Top Challenges for US Businesses with Hourly Workers: 2017 Survey Report

Salina Wuttke

Salina Wuttke

Senior Director of Marketing North America

June 09, 2017

Top Challenges for US Businesses with Hourly Workers: 2017 Survey Report

Salina Wuttke, Senior Director of Marketing North America
June 09, 2017


The State of U.S. Businesses with Hourly Workers

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Before the survey findings are revealed, the following is a brief summary of U.S. businesses with hourly employees and the tectonic shifts they are facing in the workplace.

Top Industries and Growth Trends with Hourly Workforces

According to the Bureau of Labor Statistics, the top industries growing in revenue from 2015 to 2016 and who have the highest number of hourly employees are healthcare (growing 2.7 percent with 19.4 million employees), retail (1.6 percent growth and 16 million employees), food and restaurants (2.2 percent growth and 11.5 million employees), construction (1.5 percent growth and 6.7 million employees), and education (2.2 percent growth and 3.6 million employees).

Download The 2017 Survey Report: Top Challenges for U.S. Businesses with Hourly Employees

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The Rise of Younger and Hourly Workers

With 78 million total hourly workers (60 percent of the total workforce) and 80 percent of hires made annually, the hourly workforce continues to grow year after year. Between 2014 and 2024, the U.S. Bureau of Labor Statistics reported that 9.3 million hourly jobs will be added to the U.S. workforce, representing 94.7 percent of all new jobs. The workforce is also getting younger and younger. According to The Brookings Institute, by 2025 millennials will make up 75 percent of the nation’s workforce. U.S. businesses will have to accommodate these changes in demographics.

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Increasing Wages for the Hourly Employee

Year after year, the wage of the hourly employee per state, city, and county continues to rise. The Bureau of Labor Statistics recently reported that the average hourly wage rose in 2016 by 2.9 percent over the previous year, and according to a recent SHRM article, wages in the U.S. are forecasted to grow by an average of 3.2 percent every year.

Currently, in 2018, companies like Target, Walmart, Starbucks, and Costco have all increased their minimum wage. States like Massachusetts and New York have also established minimum wages above the federal threshold. In fact, Approximately 4.5 million low wage workers in 18 states saw an increase in their paychecks beginning New Year’s Day, 2018.

To learn more about the recent minimum changes in the United States, read the article below:

U.S Minimum Wage Increases in 2018


Increasing Wage and Hour Litigations

It’s critical for U.S. businesses to be compliant with labor laws as Department Of Labor regulatory enforcement and litigation spending is on the rise. The 2017 Annual Workplace Litigation Report by Seyforth Shaw, LLP reports that workplace class action settlements hit a total of $1.75 billion in 2016. While the numbers of wage and hour class action lawsuit filings decreased in 2016 from 2015, it was the second highest number of wage and hour cases ever filed.

The settlement value tripled in 2016 for wage and hour litigations over the last two years. This is due to the total value of the top 10 settlements hitting $695.5 million in 2016, up 50 percent to 2015’s total settlements of $463.6 million and triple 2014’s $215.3 million. A few of the most costly businesses’ wage and hour settlements in 2016 included Outback, FedEx, WalMart, and Bank of America. Retail, construction, leisure, and healthcare were the top industries since 2013 with the highest number of employee lawsuits filed.

In 2016, there was a 76 percent success rate for employee plaintiffs filing wage and hour class action lawsuits, a steady rise annually from 70 percent in 2014. This conveys the U.S. Department of Labor’s increase in their regulatory enforcement of workplace litigations in 2016.


Executive Summary & About the Report

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This survey was conducted to glean insight from U.S. businesses who employ hourly workers and understand the current challenges, priorities, and measures they are taking to accommodate these shifts in the workplace.

