Why signing bonuses are becoming more common 

During the Great Resignation, employers offered signing bonuses at unprecedented rates and, while the labor market has since cooled, the cash incentive remains popular, especially among in-person roles.

According to a recent study by Indeed’s Hiring Lab, the one-time bonus was included in less than 2% of job postings on the platform before the pandemic, and skyrocketed to a peak of 5.6% in September of 2022. 

Though the labor market is largely back to pre-pandemic norms, signing bonus offers remain nearly twice as common as they were in 2019, and are now attached to 3.7% of U.S. job postings.

“In the last couple years, the trend line has actually diverged,” explains the report’s author and Indeed economist Cory Stahle. “In other words, we saw wage growth start slowing down really fast, and signing bonuses started slowing down too, but not nearly as fast.”

According to the study, the jobs that are most likely to come with a signing bonus require a physical presence and tend to be in a medical field. Veterinarians, for example, have seen a nearly 50% spike in signing bonus frequency since February of 2020, with 12.1% of roles now offering one.

The nursing profession also offers signing bonuses at similar rates, while the physician and surgeon, beauty and wellness, and medical technician fields round out the top five, with the bonus offered with roughly 10% of jobs in each.

“Signing bonuses are most prevalent in jobs where employers are still actively recruiting people at really high levels, and if we look at where those jobs are, we see that those tend to be in healthcare, with a lot of in-person, skilled labor, hands-on jobs,” Stahle says. “On the flip side, signing bonuses are much less common in traditional white-collar, knowledge-work roles.”

A Substitute for Flexibility?

The elevated frequency of signing bonuses in roles that require a physical presence may suggest that in the age of remote work, employers that are unable to offer location flexibility need to find other ways to sweeten the pot. (The Indeed report did not collect data on the average size of signing bonus, but it varies depending on the role and industry.) 

According to a study conducted by Owl Labs, more than half of American workers prefer hybrid work, and more than 38% would not accept a role that required them to be in the office full time.

“The data suggests that many employees value a work-life balance and are willing, in certain instances, to draw lower salaries if they are allowed the option to work remotely or hybrid,” says Owl Labs CEO Frank Weishaupt. “If employers want their employees to work in person, they will need to offer new and improved benefits.”

Weishaupt adds that in-person requirements come with real financial costs to employees. According to the study, workers spend an average of $61 each day on commuting, food, and other expenses related to coming into the office—a 20% increase from 2023—and save about $42 each day they work from home.

“We found that, on average, U.S. workers would sacrifice 8.3% of their annual salary for a flexible or remote working location,” Weishaupt says. “Since our report found that coming into the office can be more costly than working from home, a signing bonus, more than ever, is an acknowledgment that an extra incentive may be needed to fill those in-person roles.” 

Why Employers Should Proceed with Caution

While the added upfront cash might help lure candidates, Weishaupt warns that a one-time payment may not be effective at retaining them over the long run. “Signing bonuses are short-term solutions for issues that will arise again; namely the desire by employees for work-life balance,” he says.

Society for Human Resource Management CHRO Jim Link agreed that it’s risky to use a one-time payment to secure a long-time commitment. That is why he recommends attaching a few conditions to the increasingly popular perk.

“If the employer is intending to pay those [bonuses] upon the start date, we encourage them to have a fallback agreement that says if that employee leaves after a specified period of time, they are due to pay back all or part of it,” he says. “That’s option one; option two, if you don’t want a claw back agreement, is to make that lump sum payment go into effect at a specified time, like after 90 days or 120 days, assuming certain conditions are met.”

Skills Gaps and Economic Uncertainty

The widespread desire for hybrid or remote work among employees may help explain why more companies are leaning on the signing bonus to lure workers into less flexible roles, but that doesn’t tell the whole story. After all, the bonus is just one of many tools employers could use to attract employees, and not a historically popular one in mostmore sectors.

The signing bonus, however, is unique for presenting employers with a one-time cost, rather than an ongoing commitment, which may be particularly appealing in the current economic climate. 

“Employers in 2024 were very cautionary in their overall financial management, particularly as it relates to things that they would have to pay again and again, like substantial pay raises,” explains Link, pointing to both economic and political uncertainty. 

Furthermore, while the labor market has cooled, Link suggests certain roles remain in extremely high demand. “There’s a significant gap between what employers are looking for—whether it be in healthcare or other industries—versus what’s immediately available out there on the market,” he says. “We don’t see in the short-term anything coming that’s going to lessen that gap.”

While those gaps remain, and with lingering uncertainty in the long-range economic forecast, Link believes employers will continue to choose the lump sum bonus over other employee perks for the foreseeable future. 

“My best guess is that this current rate overall that we’re seeing of employers across industries utilizing it, there’s nothing that I see forthcoming that would make me think that that number is going to either substantially increase or decrease,” he says. “This is the new normal.”

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