A single of the most consistent findings in labor economics has traditionally been the reality that large companies pay back greater wages than small companies — typically by as much as 20-40%. But in my personal modern examination of Homebase employing details, I’ve uncovered a shocking final result: Businesses with just one particular to four workforce are willing to pay back focus on hourly wages 10% increased than organizations with 20 to 49 employees — making them deserving choosing competition in today’s limited labor market.
Supply: Homebase choosing info (January 2021 – March 2022). Notice: Benefits from regression predicting Ln (goal hourly wage) as a operate of full quantity of employees, condition, thirty day period, yr, month*year, unique organization description (e.g., grocery retail store, pet retail outlet, consulting) and choose position roles (e.g., chef, baker). Managing for NAICS codes or coarse enterprise descriptions produce comparable benefits managing for MSA, metropolis or zip code as opposed to point out yields reliable success, as does estimating models without controls. Treating enterprise staff dimensions as a ongoing variable with a squared-expression yields constant conclusions. Strong, clustered (by institution) normal mistake bars. Design F=32.77***, R2 =.22. All full quantity of employee indicator variables are statistically significant at p < .05 (two-tailed tests) save for the 100 to 249 indicator variable.
How can the smallest businesses afford to pay more?
It all comes down to productivity advantage. Looking into sales data for a select sample of Homebase customers, for example, I’m finding that businesses with one to four employees earn approximately $4,500 more per month per employee than businesses with 20 to 49 employees. So, on a size-adjusted basis, they’re earning enough revenue per employee to pay a higher wage.
What does this mean for small businesses?
As the labor shortage continues, businesses with one to four employees may find they need to be in a position to compete with larger companies in terms of pay.
And for those who aren’t? There’s plenty more any small business can do to attract — and keep — new job candidates, particularly among the new-era hourly workforce.
In a recent survey of 2,000 hourly workers, Homebase found that today’s hourly employees value good leadership over pay. And that’s not all candidates are looking for in a position.
In order of importance, these are the top 10 factors hourly employees consider in a job offer — proving that being a better boss often pays more than handing out a better paycheck, no matter the size of your business:
- Company leadership
- Great co-workers
- Flexible work hours
- A predictable work schedule
- Company culture
- Learning and development opportunities
- Company commitment to sustainability and the environment
- A short commute
- Health insurance
Homebase can help.
A little tech goes a long way with today’s hourly workers.
These are just a few of the ways small businesses can use tools like Homebase to attract — and retain — a great team.
Schedule flexibility and predictability: Homebase gives small business teams peace of mind around schedule predictability and flexibility with an always available digital schedule. Plus, tools that allow them to easily submit their availability and time off, claim open shifts, and swap their shifts with other employees.
Company Culture: Homebase helps small business leaders keep their teams informed and connected with built-in messaging, reminders, and real-time alerts. Plus, businesses can use Homebase to recognize their team’s contributions and build a culture of acknowledgment and appreciation — all while collecting valuable feedback to keep tabs on how their team is feeling after every shift.
Early access to wages: Homebase gives employees early access to up to $250 of their wages with zero interest or fees, making it easy for small businesses to help their employees stay on top of their finances and get ahead, at zero cost to the business or owner.
Interested in more about the state of Main Street and the future of hourly work? Take a look at my latest Main Street Health report.