A “signing bonus” (also referred to as a sign-on bonus) is a sum of money paid to a new recruit by a company as an incentive to join that firm as an employee. A signing bonus is typically given as a way of making the overall compensation package more attractive to the employee.
In the past, signing bonuses were usually reserved for professional athletes and a privileged few white-collar professionals. Not anymore. Employers are having such a hard time finding needed employees that upfront signing bonuses are becoming the norm across many industries. And the signing bonuses are becoming increasingly larger.
As US employers’ search for workers increases in urgency – especially in the manufacturing, logistics, healthcare and food service industries – truck drivers, hotel cleaners and warehouse workers, among many others, are being offered signing bonuses of hundreds and even thousands of dollars.
Increasingly, openings posted on the popular job search website ZipRecruiter.com in June are offering signing bonuses, whereas few did so in the past. It’s a sign of today’s tight labor market.
The states with the highest shares of job listings which include a signing bonus are Iowa, Missouri, Vermont, Wyoming, Arkansas, Texas and Florida, according to ZipRecruiter. Hiring bonus offers typically start at $500 and quickly rise from there, often to thousands of dollars.
Job postings across various sectors show that a $1,000 hiring bonus is quickly becoming the norm, even in recruiting hourly workers who make between $16 and $25 an hour. The $1,000 hiring bonus is advertised on jobs listed for apartment complex groundskeepers in Texas, movers in Florida, cabinet makers in Georgia, housekeepers in Wisconsin, pool cleaners in New Mexico and welders in Ohio, among many others.
Amazon announced in May that it was looking to hire 75,000 more US workers, offering the $1,000 perk. Amazon signing bonuses are up to $3,000 for warehouse workers in certain locations, including Nashville and others, according to job postings. New employees also get an extra cash bonus on their first day of work if they can show proof of Covid-19 vaccinations.
Amazon said signing bonuses are standard recruiting practice for the online retail giant and the amount depends on local market demand. Cash signing bonuses are attractive to employers because they are a one-time cost and don’t require raising wages for the long-term.
It remains to be seen if cash signing bonuses become a permanent fixture in hiring practices, but for now it looks like they could be here to stay. The question is, why? Many believe it’s at least partly due to the government paying people so much in benefits that they would rather stay at home instead of going back to work.
Others argue the economic recovery following last year’s severe COVID-19 recession is so strong that job candidates can be picky when deciding which job opportunity to take. In any event, employers are having to sweeten the pot to attract new hires.
The job market is particularly hot in Austin, TX where I live. The topic of signing bonuses was being discussed on the AM News/Talk radio station I listen to on the way to and from work a couple of weeks ago. The hosts mentioned they had heard of signing bonuses of $1,000 dollars or more at numerous businesses in the Austin area.
But then they got a call from a gentleman who works for a high-tech firm here in town who said his company offers a cash signing bonus of $5,000 for new hires, and he claimed most of his firm’s competitors were offering the same to attract new employees. He also said his employer was paying $1,000 to any employees who refer new workers to the company.
The bottom line is, the US economy is booming and employers are finding it very difficult to attract new workers as they reopen. Unfilled job openings are at a record high of over 8 million. Meanwhile, the number of unemployed workers stands at over 9 million.
There is a disconnect here. With employers pleading for new workers, and offering generous cash signing bonuses in many cases, why are so many people still unemployed? I maintain it is partly due to the government paying people benefits which are equal to or more than they could make by going back to work.
But there’s more to it than that. Others argue it’s because with jobs being so plentiful, potential workers are being very picky about what jobs they will take. Maybe so, but government benefits will run out at some point. Over 20 states have ended them already.
People will have to go back to work at some point… right? I guess we’ll see just ahead.
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