Hospitality and service workers make up 17% of the workforce. It’s often transient work that comes with low wages for entry-level employees. Hospitality employers can offer better benefits to their workforce to address the specific needs of this employment group.
Among service industry workers,only 42% had access to retirement benefits.
Additionally, only half of those with access to retirement benefits even took advantage of them.
Only 2 out of every 10 service industry and hospitality workers are engaged with their retirement benefits — but why?
The Nature of Hospitality Work
Hospitality workers are unique. The jobs they have are typically part-time.
Because of this, some employers avoid offering benefits. They’re worried employees won’t be at a company long enough to receive them.
But low wages and short tenure shouldn’t mean that employees shouldn’t have access to benefits. Studies show access to financial wellness benefits reduces employee turnover. Employers see an average ROI of $7 for every $1 they spend on a wellness program.
If You Build It, They May Not Come
At first glance, employees aren’t using their retirement benefits because they don’t have access. But as mentioned earlier, only 54% of service industry workers who have access to benefits ever use them.
That means that 80% of the employees in service industry jobs either don’t have access to or aren’t using their retirement benefits at all.
Of the lowest 10% of income earners in the private sector (workers earning less than about $11 per hour), only 33% had access to retirement benefits of any kind. Of those who had access, only 14% are utilizing them. That means that 86% of low-wage hospitality workers aren’t saving for retirement either because they don’t have access to the benefit or because they’re not interested.
This means that for full-time employees, retirement benefits may be a smart choice. But for those working part-time, traditional retirement benefits aren’t cutting it.
Offering the Right Benefits
If many service industry workers aren’t using their retirement benefits, but are taking advantage of both health and life insurance benefits, what financial benefits should employers be offering?
Benefits rollouts should not be a one-size-fits-all solution. Benefits should be adaptive to employees’ needs.
For lower wage employees that could mean easier access to earned wages and coaching on effective budgeting, whereas employees with children may also need access to financial planning or access to affordable childcare.
In a study conducted by the Urban Institute, it found that low-income workers are disproportionately likely to work for smaller companies. Because of this, these firms are often unable to afford to offer benefits to their employees or pay higher wages.
SUGGESTED READING: Overcoming the next recession with financial wellness.
But while individualized benefits may not be available, financial education and wellness programs are inexpensive to implement and maintain and can make a significant difference in employees’ financial lifestyle.
While the culture of benefits adoption should help employees be more future-focused, there are obvious short-term needs that need to be addressed for many hospitality workers first.
If employers are able to focus their attention on providing more financial wellness tools to help employees address the needs actually affecting them, retirement benefits adoption and other long-term benefits will likely see increases over time as well.