The findings in this survey report the following:

  • The top three business challenges are revenue growth/profit margins (39 percent), employee retention/turnover (24 percent) and customer experience (23 percent).
  • 56 percent of respondents feel confident their business attracts the best employee talent anywhere.
  • 44 percent of respondents anticipate business growth of greater than 25 percent over the previous year by the end of 2017.
  • 43 percent of respondents don’t feel that they are in control of their profit margins.
  • 56 percent of respondents do not agree with the statement, “I feel confident with understanding changing labor and healthcare laws”.
  • The least important business challenge for respondents is “Keeping up with Labor Laws/Compliance” (5 percent).
  • Key Insight: These two last bullets are important data points, as understanding changing compliance and labor laws should be a top priority for business owners/managers aiming to protect their businesses from the trend of increasing wage and hour litigations and settlements, as noted in the of State of U.S. Businesses with Hourly Workers section of this report.
  • Summary by Industry: A few industries fared better than others. Restaurant, services, manufacturing and construction industries beat the average responses, while those in the fields of education, retail and healthcare had lower confidence on profit margins and compliance. Production costs, compliance issues, and factors outside of their control have managers lying awake at night. Many also worry about controlling expenses, retaining employees and increasing profits. Read on to see the numbers and why managers are worrying.

About the Report

This report was commissioned and administered by Deputy™ via an online survey (through survey software Typeform) to 4,852 U.S. businesses with hourly employees. A survey was sent via email to Deputy’s U.S. customers and through Intercom (Deputy’s in-app messaging service) to businesses ranging from 3 to 1,455 employees. The survey ran from March 22, 2017, to April 9, 2017. Percentages are rounded to the nearest tenth.


General Points of Interest

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Respondent Demographics:

  • 32% Managers
  • 29% Owners
  • 21% Administrators
  • 8% Supervisors
  • 7% Staff
  • 2% Corporate
  • 1% Shift Managers

Respondents by Industry:

  • 26% Other
  • 21% Retail
  • 17% Services
  • 15% Healthcare
  • 13% Restaurant/Food Services
  • 4% Construction/Manufacturing
  • 4% Education

Respondents’ Anticipated Growth Rate in 2017:

  • 51% Anticipate 0-25% Growth Rate
  • 29% Anticipate 26-50% Growth Rate
  • 10% Anticipate 51-100% Growth Rate
  • 5% Anticipate 100%+ Growth Rate
  • 5% Anticipate a Negative Growth Rate

Respondents Feel They Are in Control of the Profit Margins of Their Business:

  • 25% Strongly Agree They Are in Control (5 stars)
  • 32% Agree They Are in Control (4 Stars)
  • 27% Feel Neutral (3 stars)
  • 7% Disagree They Are in Control
  • 9% Strongly Disagree They Are In Control

Respondents Feel Confident Their Business Attracts the Best Employee Talent Anywhere:

  • 20% Strongly Agree They Feel Confident (5 Stars)
  • 45% Agree They Feel Confident (4 Stars)
  • 15% Feel Neutral That They Feel Confident (3 Stars)
  • 14% Disagree They Feel Confident
  • 6% Strongly Disagree That They Feel Confident (1 Star)

Top Business Challenges/Priorities for 2017:

  • 39% Revenue Growth/Profit Margins
  • 24% Employee Retention/Turnover
  • 23% Customer Experience
  • 10% Staying on Top of Technology and Market Trends
  • 4% Keeping Up with Labor Laws/Compliance

Respondents Feel Confident with Understanding Changing Labor and Healthcare Laws:

  • 14% Strongly Agree They Are Confident (5 stars)
  • 30% Agree They Are Confident (4 Stars)
  • 33% Feel Neutral (3 stars)
  • 14% Disagree They Are Confident
  • 9% Strongly Disagree They Are Confident

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Report: By Industry

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Retail

Retail managers and owners were less optimistic about anticipated growth compared to the general report (all industries). More than two-thirds of those who participated in the study said they only anticipate 0-25 percent growth this year. 32 percent of retail respondents projected growth rates of over 26 percent (12 percent lower than the general report). Less than 3 percent of retail supervisors predicted 51-100 percent growth for their businesses and no respondent expected their organization to grow by more than 100 percent.

Retail respondents felt they were more in control of their profit margins compared to the general report (all industries), as only 27 percent didn’t agree that they were in control of their profit margins (47 percent on the general report). As the retail industry aligned to the general report findings that the top focus was revenue growth/profit margins, the second challenge was delivering great customer experience (24 percent) versus employee retention in the general report (all industries). Retail responses were 4 percent less confident in understanding changing labor and healthcare laws versus all industries.

