Retaining Low-Wage Workers

Low-wage workers, typically concentrated in the service industry (e.g., in fast food and retail positions), have the lowest retention rates of all American workers. Fast food workers, of all ages, have a particularly low retention rate, reporting on average 2.2 years with their current employer. But is the low retention of low-wage workers a problem that can be easily resolved?

Retaining Low-Wage Workers

To some extent, the low retention rates of workers in the service industry reflects the industry’s demographics. The service industry has historically had the highest percentage of workers between the ages of 16 and 24 and to be fair, many young people are just passing through. Working as a barista or store clerk, for example, is just a step in many young people’s journey into the work world. As reported in the 2014 Bureau of Labor Statistics’ report on employee tenure, the medium tenure with a current employer for 20 to 24 years old is 1.3 years compared to 25 to 34 years olds who report 3.0 years on average.

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But high school and college age students are not the only people who occupy low-wage service industry jobs. Adults from some visible minority groups, women and people with lower levels of education are also more likely to land low-wage service industry jobs. And next to teenagers, adult women who identify as Hispanic or Latino have the lowest employment tenure—a majority have been with their current employer for 12 months or less.

Adult low-wage workers’ reasons for leaving their current jobs are different from the reasons typically given by young workers and by no means surprising. The work is often physically difficult but lacks stimulation, there is a perception that it is unappreciated by customers and employers, the wages and benefits are often too low for an adult to cover basic expenses, and opportunities for advancement are either limited or nonexistent. Retaining low-wage workers is contingent on many factors, but first and foremost, low retention consistently correlates with low levels of job satisfaction, and this is where effective training can have an impact.

1. Adopt a Skill Acceleration Model: Hire every employee with the aim of having them fill more than one position in your organization over time. The more skills employees acquire, the more valuable they will be within the organization’s structure and the better they will feel about the organization and their future place within it. When this translates into higher retention, the benefits are shared by workers and the organization.

2. Approach Training as a Benefit: Don’t frame training as something that employees must do to get or keep their current position. Frame training as an opportunity for employees to diversify their work skills on the job. In other words, frame training as a type of continuing education. When workers see training as a benefit—something that holds the potential to enrich their lives and job currency whether or not they stay with their current employer—company loyalty is enhanced.

3. Incentivize Training: Reward employees who participate and successfully complete training courses by giving them increased responsibilities and/or compensation. Send out a message that participation comes with rewards that extend beyond the training event or course.

4. Recognize that Low-Wage Workers are a Source of Knowledge: In the service industry, low-wage workers frequently have the most frontline contact with customers. For this reason, bus boys and sales clerks often have invaluable insights to share about customer demographics and products. By creating mechanisms through which low-wage workers can share their experiential knowledge, organizations can generate valuable data while simultaneously pulling low-wage workers into higher-level thinking and strategizing processes. When low-wage workers feel valued, job satisfaction increases and so do retention rates.

Due to the high number of young people in the service industry, it will likely always suffer from lower retention rates than other industries. Finding ways to hire, train and retain the adults who also work in the service industry, however, holds the potential to pay back. Hiring workers costs businesses thousands of dollars every year while retaining them saves just as much money. More importantly, turning low-wage workers into future managers is good for morale, continuity and a company’s reputation as a great place to work.

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