Employers are competing more fiercely than ever for workers. More than 11 million jobs are currently open—but just 5.9 million Americans are looking for work. Some 47 million people quit their jobs last year, part of an ongoing Great Resignation.
This labor shortage has sparked a cutthroat competition for talent. Some employers are hoping to entice workers with higher wages. Others are getting more generous with raises to try to keep the staffers they have. New college graduates in some fields are being greeted with six-figure starting salaries.
Meanwhile, 46 million Americans owe a collective $1.75 trillion in student debt. That’s an average of almost $40,000 per borrower.
Most of those with student debt held off on paying it down during the pandemic, thanks to a waiver from the federal government that suspended loan payments, set interest rates to zero, and paused collections on defaulted loans. That waiver will expire on Aug. 31.
There are more millennials with student debt than any other generation. Millennial college graduates devote almost a fifth of their annual salaries to paying back student loans, which keeps millions of them from owning a home or saving for retirement.
It is no surprise, then, that millennials list student loan debt as their top financial concern.
Savvy employers are starting to recognize that helping employees with student loan debt can be an effective recruiting and retention tool, particularly for millennials, who account for a disproportionate share of the Great Resignation departures amid the pandemic.
Pre-pandemic, just 8% of employers like Abbott helped their workers repay student debt, according to a survey by the Society for Human Resource Management. Now, 17%— including the likes of Google, Peloton, and Hulu—offer student loan assistance. Another 31% plan to offer it in the next two years.
Other types of employer aid are also on the rise. Nearly 55% of firms offer debt-management training, up 15% from before the pandemic. One in four companies provides student loan consolidation or refinancing services; another 41% say they plan to implement such programs in the next year or two.
Research shows that investing in employees like this can save employers money in the long term. A Gallup poll estimated that millennial turnover costs the U.S. economy $30.5 billion a year. The cost of replacing an individual employee can go as high as two times that person’s annual salary.
That is why retention is so important. Student loan assistance programs can help cultivate lasting loyalty. According to a survey by the nonprofit organization American Student Assistance, 90% of young workers said they would commit to a company for five years if it provided student loan relief.
We're beginning to see that at Abbott. Under our student loan assistance program, Freedom 2 Save, employees who contribute 2% of their pay toward their student loans are eligible to receive 5% of their pay from the company in their 401(k). Eighty percent of employees under age 55 who have participated in the program since its launch in 2018 are still working for us.
This data suggests that Freedom 2 Save is one of the reasons we’e been able to hold on to our workers. Indeed, our experience could prove instructive to companies contemplating their own student loan assistance programs.
The United States is facing its most intense labor shortage since World War II. Initiatives like student loan assistance programs can better position employers as they compete for talent.
Mary Moreland is the executive vice president of human resources at Abbott.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not reflect the opinions and beliefs of Fortune.
More must-read commentary published by Fortune:
California has an opportunity to shape how the world protects children online
We should stop blaming workers for the Great Resignation–and start looking at the jobs they’re leaving
Web3 is not dead. Here’s what the crypto space will look like in 2030
How to fix the nursing shortage—and recruit the next generation of frontline heroes
I was a senior executive at WeWork before it imploded. Here’s the one behavior that could have saved the company
This story was originally featured on Fortune.com