Recruitment bonuses are no longer solely the domain of executive and professional-level positions at construction firms. As field labor shortages become more pronounced across the U.S., cash incentives are increasingly being used to lure experienced craftworkers as well.
“Signing bonuses are not new, but they are becoming more prevalent,” says Jeff Robinson, president of compensation consulting firm PAS Inc. Unlike the common practice of providing what he calls “mobilization pay” to compensate for relocation costs, contractors now are offering one-time bonuses ranging from a few hundred dollars to upwards of $1,500 per worker.
According to Robinson, a foreman might be offered as much as $3,000, although there may be an expectation that the person will bring other workers along to join the employer’s workforce.
“The advantage of a bonus is that it’s a one-time payment that doesn’t affect base pay,” he says, adding that the incentives usually include a 60- to 90-day employment requirement before they can be collected.
The 2017 survey of workforce shortages by the Associated General Contractors of America reported that nearly a quarter of contractors used bonuses for craft personnel because of difficulty filling positions. The trend appears particularly strong in areas where labor demand is extremely high.
Michael Brewer, CEO of the Brewer Cos., Arizona’s largest plumbing contractor, and vice president of the state chapter of the American Subcontractors Association, reports that “all trades are having problems” finding capable workers to support the area’s commercial and residential building boom. But he says that recent federal restrictions on H-2B visas for seasonal workers have also exacerbated the challenge for some specialty contractors.
Brewer has also had to beef up his firm’s internal referral programs, which provide bonuses to employees as well as new recruits.
Along with increasing payouts, Brewer is considering augmenting legacy payments based on the new workers’ productivity, to offset any concerns that current employees may have about losing their work to newcomers under the company’s compensation structure. “It’s an example of how we’re trying to be creative with what’s already in place,” he explains.
The $10-billion Foxconn Technology Group megaproject now getting underway in southeast Wisconsin could put more pressure on the craft workforce.
“The fear for contractors who are not involved in this project is that the Foxconn contractors will use incentives to lure workers to their project, making labor even harder to get in the other areas of the state,” explains Mark Rounds, vice president of corporate development for Vogel Brothers Building Co., Madison.
Loss of a General Superintendent
Vogel, which does not use incentives for craftworkers, has already lost its general superintendent to the project’s lead contractor “with an offer he could not refuse,” Rounds says.
Although Robinson says recruitment bonuses offer a temporary means for bridging craft workforce gaps, there are downsides, particularly since the current labor shortage has had little overall effect on base pay for craft workers.
“You could have ‘mercenary’ workers who stay long enough to collect the bonus, then leave for another opportunity,” he says. “It’s one thing to get them in the door, but another to keep them employed.”
Brewer worries that reliance on bonuses to “buy a workforce” could escalate into bidding battles among contractors as craft experience becomes an increasingly coveted asset.
“Where does it stop?” he says.