Education as a Benefit: The Best Way to Attract and Retain Low-Income Workers
Posted by Peter Sorensen on January 10, 2024
In the current economic climate, companies face significant challenges in both attracting and retaining minimum wage workers. Despite the implementation of advanced technologies like robotics, self-checkout stations, and AI, there still remains a crucial need for human capital. Their contributions, often at the heart of operational functions, form the backbone of many businesses. To fill this need, a handful of companies have found one of the most effective strategies for attraction and retention: providing education and skills training as a benefit to their low-income employees.
Current labor market patterns
While in the past, slight adjustments in hourly wages, enhanced flexibility, and the occasional sign-on bonus may have sufficed to address staffing shortages among low-wage employees, the landscape has shifted. According to The Harvard Business Review, the efficacy of these traditional financial incentives has diminished.
In today's dynamic job market, where individuals have an array of options and opportunities, addressing workforce shortages demands a more nuanced approach. Companies are now confronted with the realization that they must think innovatively and holistically to not only attract but also retain low-wage employees. The Harvard Business Review continues to state that the most sought-after benefit, beyond increased monetary compensation, is the opportunity for skill enhancement through training and education. Providing education or skill training may appear as a financial burden but this blog highlights that boosting retention and attraction are only two of the many reasons why employee education and training opportunities benefit companies.
Employee education and training: a profitable venture
Some employers may worry that a more educated workforce could lead to increased turnover as employees seek out better opportunities. However, recent research underscores that when a company proactively invests in its employees by providing avenues for skill development and education, the result is not only a more proficient workforce but also one that is noticeably more engaged with their work and more likely to stay with their company. This increased proficiency stems from the fact that skills-aligned education directly improves human capital, and a sense of appreciation and empowerment leads to deeper engagement.
Because most companies do not proactively invest in their lower-wage employees, the prevailing trend is a high turnover rate. According to a report from the Harvard Business Review, a remarkable fifty percent of companies anticipate an annual turnover rate of at least 25% among their low-wage workforce, with an even more notable twenty-five percent preparing for turnover rates exceeding 50%.
This level of turnover not only poses significant operational challenges but also represents a substantial financial burden in terms of recruitment, onboarding, and training costs. It's a cycle that can erode workplace stability, hinder productivity, and impede the development of a cohesive, skilled workforce.
How to determine successful educational offerings
The key to boosting retention lies not only in education but in a strategic blend of qualifications tailored to the specific industry. The recommended approach, as it turns out, is twofold. First, offering an accredited high school diploma to individuals without one, as high school graduates display lower turnover rates. Second, offering custom-designed, on-the-job training in relevant skilled trades. This can help your employees gain confidence at work while growing their careers at your company.
The reality of attraction and retention
This paradigm shift in the labor market illuminates a crucial truth: it's no longer sufficient to rely solely on financial incentives to retain entry-level workers. The evidence is clear - employees are now gravitating towards companies that offer a pathway to career advancement through education and skill-building. If you’re interested in learning more about how Penn Foster can provide the education and training that you and your employees are looking for, book a call with our team.