Snow and ice management professionals, as well as other business owners both big and small, are finding themselves short of the one thing they need to thrive and grow: workers. In fact, the Bank of America recently estimated that 4.6 million workers exited the labor force during the pandemic – but only half are expected to rejoin by the end of 2021. This startling statistic comes as no surprise as business owners and managers stare at empty seats around their conference table, in work cubicles, and out in the field.
Instead, owners and managers vainly seek viable strategies to get this labor pool of the sidelines and into their operations.
One reason for the shortage may be that we’re still paying people not to work. Quite simply, for workers earning less than $32,000 annually, it’s more financially lucrative to collect federal and state aid than to pursue full-time employment. After all, benefits for non-workers now average $16 per hour, more than twice the $7.25 hourly minimum wage.
The Biden administration is reportedly taking steps that will make it easier for employers to hire more workers and says Americans must accept a job or lose unemployment benefits. In the Senate, a proposed bill, the National Signing Bonus Act, would convert unemployment insurance’s expanded benefits into a two-month bonus for anyone going back to work. And several states have already, or are on the verge of, eliminating the $300-a-week unemployment benefit extension included in the American Rescue Plan.
Obviously, unemployment benefits are not the only reason workers are remaining on the sidelines. Among those reasons: Many parents are struggling to find childcare with schools remaining closed for in-person learning and child-care facilities experiencing the same worker shortages faced by many businesses. Other workers have said they’re reluctant to return to jobs out of concern they will contract COVID-19, or one of its more dangerous variants.
Finding qualified workers remains the biggest challenge for every business and is slowing both the recovery and growth. Some employers are increasing compensation, offering bonuses and benefits to attract employees. Consider just a few of the strategies in play as snow and ice management businesses search for workers for Winter 2021-22.
REWARDS FOR WORKERS HIRING WORKERS
Imagine, offering a reward to employees who bring another job candidate onboard. These recruiting bonuses, also known as employee referral programs, foster a sense of trust in existing employees to refer good people who they – and everyone else – will work well together.
Of course, for these bonuses to be most effective, there should be some requirements to determine the success of the referral before the bonus is paid. These requirements often include working a set length of time, meeting certain standards, sustaining growth over a certain period and more.
So-called “signing bonuses,” just like those we’re familiar with in professional sports, are becoming more and more common in industry. A signing bonus is money a business gives an employee who has accepted their job offer. A signing bonus is offered to attract well-qualified employees and convince them to accept a job. That bonus is usually in addition to the employee’s salary, benefits and other bonus or commission opportunities.
Bonuses and awards must, of course, be included in an employee's taxable income. Should the bonus or award be in the form of goods or services, employees must include the fair market value of those goods or services in their income.
THE BATTLE OF THE MINIMUM WAGE
While thousands of jobs are available and businesses are finding it increasingly difficult to find workers, many economic experts argue unemployment benefits are not the problem, instead they point to low wages, specifically, the minimum wage. Senate Budget Committee Chairman Bernie Sanders has a simple solution to the problem: Raise wages and pay decent benefits.
The main argument against a nationwide $15-per-hour minimum wage is that it would make labor too expensive for poorer areas, prompting employers in those areas to shed jobs. So far, a local approach to the minimum wage dilemma seems viable as many cities and states pass their own $15-per-hour minimum wage initiatives.
More than half of snow and ice managers (53%) compensate their hourly employees at a rate that exceeds $15 per hour, according to research conducted by Snow Magazine earlier this year. While nearly a quarter (23%) of snow and ice management respondents believe the minimum wage should remain unchanged at $7.25 per hour, the majority (53%) believe it should be raised by at least $3 per hour or more.
When compared against respondents performing snow and ice management, the majority of all research respondents (54%) did not pay their hourly employees more than $15 per hour. Likewise, more than half (54%) agreed the minimum wage should be raised by at least $3 per hour, and slightly less (21%) indicated the minimum wage should remain unchanged.
