Unlocking the untapped potential: Why the hourly workforce deserves your full attention 

At Mercer, we're challenging the outdated assumptions surrounding the hourly workforce. Insights from our latest Inside Employees' Minds Survey , combined with conversations with HR leaders at the 2025 WorldatWork Conference, reveal a critical truth: hourly workers are not thriving at the same rate as their salaried counterparts.

Hourly workers are facing mounting financial stress, limited access to workplace flexibility, and a declining sense of belonging and value. Overlooking these realities is a strategic misstep with direct consequences for productivity, retention and your organization's overall performance.

Approximately 56% of the US workforce is hourly.¹ According to our research, the challenges facing this essential group are both palpable and multifaceted, including:

• Financial stress: Nearly three-quarters report increased personal financial stress in the past year, leading half to cut discretionary spending and over a third to reduce savings. This constant burden makes it incredibly difficult to focus on work.
• Lower engagement: Hourly workers consistently report lower levels of engagement, with only 60% stating they feel a sense of belonging and fewer than three-quarters are satisfied with their overall workplace experience. This contributes to a stark reality: only 63% would recommend their employer, a 6% drop from last year.
• Unequal access to flexibility: While knowledge workers increasingly adopt remote and hybrid work models, hourly employees often lack access to the same level of flexibility and control over their work.
• Seeking more than a paycheck: The belief that hourly workers are inherently transient is outdated. Many seek long-term careers and meaningful growth. As Nancy Antoniou, HR leader at the Los Angeles Times, noted, "Many hourly workers are loyal and committed to their employers, building relationships that stabilize the workforce."

While competitive pay is essential, it's merely the starting point. The real opportunity to attract and retain hourly talent lies in reimagining the broader Total Rewards experience. Consider the following insights on how compensation structures can and should be tailored to serve hourly employees better:

• Clarity builds trust: Only 60% of hourly workers understand how their pay is determined and a mere 40% believe they are compensated fairly. This gap is staggering, considering that employees who understand their compensation are eight times more likely to feel fairly paid. Effective communication of pay philosophy and structure matters as much as the numbers themselves.
• Make benefits affordable: A striking 63% of hourly workers struggle to afford healthcare for their families, a figure that drops to just over half for those earning less than $60,000 annually. This is a direct financial burden that impacts well-being and productivity. Innovative benefits and a focus on affordability are critical.
• Career opportunities matter: Contrary to outdated assumptions, hourly workers care deeply about career progression. Yet only 40% believe their employer can help them achieve their goals, and just 60% report receiving clear guidance on the skills needed to advance. Providing transparency around growth paths is critical. As Tammi Markovich of Masco Corporation noted, "Implementing a transparent pay-for-skills program can incentivize flexibility and growth, empowering employees to shape their career paths." Nancy Antoniou echoed this, "Emphasizing the value of on-site university classes and leveraging internal learning systems to build robust internal talent pipelines."

Transforming the hourly employee experience requires bold, human-centric strategies. We recommend:

1. Empower frontline leadership: Supervisors are the most critical touchpoint for hourly employees. Investing in their development, empowering them to address on-the-ground issues and fostering a human-centric leadership style can dramatically improve engagement and retention. Amber Wooten from Clarios shared a powerful example: a CHRO spent time shadowing frontline shifts, uncovering basic unmet needs, like clean showers and proper uniforms, and responded by launching a frontline leader development program to empower supervisors as true advocates for their teams.
2. Rethink flexibility: Flexibility means something different for hourly workers. It's less about remote work and more about having control over shifts, predictable scheduling and a reduced workload. These concrete solutions are what truly support their well-being and prevent burnout.
3. Embrace automation: Automation is a tool for safety, efficiency and flexibility. As Tammi Markovich described, "Implementing automatic palletizers and guided fork trucks at our distribution centers improved safety, reduced injuries and created opportunities for employees to learn new skills, changing the workforce's profile. Crucially, this was achieved without headcount loss, managed through attrition and upskilling initiatives."
4. Go beyond the traditional: Traditional Employee Assistance Programs (EAPs) may not meet the unique needs of all hourly populations. Nancy Antoniou's example of an internal peer-to-peer support group for news media first responders dealing with trauma underscores the need for tailored, empathetic solutions that resonate with the specific experiences of individual employees.
5. Simplify and communicate: Complex incentive plans, while well-intentioned, can lead to confusion and disengagement. Amber Wooten's experience at Clarios highlights the importance of clarity in compensation. There, a performance-based incentive makes up more than 50% of total pay, which is a powerful tool when understood. But even the most well-designed programs lose impact if employees can't easily grasp them. When pay and benefits are communicated clearly, employees are more likely to recognize their value and stay engaged.
6. Foster cross-functional partnerships: Addressing hourly workforce challenges cannot be done in a silo. Finance, Operations, and HR must collaborate closely to design and implement effective programs, ensuring they are financially viable, operationally sound, and truly address employee needs.

The hourly workforce plays a vital role in nearly every industry, and supporting them requires more than traditional compensation levers. These employees are diverse, resilient, and deeply influenced by their day-to-day experience at work.

To harness their full potential, organizations must focus on meeting fundamental needs, empowering frontline leaders, leveraging technology to improve access and efficiency, and communicating with clarity and empathy. This shift isn't about extracting more – it's about creating the conditions for sustained value. Investing in the well-being and engagement of hourly workers is both the right thing to do and a smart, strategic move. It directly fuels organizational stability, productivity and long-term performance.

Is your organization ready to redefine its relationship with the hourly workforce? Mercer partners with forward-thinking leaders to design comprehensive talent strategies that empower your entire workforce, driving engagement, retention and business growth. Connect with us to discover how we can assist you.

_{¹ Characteristics of minimum wage workers, 2023 : BLS Reports: U.S. Bureau of Labor Statistics}