When asked the open-ended question, “What are your best tactics for controlling profit margins?”, minimizing/controlling discounts and rotating stock to sell items that are getting close to expiration were top recommendations. Another open-ended question was “What is your biggest compliance/regulatory challenge?”, and the common response was accurately tracking employees taking breaks and keeping abreast of differing state labor laws, however, the majority of responses were similar to the general responses (see Tips & Best Practices section below).

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Construction and Manufacturing

In some respects, the construction/manufacturing industry appeared to be more optimistic than other industries. While only 14 percent of the general report (all industries) projected to see more than 50 percent growth in the coming year, 29 percent of construction and manufacturing supervisors said they would see more than 50 percent growth. 57 percent of all construction respondents said they expected between 0-25 percent growth, which is almost on par with the 51 percent overall stats that we saw. This is especially telling because 5 percent of the general report (all industries) respondents said they expected negative growth this year, while none of the direct construction respondents answered negatively.

71 percent felt they were in control of the profit margins of their business compared to 57 percent the general (all industries) report. 57 percent of all construction and manufacturing respondents selected revenue growth/profit margins as the top challenge/priority compared the general average of 39 percent. The top open-ended response to “What is your biggest compliance/regulatory challenge” was adhering to OSHA regulations and healthcare insurance, and the majority of responses were similar to the general responses (see Tips & Best Practices section below).

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Restaurant and Food Service

The restaurant and food services industry was slightly more confident in its annual projections. 57 percent of restaurant/food services participants reported they anticipate a 26 percent or greater increase in business growth over the previous year. This is a 13 percent increase over the general responses (all industries). The restaurant and food services respondents were in line with the general response of feeling 57 percent in control of their profit margins. 48 percent of restaurant and food service respondents feel confident they understood the changing labor and healthcare laws compared to the 44 percent general response. 52 percent feel their business attracts the best employee talent anywhere compared to the general response of 56 percent.

When asked the open-ended question, “What are your best tactics for controlling profit margins?”, providing consistent, exceptional customer service and quality food was the top recommendation as well as tightly controlling labor costs, inventory management and overhead (via cutting out waste and “buying low and selling high”). Controlling marketing discounts helped to also widen profit margins.

Another open-ended question was “What is your biggest compliance/regulatory challenge?”, and the common response was meeting labor and healthcare regulations, but the majority of responses were similar to the general responses (see Tips & Best Practices section below).

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Healthcare

As healthcare laws remain uncertain in the U.S., industry experts remain attuned to the marketplace. This industry appears to have the most synergy with the rest of the business landscape. Almost all of their responses were identical to the average.

A key variance in the healthcare industry was their top challenge/priority. 37 percent of respondents selected employee retention/turnover as their top priority versus revenue growth/turnover as the top challenge in the general report (all industries). Revenue growth/profit margins was second (30 percent). Even more interesting was the fact that not one healthcare respondent noted “keeping up with labor laws/compliance” as their top challenge/priority in this report.

In the open-ended question section, most responses fell in line with the general report (all industries), but the top differing comments for the question, “What is your biggest compliance/regulatory challenge?” was keeping up to date with the ever-changing healthcare laws and regulations and keeping their staff members knowledgeable of changes. This includes insurance changes and stipulations. HIPAA compliance and ensuring staff are properly trained and following the correct procedures to ensure privacy compliance guidelines is their top compliance challenge.

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Education

The education field had the highest percentage who thought they’d have between 0-25 percent growth – at 71 percent, compared to the 51 percent general report (all industries). Only 14 percent said they would see a 26-50 percent growth, exactly half of the 28 percent that the general respondent had.

The education industry doesn’t feel as confident in their knowledge of compliance. 71 percent don’t agree that they feel confident in understanding the changing labor and healthcare laws versus the 56 percent general report (all industries) who don’t agree.

All responses to the open-ended section in the survey fell in line with the majority of the general responses (see Tips & Best Practices section below).

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Services

The services industry’s figures fit in almost perfectly with the general (all industries) survey responses for feeling in control of profit margins (60 percent) and anticipated growth with 50 percent of respondents in the services field expecting between 0-25 percent growth this year. 27 percent said they thought they’d see 26-50 percent growth, and 20 percent of respondents in the services group expected 51 percent or higher percent growth.

