How to Retain Minimum Wage Employees

Minimum wage jobs include such occupations as cooks, fast food workers, hosts, hospitality workers, dishwashers, cashiers, childcare workers, waiters, bartenders, and retail workers.  Low wages and few, if any, benefits are typical.  But with the pandemic, many workers have concluded that those conditions are no longer acceptable. A Georgetown University article reports, “The pandemic shook up what workers want and expect from a job. America cheered frontline workers during the early days of the pandemics…But these workers’ wages remain too low to cover rising housing, education, and health care costs.”

Organizations can make a positive impact on retaining minimum wage employees by developing focused plans to address typical issues that lead to turnover. Offering fair compensation is vital, and organizations must remain within their financial budgetary boundaries; however, addressing non-monetary issues is another key component.

Employee Engagement and Recognition

Gallup research indicates that having a “bad” manager compounds employee stress and impacts their well-being, affecting both home life and work. Managers can have a significant impact on employee engagement, with engagement defined as, “the emotional commitment, enthusiasm, and dedication the employee has to the organization and its goals” (see this Forbes article for further discussion). Employees who feel as though their managers are invested in them as people are more likely to be engaged and less likely to look for opportunities elsewhere. The best managers make a concerted effort to get to know their employees and help them feel comfortable talking about any subject, whether it is related to work or not. They motivate and build genuine relationships, which encourages a productive workplace where employees feel safe enough to face challenges, to share information and new ideas, and to support each another.

Most, if not everyone, enjoys recognition for a job well done. Some prefer quiet, low-key recognition, while others want to be celebrated front and center. Appreciation is an effective means of honoring the hard work and efforts of teams and individuals. Small non-monetary gifts can be quite effective, as are small bonuses or gift certificates.

Development and Benefits

The desire to learn and grow is a basic employee need. Many minimum wage employees are students, working to advance to better paying jobs by continuing their education. Others are interested in working their way up to management or technical careers. Companies that offer mentoring, formal coaching, development opportunities, or tuition reimbursement demonstrate a willingness to invest in the employee as a person, encouraging loyalty and positive branding of the organization. Leaders should continually invest in learning and development opportunities for all employees.

Many minimum wage employees are interested in individual and family benefits, such as health care, dental, vision, and life insurance. Often minimum wage positions do not offer any such benefits. If a company can find the sweet spot to offer these to employees at a reasonable cost-sharing level, this is another way to foster loyalty and retention, beyond wages.

Onboarding

Developing an effective onboarding plan – first impressions – is a crucial step in retaining employees. Taking the time to acclimate employees to the company culture and ensuring they know where to find simple things, such as the breakroom and supplies, can eliminate needless frustration and help new employees experience a sense of productivity quickly. Orienting them to the history of the organization, the leaders, strategy, and goals tells employees what is expected of them and that they are part of something bigger than themselves.

Wages

The federal hourly minimum wage is $7.25; California is $14. Addressing a living wage in the time of COVID-19 is tantamount to getting low wage employees back to work.  Some are vaccine avoidant, while the fear of contracting the virus (and its variants) is an ongoing issue among others, creating a complex environment to attract and retain low wage workers. Many companies are getting creative with wages, recognizing that a monetary boost may be the only way to entice typically low wage employees back to work. Amazon recently reported increasing the starting hourly pay rate to $18 to hire over 100,000 employers to support the increase in business. Some Amazon locations are increasing the rate to $22.50 and offering health, vision, and dental insurance, 401(k) plans, up to 20 weeks of paid parental leave, and college tuition reimbursement. The company is one of many increasing average wages in a bid to entice workers, with many retailers forecasting a busy holiday season ahead, which will be hard to navigate with the current labor shortage. Other industries, such as restaurants, are experimenting with paying the full minimum wage instead of the minimum for tipped employees plus tips, adding a 20% service charge to every check, and sharing the tips with entire staff, including those who do not typically share in the pot. For more information on benchmarking wages and help with determining pay rates, visit SalaryExpert’s blog post about compensation planning.

Positive Work Environment

Fostering a positive work environment is a simple non-monetary strategy that all organizations can create. Turnover may be inevitable in some jobs, but showing appreciation, celebrating, having fun, coaching, and mentoring, showing care and concern, and getting to know employees leaves a lasting positive impression that goes beyond money, fostering job satisfaction, productivity, and motivation.