The Future of Manufacturing Starts With Your Employees Today
The current labor shortage in manufacturing could result in 2 million unfilled jobs by 2030 and a loss of $1 trillion in the U.S. economy, according to a 2021 study on the manufacturing labor shortage.1
This study by Deloitte and The Manufacturing Institute noted that the urgent need to find skilled workers has remained a steady concern for manufacturers over the past few years. 2
One cause of this labor shortage is the perception of manufacturing held by younger generations. While the Baby Boomer generation viewed manufacturing jobs as well-paying, long-term career options, the younger generation that would fill these roles may have a different perception of the industry or be unfamiliar with its opportunities.3
Despite these challenges, manufacturing leaders can hire and retain workers by developing an employee-first culture. Manufacturing employees are the backbone of companies, so an engaged and skilled team is vital to success. Employers should demonstrate a commitment to an employee-first culture backed by improved benefits to help repair lost trust with workers and show that the company is invested in the long-term financial health of its employees.4
Overcoming Current Challenges for Manufacturing Employers
Highly skilled workers keep production lines moving and factories bustling. Without the right people on the line, your plant simply isn’t going to run as effectively as possible.
Let’s take a look at some of the challenges facing manufacturing employers today.
Attract New Workers
More manufacturing facilities open roles across the country as they reshore to the U.S. and an older workforce of Baby Boomers retire. Manufacturing leaders must figure out how to address these trends and fill open roles.4
Amidst this labor shortage, several misconceptions about the industry keep people from seeking careers in manufacturing. Workers may believe that other sectors like retail or services offer better benefits and salaries or that manufacturing is simply not a strong career path.5
Offering employee benefits that actively demonstrate how a company values its employees may boost hiring and engagement. A 2020 DailyPay survey shows that companies who offer on-demand pay through DailyPay benefit from the ability to recruit and fill open positions 52% faster.6
Retain Existing Talent
According to 2020 research from Randstad, almost half of the workers in manufacturing changed their jobs or were considering leaving at the time.7 Disgruntled workers cite a lack of connection with the company and dissatisfaction with compensation and benefits among the main reasons for leaving.8 Across the manufacturing industry, the annual quit rates from the U.S. Bureau of Labor Statistics show an increase from 18.4% in 2017 to 28% in 2021. 9
While the challenge of attracting new workers is the responsibility of a company’s external marketing, awareness and incentive programs, retaining existing talent is more internally focused. Leaders should prioritize workplace culture and employee engagement and instill a sense of value among staff with training, benefits and more.
Adapt to the Digital Transformation
The manufacturing industry is evolving with the onset of Industry 4.0 and the continued adoption of new technologies such as artificial intelligence, machine learning and the Internet of Things.10
As manufacturing employees adapt to changes in their roles and responsibilities brought on by digital transformation, companies can support them with new training and resource initiatives. 11
According to EY, a “people-centric” approach is critical throughout the digital transformation. This approach may help manufacturers plan and scale to improve sustainability and resilience.12
As the increase in automation and robots in factories has made some Americans worry about their jobs, manufacturing employers should prioritize instilling a sense of trust in their employees. They can do this by investing in training and development programs, expanding their benefit offerings and demonstrating their commitment to employee wellbeing through health and financial wellness tools
Repair Employee Trust
Years of offshoring operations13 and 2020 mass layoffs from COVID-1914 have also contributed to a lack of trust between employees and their employers in manufacturing. At the beginning of the pandemic, 1.3 million workers lost their jobs.15 These mass layoffs may make potential hires reluctant to trust an industry that let go of so many employees so recently.
As manufacturers try to rebuild trust with employees in a sector troubled by recent layoffs, industry leaders may find that a holistic focus on employee wellness — complete with improved benefits — can transform operations.
Why Increased Wages Alone Are Not Enough
While many employers have tried to attract workers by increasing wages, this strategy falls short without a robust employee support program.
Research shows that while wages increased by 4.5% between 2020 and 2021, inflation outpaced the rise in wages.16 This means that despite a pay increase, workers may still be struggling to buy necessities and save for the long term. According to data from a recent Harris Poll commissioned by DailyPay and Funding Our Future, 75% of workers struggled to pay their bills this year due to recent price surges.17
In addition to increased wages, companies should also create an ecosystem to support employees with strong benefits.18
Adopt an Employee-First Culture to Improve Employee Wellness and Production
As the industry evolves and works through these challenges, creating an employee-first culture within your manufacturing business is a valuable strategy for improving production yields and quality outputs.
Building a sense of value and worth in the employer-employee relationship may increase employee engagement and satisfaction. Research shows that engaged manufacturing employees have 70% lower turnover rates and a 78% higher safety record19. Additionally, culture-driven organizations experience fewer mistakes, higher productivity and lower absenteeism. 20
As part of this employee-first strategy, companies should consider offering perks that are more aligned with their employees’ desires such as comprehensive and customizable benefits. Meeting these employee desires may result in increased job satisfaction, improved employee retention and better recruiting. 21
In addition to supporting employees, building a strong culture may also help avoid risks and minimize errors.