Half of the services respondents felt confident that their business attracts the best employee talent available anywhere (down slightly from the 56 percent in general responses). 40 percent versus the 44 percent in general responses feel confident with understanding changing labor and healthcare laws.

On the open-ended question for “What are your best tactics to controlling profit margins?”, services respondents recommended selling their services in a bundled pricing solution and pricing their services at top of market rates. Many tactics also recommended focusing on differentiating their business against the competition and automating and outsourcing to cloud-based solutions to maximize efficiency. Another common tactic was hiring contract or part-time employees to save on healthcare and benefits costs.

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Report: Tips & Best Practices

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This survey included three open-ended questions to offer tips and best practices for other businesses.

When asked, “What are your best tactics for controlling profit margins?” many respondents across all fields said the same thing: controlling costs.

Controlling labor costs by scheduling employees to match customer and sales demands (labor costing) was a top recommendation as it helps prevent overtime and over-staffing. Additionally, conducting frequent reviews of the pricing of goods and services was a top tactic, with recommendations to buy in bulk discount from partners and wholesalers while charging for goods at the top of market rates — all while keeping an eye on the competition’s pricing.

Several suggestions were also made to utilize cloud-based solutions that maximize efficiency and to automate whenever possible. Lastly, providing quality and an exceptional customer experience was a common response for customer retention and acquisition. Overall, respondents commented that with controlling profit margins, increasing revenue is hard, but decreasing expenses is easier to control. Labor and production costs are the keys to a successful business, and being efficient and productive is a top concern for businesses.

Another question asked was, “What are the biggest compliance/regulatory challenges your business is dealing with and how are you responding?”.

Many respondents cited overtime rules, tracking required breaks for hourly workers, minimum wage increases and exempt and nonexempt laws as their biggest compliance issues. The top regulatory agencies cited as most challenging were HIPAA, FDA, OSHA, USDA and FERPA, and the top challenge cited for all of these bodies was ensuring their employees were well trained, held the proper certification requirements and were continually educated on compliance updates.

On a local level, city ordinances (e.g. store signage) create challenges for businesses and, as regulations such as labor laws vary from state to state, many respondents are having challenges keeping their locations and employees in other states informed and compliant. Workers’ compensation and healthcare insurance regulations (e.g. Affordable Care Act) rounded out the top comments, as healthcare rate increases and ever-changing healthcare stipulations keep businesses on edge (e.g. who and what is covered).

A final open-ended question asked was, “Please list best practices for attracting and retaining your best employees.”

As employee retention was a top concern for many of those surveyed, figuring out how to make employees happy should be a top goal this year.

Respondents commented that they recruited their best employees from word of mouth referrals from their top employees, as well as local colleges and the DECA programs in local high schools, and even suggested hiring interns. Many businesses recruited new employees with online and on-site events using various advertising channels like Indeed.com. Many recommended being slow to hire and asking behavioral questions.

Employee retention best practices included giving proper and ongoing training (such as L.E.A.N.), setting clear expectations and goals, and providing ongoing performance feedback. Providing flexibility with employee work schedules and higher wages than competitors was a top retention tactic. This also included giving employees opportunities for advancement. Many respondents cited that creating a fun, honest, and collaborative culture was a key to employee retention, and offering additional perks like free meals, contests, and team building events made employees feel they were valued as “humans” rather than as “tools” for the business.

Lastly, many businesses cited that using technologies to empower their employees helped with retention, such as the installation of a new POS system that increased employee tips by double and the Deputy mobile app that helped their employees better manage their schedules and properly track their time.

One of the top reasons that managers cited for having successful, productive and happy employees is simple: hiring personality over skill. As these respondents understand that company culture is a delicate ecosystem. If someone disrupts it, it could affect the whole team.

Prosperous managers also know that finding talent is one thing, but keeping it is another. They praise employees, make them feel like they’re part of the team and pay them well with bonuses and promotions. Employee retention was a top concern for many of those surveyed, so figuring out how to make employees happy should be a No. 1 goal this year.