On an interesting side note, Snow Magazine’s research data indicates nearly half (44%) of snow contractors who already pay hourly employees $15 per hour advocated for a $5 or more per hour pay increase of the minimum wage. The greatest percent (20%) of snow professionals who did not already pay hourly employees $15 per hour indicated they believed the federal minimum wage should be increased by $3 per hour.
Despite the minimum wage stalemate in Congress, the government has employed a number of tactics to help struggling businesses and individuals cope with the economic fallout of the pandemic. These include payroll tax deferrals, forgivable loans and refundable tax credits to reimburse employers for costs incurred providing paid sick and family leave to their employees as a result of COVID-19.
BENEFITS TO ATTRACT AND RETAIN WORKERS
Surprisingly, survey after survey seems to show that it is not money alone that attracts new workers and keeps existing employees on the job. Rather, it is the benefits.
Obviously, no snow or ice removal management operation can be an employer of choice without a good benefits package. Employees are looking for a sense of security in the form of good benefits and retirement packages (a 401(k) is the most common, but there are many other options). Helping employees maintain their health and build a stable retirement shows job applicants – and existing workers – the business values them.
Also treasured by job seekers – and employees – are flexibility and the opportunity to balance work with other life responsibilities, interests and issues.
Job training, educational assistance, and employer-provided vehicles used for business are among the popular – often necessary – working-condition fringe benefits offered by many small businesses.
JOB TRAINING AND EDUCATIONAL ASSISTANCE
Seeking workers “outside-the-box” means job training and many employers are finding ways to use a job-seeker’s previous job experience to place them in new careers. One example given cites the customer service experience of hospitality and restaurant workers – and their ability to stand on their feet during long shifts – as an excellent entry point for light industrial work.
There are also job training and educational cost assistance programs frequently used to attract job applicants – and welcomed by existing workers.
On-the-job training provided by an employer is a tax-free hiring incentive as well as an invaluable “perk” for current employees. Educational assistance and tuition reimbursement are also welcome fringe benefits.
A business with a formal, written educational assistance plan isn’t required to immediately fund the plan, only reimburse an employee’s educational expenses – up to $5,250 per employee, per year and exempt from tax. Educational assistance doesn’t just include tuition assistance, but also payments for books, equipment and other expenses related to continuing education.
WHAT THEY WANT
Among the more common, tax-free employee fringe benefits are the following:
Health benefits. Health benefits are by far the single most important fringe benefit. Health benefits include providing employees with health, dental and vision insurance as well as paying health-related expenses.
Long-term care insurance. This insurance covers expenses such as the cost of nursing home care. While premiums are not taxable benefits, benefits received under the insurance may be partly taxable if they exceed certain limits.
Group term life insurance. A snow removal business can provide up to $50,000 in group term life insurance to each employee tax-free.
Dependent Care. While many working parents may qualify for a tax credit for child and dependent care, up to $5,000 in dependent care assistance can be provided to an employee tax-free.
Working condition fringe benefits. Working condition fringe benefits are anything provided or paid for by an employer to help someone do their job. Local- and long-distance travel, business-related meals and entertainment, professional publications and company cars are all good examples of tax-free working condition fringe benefits.
THE BOTTOM LINE
One evolving method of dealing with the tough labor market involves working without workers. In other words, many snow and ice management businesses are stepping up the automation of their operations.
The government, particularly our tax laws, provide a much needed helping hand with the cost of automating. The current tax laws offer a first-year expensing option that allows amounts spent for new (or used) equipment to be entirely written-off or deducted immediately. So-called “bonus” depreciation is another option for an immediate deduction of 100% of expenditures.
Unfortunately, in order to deduct something, there must be income from which it can be deducted, something far-too-many snow and ice management businesses lack. The alternative for those automation expenditures is the tried-and-true depreciation deduction. Depreciation creates a write-off for a portion of those costs annually – when the recovering business will, hopefully, have income that needs reduction.
To attract talented individuals to work for the snow removal business, as well as to retain qualified employees, employers in today’s job market are offering increased wages, fringe benefits and other perks. With professional guidance, the most successful options could well be the ones that cost the snow removal operation the least.