The Business Case For Giving Hourly Workers Flexibility

Before Covid, hourly workers were rarely deemed essential and were treated like second-class citizens. Now, these employees—in sectors such as retail, healthcare, food and agriculture, transportation, and others—are seen as necessary for civilization to run. Yet, U.S. hourly workers, who represent 43% of all essential workers, earn less than $20 an hour and haven't received a raise in over a decade. Research from Gallup also reveals a stark contrast between hourly and salaried workers’ satisfaction with various job aspects, in particular their benefits. Compared to salaried staff, hourly workers report being significantly less satisfied with their vacation time, retirement benefits, pay, safety conditions, job security, opportunities for promotion, health insurance benefits, recognition for accomplishments, and flexibility of hours.

Given the current circumstances, hourly workers’ satisfaction with various job aspects will likely continue to decline. Covid has put enormous strain on essential workers, including hourly employees. At the same time, mass layoffs have forced many people to unwillingly take up hourly, part-time, or gig work to support themselves and their families. Indeed, the future of these workers is one of the biggest labor issues facing the Joe Biden administration. With California recently reclassifying gig workers as employees instead of independent contractors, there is hope that these workers will soon be treated similarly to salaried employees in terms of benefits and the perceived value they add to their organization. 

To better understand the perceptions around benefits for hourly employees, I collaborated with MyWorkChoice to survey 2,000 U.S. HR leaders and hourly workers. The study revealed that we’ve reached a critical turning point—nearly all leaders (94%) and hourly workers (87%) felt that hourly team members should receive the same, or some of the same, benefits as salaried employees. The evidence is growing that employers who want to remain competitive in today’s marketplace should consider rethinking their benefits for hourly staff, especially flexibility.

A long history of (in)flexibility

The topic of workplace flexibility has been researched for decades, yet there is little consistency in its definition. One group of researchers analyzed trends across 186 studies of work-life flexibility and came up with the following definition: employment scheduling practices that are designed to give employees greater control over when, where, how much, or how continuously work is done. Many practices fit within this definition, including flexible scheduling, telecommuting / remote work, reduced workload, and paid sick or parental leaves.

However, the Fair Labor Standards Act (FLSA) does not address flexible work arrangements—these are handled between the employer and the employee. While some states have laws requiring that employers offer certain benefits (usually health insurance) to part-time staff, flexibility is rarely part of the package. However, that could soon change. Recently, Congress introduced a bill called the Schedules That Work Act, which would allow employees to “request changes to their work schedule without fear of retaliation and to ensure that employers consider these requests.” The bill also requires employers to provide more predictable and stable schedules for employees in certain occupations. This is crucial because detrimental practices such as lean scheduling and unstable/variable scheduling have remained commonplace due to the misconception that they are needed to maximize profits.

Despite some progress, change is not happening as quickly as it should. Back in 2009—well over a decade ago—Former First Lady Michelle Obama met with the Corporate Voices for Working Families Board to discuss the importance of helping ALL employees balance work/life and the need for the business community to take a lead role in helping to move this dialogue forward. During the meeting, Mrs. Obama asked the key question: If it is good for the business bottom line, why don’t all companies have flexibility policies? The Board explained that many companies lack information about the benefits of flexibility as well as examples of what works. They emphasized how critical it is to communicate the business imperative and share model business practices for effectively implementing broad-based flexibility.

My hope is that the study we conducted with MyWorkChoice can help move the needle on this, even if just a little. Because I believe we can’t underestimate both the magnitude and the pernicious irony of this situation. Salaried workers are often far less financially stressed than hourly workers, yet they are typically given much more flexibility. Adding to this, research shows that the association between work schedule flexibility and employee happiness is actually stronger among hourly workers versus salaried employees. These team members would benefit immensely from being able to control their work schedules, including having the ability to increase their hours when possible. Yet they are rarely afforded the opportunity to do so.

The moral and business imperative for flexibility

Our study confirmed the importance of workplace flexibility, with hourly workers across all ages and roles reporting numerous positive outcomes. Nearly 4 out of 5 said it helps them to better manage their commitments, reduce their stress and anxiety, be more productive, and earn additional income. Over two-thirds said that having more flexibility makes them want to stay at their company longer, increases their job satisfaction, and improves their overall well-being.

Companies stand to benefit as well. HR leaders reported that offering flexibility to hourly staff has helped their business increase employee satisfaction, retention, and productivity while reducing absenteeism and overtime. Research supports these and other notable outcomes, for example in retail environments. In one experiment at Gap, retail workers in some stores were given more control over their schedules and more regularity in when they were working. The study had clear bottom-line benefits: in participating stores, sales increased by 7%, and productivity increased by 5%. Researchers estimated that Gap earned an additional $2.9 million during the 35-week program, even though the experiment cost only about $31,000 to run.

Employers who offer flexible work arrangements also have a distinct competitive advantage during the hiring process. Almost all leaders we surveyed (97%) said that flexibility is important to their overall HR strategy, while 78% of hourly workers said it’s an important factor when choosing an employer. Not surprisingly, younger generations were even more likely to say flexibility is important—something to consider for companies looking to recruit the next generation of talent. And, employers should note the effect of this key benefit on talent retention in addition to recruitment. Nearly 1 in 5 hourly workers (18%) said that a lack of flexibility is the leading reason why they would quit their jobs.

Despite the benefits of offering flexibility to hourly employees, only the most progressive employers currently do so. Yet, our study found that 88% of employers and 86% of hourly workers believe that hourly team members should get the same (or some of the same) degree of flexibility as salaried staff. Of course, it’s true that not every employee can have access to the same types of flexible arrangements—nor do they necessarily want them. Remote work isn’t possible in some occupations, and flexibility practices linked to reduced workload are typically unappealing for low-income hourly workers. However, nearly all employers (90%) and hourly workers (84%) agreed that hourly employees can have flexibility even if they have to be physically present to perform their job. 

Closing the gap

There’s a clear gap between the current reality for hourly workers, and the perceptions revealed in our study. Why do so few businesses offer benefits like flexibility to their hourly employees, if so many of them believe these workers should be treated the same? And what are they doing to close that gap? Almost three-fourths of employers said they already allow their hourly workers to choose their own shifts; meanwhile, 87% are discussing flexible scheduling and 80% are open to it. But, only 27% said they recognize the benefits of such a program, indicating that work-life flexibility still remains a poorly understood concept.

For organizations that do understand the business case for increasing workers’ access to flexibility, effective implementation depends on many factors. Companies who have succeeded in their efforts often report the use of technology and other tools, staffing according to demand, cross-training (so employees can back up colleagues), management practices that encourage employee involvement and team-based solutions, consistent use of clear policies, leadership, and accountability for support of flexibility, and intentional communication. Perhaps most importantly, business leaders must recognize that there is no “one-size-fits-all” flexibility solution. Every job, company, manager, and employee is unique, and the flexibility policy has to take this into account.

The future is bright for hourly workers—if companies act now

Over 11 years have passed since Michelle Obama questioned why more companies hadn’t adopted flexibility policies for all employees, given the clear benefits to their bottom line. Since then, some progress has been made, but there is still a long way to go. Our research with MyWorkChoice shows that many employers recognize the critical role they play in helping their hourly employees balance work-life obligations. However, some leaders are held back by longstanding beliefs about how the hourly workforce must be managed, coupled with a lack of awareness of the unique stressors these team members are experiencing. As Covid continues to put added strain on hourly workers and their families, forward-thinking companies would be wise to reexamine their approach to offering flexible work arrangements. Those that do so will benefit from a more satisfied and productive workforce, and a greater ability to attract and retain the best talent.

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