Conclusion & About Deputy

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As U.S. businesses are still focusing heavily this year on growing revenues while retaining their top talent, they remain uncertain about the ever-changing compliance landscape, such as labor and healthcare laws. Deputy ensures businesses can address several of this report’s top trends and challenges and provide guidance to several comments made in the open-ended section of the survey.

Addressing the biggest data insight: Businesses need to understand and prioritize compliance and labor laws due to increasing wage and hour litigations and settlements.

Lawsuits can cost businesses — and individuals — serious money.

U.S. businesses should be reviewing their own employee time clock systems to ensure they’re properly recording — and paying for — their workers’ hours.

And there’s a simple solution — workforce management technology. The fact is, this kind of modern technology has systems set in place to help businesses avoid many of the time recording issues faced by most of these top settlements.

Time tracking technology should be a win/win for both the employee and the employer. It should ensure that employees have every hour they work recorded and paid for while employers should be confident they’re correctly paying their workers, and be assured that their systems can’t be cheated.

Older time tracking systems are left wide open to cheating by both the employee and employer simply because they don’t have built-in fraud guards that accurately record when an employee is onsite and working. Employees should be paid for the hours they actually work, and one of the easiest ways to accurately record time worked is to monitor attendance onsite. Employers can do this by equipping their stores with workforce management solutions that have geotagging from a mobile device or facial recognition when employees clock in from a kiosk directly built into the technology.

The solutions are out there, and they are an easy way to help make time tracking fair for workers and their bosses. Various solutions may also include automated attendance recording, which not only gives all parties confidence that the system will accurately record hours worked, but also simplifies work records for payroll.

Ultimately, the right technology makes life easier while also helping protect companies from common issues like fraud, or worse, accusations of mismanagement of workers’ time that could lead to a lawsuit. Moreover, if issues with employees do arise, companies can ensure they are safeguarded by quickly and easily referring back to the technology for reliable documentation that can help prevent litigation.

Ultimately, companies can easily treat employees fairly and pay them what they are legally entitled to through workforce management technology. Take action now and the end result will be not only a more compliant business but a more efficient and enjoyable business for all.

Deputy’s features at a glance:

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Deputy’s employee scheduling feature can empower both managers and employees to manage schedules in an easy-to-use mobile app, saving significant time while giving employees the flexibility they need. This feature enables managers to create optimized schedules in minutes that considers data parameters like employee availability, training, and employee overtime. Businesses can also integrate POS sales data to see real-time wages vs. sales by the minute (labor forecasting). This will grow revenues for the business — addressing the top business challenge this year.

Deputy’s powerful app also includes time and attendance to properly track employee timesheets. Employees can use their smartphones to clock in and out, with options for geo-location tracking for remote employees. The Deputy iPad kiosk app enables employees to clock in and out with photo facial recognition to ensure compliance and prevent buddy punching. The time and attendance feature helps prevent and regulate overtime, and tracks required breaks for the hourly worker. Managers can also review and approve timesheets, then quickly and accurately export timesheet data into payroll with just a tap.

The Deputy app includes communication features like tasking and Newsfeed to ensure compliance while improving employee engagement and retention. With Deputy tasking, businesses can keep track of business processes and ensure employees are properly trained — all from their own mobile devices. Managers and employees can create and assign tasks to complete within a timeframe, and the person who requested the task instantly gets notified via push notification when it is completed. Deputy’s Newsfeed enables seamless communication throughout the business (e.g. healthcare or labor law updates) and provides the ability to send messages to one person, small groups, or to the entire company. Employees can get Newsfeed notifications via email or push notification and attachments can be added with confirmation, enabling businesses to drive compliance by ensuring important information is both accurately communicated and received.

Deputy includes the Journaling feature, a powerful performance management solution that allows managers to track employee performance in real time. This will give managers the tools and reports needed for better and more frequent employee performance reviews, increasing employee engagement and retention.

By using Deputy’s cloud-based technology, businesses can easily manage their employees, adhere to compliance, and grow their bottom lines. More than 30,000 customers in 73 countries use Deputy.

To learn more about Deputy and get a free 30 days trial visit www.deputy.com


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ABOUT THE AUTHOR
Salina Wuttke
Salina is the Senior Director of Marketing in North America and has 15+ years experience in delivering proven growth marketing strategies to software companies.
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