Support an Employee-First Culture With On-Demand Pay
An employee-first culture may help employers attract top talent, improve employee engagement, reduce turnover, improve morale and inspire innovation.22
According to Deloitte, companies that proactively manage culture demonstrate revenue growth over a 10-year period that is, on average, 516% higher than those who do not.23
Offering an on-demand pay solution can be a part of your employee-first culture and provide additional benefits for your company’s workforce. Eighty-nine percent of employees reported feeling more motivated and productive at work when they had access to their wages before payday. 24
On-demand pay may help employers build an attractive benefit strategy to keep employees satisfied in their roles.
By delivering an on-demand pay benefit, manufacturers can give employees what they’re looking for and make their employees feel supported and valued.
This post is part of the series that will dive into some of the current challenges and solutions for manufacturing employers.
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All information herein is for educational purposes only and should not be relied upon for any other use. The information herein does not constitute the rendering of financial, business, accounting, securities, tax, legal or professional advice by DailyPay. No fiduciary obligation or duty exists or is created, between you and DailyPay. DailyPay does not warrant the completeness or accuracy of any information provided to you.
1 https://www.nam.org/2-1-million-manufacturing-jobs-could-go-unfilled-by-2030-13743/?stream=workforce:DailyPay, 2020
2 https://www.nam.org/2-1-million-manufacturing-jobs-could-go-unfilled-by-2030-13743/?stream=workforce:DailyPay, 2020
3 https://www.themanufacturinginstitute.org/wp-content/uploads/2022/03/DI_ERI-The-workforce-experience-in-manufacturing-Does-manufacturing-need-to-recast-its-image_final-copy-1.pdf:DailyPay, 2020
4 https://www.themanufacturinginstitute.org/wp-content/uploads/2022/03/DI_ERI-The-workforce-experience-in-manufacturing-Does-manufacturing-need-to-recast-its-image_final-copy-1.pdf:DailyPay, 2020
6 https://www.dailypay.com/insights/pay-different-reimagining-employee-pay-in-light-of-the-covid-19-pandemic/:DailyPay, 2020
7 https://www.randstad.ca/employers/workplace-insights/talent-management/5-reasons-manufacturing-workers-quit-their-jobs/:DailyPay, 2020
8 https://www.randstad.ca/employers/workplace-insights/talent-management/5-reasons-manufacturing-workers-quit-their-jobs/:DailyPay, 2020
9 https://www.bls.gov/news.release/jolts.t18.htm:DailyPay, 2020
10 https://www.ibm.com/topics/industry-4-0:DailyPay, 2020
11 https://www2.deloitte.com/us/en/insights/industry/manufacturing/manufacturing-industry-diversity.html:DailyPay, 2020
12 https://www.ey.com/en_us/advanced-manufacturing-realized/creating-people-centric-future-factories:DailyPay, 2020
13 https://www.forbes.com/sites/forbesbusinesscouncil/2020/09/09/why-reshoring-us-manufacturing-could-be-the-wave-of-the-future/?sh=3d32e5cc3bfc:DailyPay, 2020
14 https://www.sme.org/technologies/articles/2020/may/manufacturing-jobs-april/:DailyPay, 2020
15 https://www.sme.org/technologies/articles/2020/may/manufacturing-jobs-april/:DailyPay, 2020
16 https://www.piie.com/research/piie-charts/us-wages-are-rising-rapidly-not-enough-keep-inflation:DailyPay, 2020
17 https://www.dailypay.com/resource-center/blog/gas-prices-inflation-impact-employees/:DailyPay, 2020
18 https://www.cnbc.com/2021/09/01/raising-wages-isnt-enough-to-attract-and-keep-workers-experts-say-.html:DailyPay, 2020
19 https://www.rhythmsystems.com/blog/10-ways-to-improve-employee-engagement-in-your-manufacturing-company:DailyPay, 2020
20 https://www.inc.com/entrepreneurs-organization/how-to-create-a-people-first-company-culture.html:DailyPay, 2020
21 https://www.amwins.com/resources-insights/article/the-bottom-line-of-benefits-for-a-5-generation-workforce:DailyPay, 2020
22 https://www.honestculture.io/blog/employee-first-culture:DailyPay, 2020
23 https://www2.deloitte.com/content/dam/Deloitte/us/Documents/human-capital/us-cons-culture-vs-engagement.pdf:DailyPay, 2020
24 https://www.fisherphillips.com/news-insights/earned-wage-access-tips-for-employers-seeking-to-attract-retain-talent.html:DailyPay, 2020
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