The Great Layoff: How the Hourly Workforce Can be Saved

With organizations across the country scrambling to cut costs amid economic uncertainty – from halting partnerships with third party vendors, to reducing employee headcount – the concern is palpable as employees work to determine what it all means for their financial wellbeing.

In Q1 2023 alone, U.S.-based companies cut more than 270,000 jobs, a nearly 400% spike, year-over-year. And with layoff rates continuing to skyrocket into Q2, it seems that no industry is immune.

As economy-driven layoffs continue to soar across the country, concern is rising for the hourly workforce in particular, as these individuals need the stability of regular paychecks now more than ever. In fact, recent survey results reveal that 60% of hourly employees were not offered any kind of outplacement support when impacted by layoffs.

As such, we must consider why so many organizations neglect their most valuable workers in this regard; because when the economy bounces back – as it inevitably will –  the demand for these frontline employees will be sure to see a resurgence.

Show Me the Money

As employers everywhere look to tighten budgets, organizations are willing to try whatever they can do to save – no matter how unconventional. Last year, we saw companies across industries pulling part-time workers into full time roles in an effort to pad teams. But now that we’re experiencing economic turmoil, these companies are feeling the budget impacts of those FTEs. It’s not surprising that hiring full time staff leaves businesses in a position more likely to face layoffs when demand slows, as this approach tends to cost employers far more than anticipated.

The cost of hiring or replacing employees is no minor line item, yet it’s often ignored. But the fact of the matter is, the high costs associated with recruitment, hiring, and onboarding cannot simply be accepted as a part of doing business while the economy continues to battle such financial unrest. With inflation soaring and employees looking for higher wages to make ends meet, it’s more important than ever for employers to retain talent and minimize company expenses, which are often exacerbated by heighted turnover rates.

A recent report exploring the true costs of recruitment and employment revealed that a vacancy for a single worker earning $15/hour costs businesses at least $5,832 annually in missed revenue and underutilized resources alone. Not to mention every $15/hour employee hired would have to work for approximately six months to break even on recruiting costs. This time-to-ROI is something that many companies may not be able to withstand in today’s financial climate.

Between HR’s time spent and basic hiring tools utilized, employers spend at least $889 filling just one position. With added costs for missed productivity and workplace impact, it’s no surprise the expenses climb quickly when recruiting new employees.

And the costs don’t stop when the position is filled.

As companies forgo traditional hiring models to bring on full-time employees in an effort to save, it’s critical they realize the cost burdens associated with not only recruiting, but also retaining that employee. The same report showed that the mark-up on recruiting and employing one $15/hour employee for a year is around 63%, leaving employers responsible for dishing out an extra $19,400 on taxes, insurance, benefits, recruiting and ongoing management throughout the year. To hire a 50-person workforce and stay fully staffed, an employer would have to conservatively hire 90 workers over the course of a year; the total cost of which could be upward of $603,000.

With all the added expenses that come with bringing hourly workers on full-time, companies need to consider arming themselves with a hiring model that’s economy-proof if they want to make it out on the other side. 

What Goes Up Must Come Down 

Companies in verticals like retail, supply chain, hospitality and logistics spaces are no stranger to the ebbs and flows that come with peak seasons, and as such, they typically bloat their workforce in preparation for heightened demand. But what do companies do with those workers when demand goes back down?

Fortunately, we’re living in an era where organizations have access to technology-backed tools that can reduce the burdens associated with hiring costs. By combining an agile high-quality workforce with powerful management technology and actionable data, companies are not only easily able to staff up, but they’re also able to scale down when they need to, all while protecting themselves from major financial burdens and good people from yet another sweeping layoff.

Workforce-as-a-Service (WaaS) platforms do precisely that – offering companies a solution to easily manage the variable demands of their business with a flexible hourly workforce that doesn’t require the up-front costs in both time and resources, nor the ongoing costs to retain talent. With access to a dependable WaaS platform in their back pocket (literally), organizations now have access to an elastic hourly workforce so they can tackle the staffing challenges that appear alongside fluctuating demand – something that many organizations are experiencing amid a downturn in business.

Furthermore, deploying WaaS platforms also offer financial benefits and securities to the workers themselves. Specific benefits to the hourly workforce include stable employment, regular paychecks, overtime pay eligibility, and gig-style flexibility. And the benefits don’t stop there – WaaS platforms that work under the W-2 model provide hourly workers with the perks and protections often only offered to full-time employees, such as health insurance, medical and family leave, and workers comp. These benefits provide a critical sense of security to the hourly workforce, taking these financial burdens off their shoulders. 

Using technology and data, workplaces can become more scalable and flexible than ever before, all while employing a high-quality workforce with a lower lifetime cost. Deploying a WaaS platform, organizations can seamlessly reduce employee headcount, without having to make the tough decisions to lay off staff, leaving their people out of work during a time where steady paychecks have never been more crucial. Plus, these platforms provide a softer landing for workers if and when they need to find a new gig, as they only have to onboard once, can build a history of work and attendance, and can quickly pick up the next assignment right from the app.

With WaaS platforms, we have the tools we need to save the hourly workforce from falling into The Great Layoff.

Matt Laurinas is the Chief Customer Officer at Bluecrew, responsible for leading the Sales and Account Management teams. With more than 15 years in the human capital and digital staffing spaces, Matt is an expert in all things future of the workforce, the labor market, and digital staffing trends. Prior to Bluecrew, Matt held leadership positions at CareerBuilder and UberWorks.

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