True Cost of Blue Collar Labor Report

True Cost of Blue Collar Labor Report

Katie Evans-Reber
August 10, 2021

“Blue-collar” is a term that floats around a lot when people talk about staffing, especially with the rise of e-commerce and warehousing jobs that require manual labor. The term “blue-collar” is used to distinguish workers who work in a trade, often involving manual labor, as opposed to white-collar workers, who work in professional jobs. Blue-collar jobs can range from unskilled to highly skilled and include warehousing, manufacturing, custodial work, construction, and more. 

Some people feel that blue-collar has a negative connotation and are moving towards terms like “skilled trade worker” or “technical careerist.” For the purposes of this article, we will use blue-collar to distinguish workers whose jobs involve manual labor and speak to the costs involved with engaging these workers. 

Key Costs Associated With Engaging Blue Collar Workers

Engaging blue-collar workers either as independent contractors or employees can come with a variety of associated costs, some higher than others. If your company is thinking of engaging blue-collar workers, it’s important to understand and plan for these costs. 

Recruitment costs

The first major bucket of costs associated with hiring blue-collar workers comes with the recruiting process. 

These costs include: 

  1. Hiring managers’ salaries
    1. You will have to pay an in-house employee to manage the many moving parts of the recruitment process. 
  2. Job board fees
    1. To post your job and find workers, you must pay the job boards you want to target. For example, if your company is hiring in NYC, you may want to target workers who are searching for part-time jobs in New York and the outlying boroughs of Brooklyn, Jersey City, Yonkers and Newark. Or, if your business needs are temporary, you may want to target workers who are looking for temporary jobs instead. 
  3. Branding efforts
    1. This includes job fairs and recruiting events put on by your company. Many companies use these events to connect with a high volume of candidates at one time. 
  4. Applicant tracking system
    1. This is the software that your recruiting team will use to manage the recruiting process and track all of the candidates you have moving through the process. 

Onboarding costs

Once you have recruited workers and found candidates you want to hire, the next major area of costs is onboarding. 

These costs include: 

  1. Vetting
    1. Whatever tool you choose to vet workers will charge for the service, so you have to anticipate this for any new workers you want to bring onboard. 
  2. Training
    1. Training can be a big cost in terms of time spent. You have to plan out training documentation and a manager or fellow worker who can deliver that training to the new workers. 
  3. Filling out paperwork
    1. This can take some time depending on the worker and the state you are operating in. It’s important to factor this into the onboarding process so you can take care of everything required by law. 
  4. HR team salaries
    1. Typically your HR team will be the ones spending time getting your new workers onboarded, including wrangling paperwork and training schedules. 

Ongoing costs

A major source of ongoing costs for labor is payments or salaries. If you have temporary workers at your business that are independent contractors, then they will be receiving payments that don’t have taxes taken out. They also likely won’t be eligible for any company-sponsored benefits. But that situation is different if you have workers who are classified as employees. 

Employee salaries and associated expenses are a big cost for companies that are hiring blue-collar employees. Even in tax-friendly areas, employers are still responsible for Social Security, Medicare, Federal Unemployment, and State Unemployment taxes. Plus you may be responsible for workers’ compensation insurance, health insurance, and any other benefits you offer. Hiring employees for full- or part-time jobscan come with a lot of associated costs. 

Fixed business costs

Finally, there will always be the fixed costs associated with running your company day-to-day. 

These include: 

  1. Workspace
    1. This includes offices, warehouses, and any other facilities you manage. There will be a lot of fixed costs associated with rent, electricity, internet, supplies, and everything else you need to safely and smoothly run your operation. 
  2. Taxes
    1. This includes business and payroll taxes, which can vary from area to area. It’s a good idea to understand the nuances of what taxes you will owe, especially if you have offices in multiple cities. 
  3. Insurance
    1. This includes all types of insurance, like health, workers’ compensation, liability, and more. Depending on your industry, this can be a substantial cost. 

On-Demand Staffing Solutions Can Help You Reduce Some Staffing Costs

Taking on all of the costs of recruiting, hiring, onboarding, and retaining a blue-collar worker can be daunting, as there are a lot of expenses to think about. That’s why many businesses across the country, including in NYC, partner with businesses like Wonolo that offer on-demand staffing solutions to help them find and engage blue-collar temporary workers. Wonolo helps businesses connect with high-quality, experienced workers in their area without the recruiting and interviewing burdens. More importantly, workers trust Wonolo to connect them with great opportunities, and they are using Wonolo because they want to hit the ground running and get to work. This can reduce a lot of the costs and time associated with finding blue-collar workers on your own. 

Additionally,  connecting with blue-collar temporary workers through platforms that offer on-demand staffing solutions like Wonolo is a great way to find out what kind of worker thrives at your company. It can make recruiting much easier if you have a clear profile of the type of worker you want to fill a particular job. You may even want to convert a temporary worker who is doing well to a different full-time employee role. Your previous engagements with the temporary workers can make the hiring process and transition easier. Wonolo is a valuable tool to utilize as you try to find blue-collar workers to fulfill your business needs.

About the Author:

Katie Evans-Reber, SPHR, SHRM-SCP, joined Wonolo as the Head of People in 2018. She was previously the Head of HR at Gusto, where she helped grow the team significantly. She also spearheaded launching California’s first LGBT-friendly fertility benefit.

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