News Spotlight

Gen Z students sell out. In today’s uncertain economy, many students at elite colleges care more about earning potential than exploration, studying Econ and Comp Sci to ensure them lucrative jobs in tech and finance (The New York Times).

Soft skills are needed in the AI boom. While AI may put many jobs at risk in the future of work, economists predict that new opportunities — and higher wages — might be coming for those whose work prioritizes people skills (The Financial Times).

On-site childcare is on the rise. With no end in sight for the childcare crisis, employers increasingly offer on-site care to workers, but experts caution against overly relying on business to fill the void (AP News).

Stat of the Week

In a new study that examined job postings over the last year, wages for AI-related roles — including programmers, lawyers, and accountants — were found to be 25% higher on average in the U.S. than for comparable jobs that did not require AI skills.

These skills are increasingly in demand for today’s workforce, and more and more companies are seeking workers proficient in the use of AI. Over the past decade, the number of jobs requiring AI skills grew 3.5 times faster than the total of all jobs across all countries studied — signaling that AI is well on its way to shaping the future of work.

Deep Dive Article

How Companies Can Minimize Turnover and Invest in Low-Wage Workers

Is the “Great Resignation” behind us? Many signs point to yes.

U.S. quit rates — the measure of people voluntarily leaving their jobs — have been declining back to pre-pandemic levels, from a high of 3% to 2.1%. And earlier this year, the number of U.S. job openings dipped to 8.5 million, the fewest we’ve seen in 3 years. Today’s tight labor market seems to be cooling, with more workers staying put in their current jobs.

Still, it’s more complicated than these numbers suggest. Quiet quitting and “resenteeism” remain growing trends among today’s workers. Younger workers are more likely to leave their jobs than their older counterparts, with Millennials known as the “job-hopping generation.”

Quit rates also vary considerably from industry to industry, and for certain sectors they remain quite high. These tend to be lower-paying industries, like food service and hospitality with a current quit rate of 4.3%, while higher-paying sectors like finance boast quit rates of 1.3%. Leisure and hospitality workers — many of whom are women and people of color — were especially hard hit during the pandemic, with the sector losing half its workforce in just 2 months. The industry remains unstable, caught in a hiring churn with too many open jobs and not enough workers.

A key driver of this churn is a pattern of underinvestment in the hourly and low-wage workforce. Many of these workers not only struggle to make ends meet but also tend to have minimal access to skills training or career pathways that allow them to progress and grow within their companies. As a result, companies struggle with high turnover and absenteeism, along with declining morale, productivity, and customer goodwill — all of which lead to less revenue in the long run, especially in today’s uncertain economy.

A new report from isolved, which takes a sector-specific lens to explore the current state of employee turnover, finds that the total average turnover is 17.12%. However, like quit rates, turnover varies widely by industry — from just 10.4% in the legal industry to 39.7% in hospitality and 25.6% in food services.

Overall, the report confirms that the industries struggling most with retention are also those with the lowest average salaries — $35,512 for hospitality and $36,301 for food services, which are well below the average salary of $57,400 across industries. For low-wage earners, there can be little justification for staying in one job when another pays even a little bit more, particularly when their companies are not investing in their growth and well-being with benefits like career pathing, quality health benefits, and adequate paid time off.

Of course, solving high turnover will look different for different industries. However, with low-wage earners leaving their jobs at much higher rates, there are some key investments employers across sectors can make to improve retention. This will not only help workers build better lives but also foster better business outcomes.

Where should employers begin? Here are 5 investments employers can make to keep their workers in the long term:

4 Ways Companies Can Minimize Turnover Among Low-Wage and Hourly Workers

1. Provide competitive compensation and benefits.
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   ​This should go without saying but it is essential to prioritize first and foremost when considering the experience of low-wage workers. Employers should pay a fair wage that reflects the local cost of living, ensuring that workers can support themselves and their families. Doing so helps minimize employees’ financial stress, increase their purchasing power, empower them in the workplace, and reduce their need to look for other work.​
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   ​As part of competitive compensation, employers should also provide comprehensive benefits packages to their low-wage and hourly workers, including health insurance, retirement plans, paid time off, and bonuses. Even modest improvements in these areas can significantly boost worker satisfaction and loyalty.
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2. Offer career development and training.
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   For workers stuck in low-paying jobs — and sometimes multiple low-paying jobs to make ends meet — the long hours and low wages make it difficult to build new skills to help them move onto higher-paying jobs, either internally or externally. Companies should offer regular training programs that help workers acquire new skills and improve existing ones, including on-the-job training, workshops, or access to online courses.
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   Additionally, to foster employee retention, employers should create clear career pathways that outline how employees can advance within the company. Providing opportunities for promotion and development can help workers grow beyond low-wage jobs and motivate them to stay long-term.
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3. Cultivate wellness and work-life balance.
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   ​Many low-wage industries are customer-focused, with employees working in person, demanding schedules on a company’s frontlines. To help these employees cultivate work-life balance, implement policies that help balance the demands of their role, such as flexible scheduling, telecommuting options, and adequate time off.​
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   ​The demands of frontline and low-wage jobs can be taxing not only on workers’ time but on their physical and mental health. Employers should introduce wellness programs that help employees focus on their health, including gym memberships, mental health support, stress management workshops, and healthy eating options.
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4. Create opportunities for employee engagement and involvement.
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   Low-wage workers often feel disempowered, unable to voice their opinions or influence corporate strategy. Companies should establish regular feedback mechanisms such as surveys, suggestion boxes, and town hall meetings where employees can voice their concerns and suggestions. In these contexts, it’s important that leaders actively listen and respond to feedback.
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   As part of this, it’s important to genuinely involve low-wage workers — who are often experts on a company’s customer and employee experience — in decision-making. Companies can integrate employee voices in decision-making by establishing worker councils, employee resource groups, focus groups, and open-door policies.

A living wage should lead the way.

Each of the above steps is essential to helping reduce turnover for all employees, especially low-wage earners. Above all, a fair living wage is the most urgent investment that employers can make for their low-wage and hourly employees. Unless they can make ends meet and take care of their families, employees will move on in search of higher wages, fueling the churn characteristic of low-wage jobs.

No matter the industry, company, or job, a living wage must come first. For leaders in different sectors, it’s important to benchmark wages, along with other workplace practices, against industry averages and top-performing peers.

Dig into isolved’s report for more industry-specific insights — from Retail to Hospitality to Healthcare, and more — on the current turnover challenges companies face, and best industry-specific retention practices to consider.

Thanks for reading — be sure to join the conversation on LinkedIn and let me know your thoughts on this topic.