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McDonald's, Uber, Lyft forced to get creative to lure workers amid the labor crunch

·4 min read

A white hot economy has created staffing shortages across an increasingly wide range of sectors— prompting some employers to dangle higher wages and creative bonuses to lure badly needed workers into the fold.

U.S. leisure and hospitality jobs, which sustained the brunt of COVID-19 related losses, have spiked in recent months. Those positions accounted for more than half of May’s employment gains, according to the Labor Department’s monthly report. 

Still, with many employers struggling to fill open jobs, it’s unclear if those gains will be enough to close the employment gap, which is why big companies are trying to give employees more work incentives.

Among beleaguered restaurants, McDonald’s (MCD) recently became the latest to offer sweeteners to potential new hires. According to a report in the Wall Street Journal, the Golden Arches is proposing benefits like child care and tuition assistance, in addition to higher hourly wages.

Another example is the Transportation Security Administration (TSA), which is offering $1,000 hiring bonuses as part of their push to add 6,000 screeners by the end of September. The agency so far has hired about 4,000, a TSA spokeswoman said, as more travelers — some of them unruly — take to the skies again.

The tight labor market is forcing many employers to rethink how they will engage with and reward workers. More and more, the debate surrounding employee perks mirrors the conversations around how employers can lure remote workers back to the office.

After spending over a year at home, people are starting to venture out again in large numbers, even in the face of rising worries about the Delta variant of COVID-19. However, rideshare giants Uber (UBER) and Lyft (LYFT) continue to struggle to bring drivers back on the road, causing longer wait times for customers and ride prices to increase.

While the labor crunch isn’t expected to end anytime soon, both companies are hoping the supply and demand mismatch will recover in the current quarter. But if the imbalance continues, they could consider making fundamental changes that would cater to drivers.

Uber is considering funding education and career-building programs, The Journal recently reported. A spokesperson for Uber, which declined to comment, pointed to the company’s April announcement to provide a $250 million stimulus to drivers.

On the other hand, Lyft is looking for ways to reduce drivers' expenses, a spokesperson told Yahoo Finance.

“We're committed to the success of drivers using the Lyft platform, which is why we've invested in short-term incentives and are also investing in long-term upgrades to the Lyft products drivers use to do their work,” the spokesperson said.

“The new features and partnerships we have underway will help make earning with Lyft even easier, more efficient and more rewarding,” they added.

Why pay hikes, bonuses are 'not sustainable'

Fast-food workers and their supporters join a nationwide protest for higher wages and union rights outside McDonald's in the Harlem section of Manhattan in New York City, November 10, 2015. REUTERS/Mike Segar
Fast-food workers and their supporters join a nationwide protest for higher wages and union rights outside McDonald's in the Harlem section of Manhattan in New York City, November 10, 2015. REUTERS/Mike Segar

The current landscape underscores how companies are “trying to move from the bonus situation to a perk, because just offering bonuses and higher pay is not sustainable,” Michael Sherrod, an instructor at Texas Christian University’s Neeley School of Business, said in an interview.

Even still, those efforts won’t immediately solve the labor issue, Sherrod added, particularly in the gig economy.

Companies that employ gig workers have been under extreme pressure to classify them as full-time employees, a battle that came to a head after California voters approved a ballot measure allowing gig companies to continue classifying workers as independent contractors.

“I would be lobbying for a third designation of some kind of worker who is between a full-time W2 and an independent contractor,” Sherrod suggested.

“I think that's going to be the only solution that's actually going to be able to make it so that gig companies can continue to hire people, but not give them all of the things that are required to hold onto someone full time.”

Still, many drivers have had a taste of what it's like to work outside the gig economy. Some have moved on to other jobs, or are waiting for their unemployment benefits to end, while other gig workers have become more frustrated over rideshare compensation — especially as prices spike.

Even with the high rates passengers are paying, drivers are not getting their fair share of the cut, reports suggest. Meanwhile, activists have pushed for companies to pay a “living wage” to their workers.

“You have a lot of people on YouTube, for instance, who are drivers, who are constantly calling for strikes, are calling for more pay or whatever,” said Sherrod. “And some of them are gaining quite a bit of traction. So you're going to see constant upheaval.”

The labor crunch has prompted a growing number of workers to extract more value, so it may be a matter of time before Uber and Lyft — and indeed, other companies — will listen.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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