critical turning point: Nearly all leaders (94%) and hourly workers (87%) felt that hourly workers should receive the same, or some of the same, benefits as salaried employees. The evidence is growing that employers who want to remain competitive in today’s marketplace should consider rethinking their benefits for hourly workers, especially flexibility.

The topic of workplace flexibility has been researched for decades, yet there is little consistency in its definition. One group of researchers analyzed trends across 186 studies of work-life flexibility and came up with the following definition: Employment scheduling practices that are designed to give employees greater control over when, where, how much, or how continuously work is done. Many practices fit within this definition, including flexible scheduling, remote work, reduced workload, and paid sick or parental leaves.

However, the Fair Labor Standards Act (FLSA) does not address flexible work arrangements – these are handled between the employer and the employee. While some states have laws requiring that employers offer certain benefits to part-time employees, flexibility is rarely part of the package. The irony is that salaried workers are often far less financially, physically and psychologically stressed than hourly workers, yet they are generally given much more flexibility. Adding to this irony, research shows that the association between work schedule flexibility and employee happiness is stronger among hourly workers versus salaried workers.

Our survey results confirmed that hourly workers benefit immensely from increased flexibility. Nearly four out of five said it helps them to better manage their commitments, reduce their stress and anxiety, be more productive, and earn additional income. Over two-thirds of hourly workers said that having more flexibility makes them want to stay at their company longer, increases their job satisfaction, and improves their overall well-being. Companies stand to benefit as well. Offering flexibility to hourly workers has helped businesses increase employee satisfaction, retention and productivity, while reducing absenteeism and overtime.

In addition, employers who offer flexible work arrangements have a distinct competitive advantage during the hiring process. Almost all leaders (97%) said that flexibility is important to their overall HR strategy, while 78% of hourly workers said it’s an important factor when choosing an employer. Not surprisingly, younger generations were even more likely to say flexibility is important – something to consider for companies looking to recruit the next generation of talent. And employers should note the effect of this key benefit on talent retention in addition to recruitment. Nearly one in five hourly workers (18%) said that a lack of flexibility is the leading reason why they would quit their jobs.

Despite the benefits of offering flexibility to hourly workers, only the most progressive employers currently do so. Yet our study found that 88% of employers and 86% of hourly workers believe that hourly workers should get the same (or some of the same) degree of flexibility as salaried workers. Of course, it’s true that not every employee can have access to the same types of flexible arrangements. However, both employers (90%) and hourly workers (84%) agree that it is possible for hourly workers to have flexibility even if they have to be physically present to perform their job.

There’s a clear gap between the current reality for hourly workers, and the perceptions revealed in our study. Why do so few businesses offer benefits like flexibility to their hourly workers, if so many believe these workers should be treated the same? And what are they doing to close that gap? Almost three-quarters of employers already allow their hourly workers to choose their own shifts, 87% are discussing a flexible hourly worker programme, and 80% are open to it. But only 27% said they recognize the benefits of such a programme, indicating that work-life flexibility still remains a poorly understood concept.

Despite this gap in awareness, our research shows that many employers recognize the critical role they play in creating a workplace that meets the work-life needs of their hourly employees. As COVID-19 continues to put added stress on these workers and their families, forward-thinking companies would be wise to re-examine their approach to offering benefits, including flexible work arrangements. Those that do so will benefit from more satisfied and productive workers, and a greater ability to attract and retain the best talent.