Automation Could Lead To Further Concentrations of Growth

Automation Could Lead To Further Concentrations of Growth

Urban and rural economies across the U.S. have been on diverging trajectories for years, and unless well-targeted interventions are undertaken, automation could further concentrate growth and opportunity, while causing job displacement in rural areas and smaller cities, a recent report published by the McKinsey Global Institute warned.

“The future of work in America: People and places, today and tomorrow,” was published in July 2019. The analysis of 315 cities and more than 3,000 counties showed that the United States can be viewed as a mosaic of local economies, with widening gaps between them.

The report found that 25 megacities and high-growth hubs, which account for around 30% of the U.S. population, have generated most of the job growth in the country since the Great Recession, with the high-growth industries of high tech, media, health care, real estate, and finance making up large shares of these local economies. The study also identified 54 trailing cities and around 2,000 rural counties, which collectively account for roughly 24% of the U.S. population, that have older and shrinking workforces, higher unemployment, and lower educational attainment. Between these extremes the analysis identified thriving niche cities and a larger “mixed middle” with modest economic growth, which together account for around 30% of the U.S. population. The remaining 16% of the population were categorized as residents of extended suburbs of U.S. cities, or the urban periphery.

According to researchers, these different starting points are likely to determine whether communities will have the momentum to cope with automation-related displacement. They projected that the 25 cities and peripheries that led the post-recession recovery will capture 60% of U.S. job growth through 2030, while the mixed middle and trailing cities will see modest job gains. By contrast, the analysis showed, rural counties are likely to experience a decade of flat or even negative net job growth. Researchers added that these shifts are occurring at a time when geographic mobility is at historic lows: while 6.1% of Americans moved between counties or states in 1990, this figure had declined to 3.6% by 2017.

The report also found that although the next wave of automation will affect occupations across the country, displacing many office support, food service, transportation and logistics, and customer service roles, the U.S. economy will continue to create jobs, particularly positions in health care, STEM fields, and business services, as well as roles requiring personal interaction.

Researchers observed that the challenges employers will encounter as a result of these trends will vary depending on the nature, mix, and geographic location of their workforce. For example, researchers noted, the challenges facing a retail or food chain with a distributed customer-facing workforce are not the same as those facing an employer with a geographically concentrated white-collar workforce.

“All employers will need to make adept decisions about strategy, investment, technology, workflow redesign, talent needs and training, and the potential impact on the communities in which they operate,” the report concluded.

U.S. Companies Prefer To Promote From Within

U.S. Companies Prefer To Promote From Within

It is common for American companies to promote from within the organization, and women employees tend to be promoted to management positions earlier than their male counterparts—but face a glass ceiling at higher management levels—the results of a recently published study by ADP Research Institute indicated.

The “2019 State of the Workforce Report: Pay, Promotions and Retention,” was released on April 16. The study provides organizational benchmarks derived from the aggregated actual HR and payroll data for January 2018 of more than 13 million U.S. workers employed by around 30,000 companies across eight industry sectors that have at least 50 employees. The aim of the report is to help employers gain a better understanding of the hierarchical structure of organizations, pay levels, employee retention, and the connection between pay and promotions.

The study found that, overall, employers promoted 8.9% of their employees annually, and those promoted employees received an average wage increase of 17.4%. More generally, the analysis showed that of the workers studied, 84% had non-supervisory roles, while 16% had management or professional roles; and that the average length of time an employee worked for an employer before receiving a first manager promotion was 6.9 years.

The research further indicated that companies were more likely to promote internal employees for management positions, and that the percentage of internal hires increased at higher levels in the organization: over a one-year period, 17.2% of managers were promoted, while 15.6% were new hires; and at the highest management level, 21.5% of managers were internally promoted, and only 12.5% were new hires.

In addition, the study found that women were promoted slightly earlier than men, they tended to hit a glass ceiling at the fourth level of management. The results showed that while the average number of years to first manager promotion was 6.6 years for women and 7.3 years for men, there was a steep decrease in the likelihood of being promoted for women at the third level of management, and this decline became more pronounced at each level of advancement, the overall promotion rate was found to be 8.4% among women, compared to 9.3% among men.

The analysis also showed that the average hourly wage across all workers was $29.03, with managers earning an average of $47, and non-managers earning an average of $25. The average hourly wage for women was found to be $25 and hour, or 79% of the $32 average hourly wage for men. Researchers observed that the ratio of women’s to men’s pay reached a high of 82% at the fourth level of management, but then declined to 77% at the top management levels.

Moreover, the study found that the total monthly turnover rate, defined as the percentage of employees who separate from their employer, was 3.2%, with 1.8% leaving for voluntary reasons and 1.4% leaving for involuntary reasons. The turnover rate was shown to be much higher among employees who had been with the company for less than four years (5.1%) than among employees who had a tenure of four to six years (1.5%). Not surprisingly, the turnover rate was found to be lowest among workers with a tenure of more than 12 years (0.8%).

Broken down by industry sector, the analysis showed that the monthly turnover rates were highest in the trade/ transportation/utilities sector, which includes retail (5%); followed by leisure & hospitality (4.4%). Much lower turnover rates were observed in manufacturing (2.1%), finance/insurance (2.2%), and education/health (2.4%).

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From Benefit Trends Newsletter, Volume 62, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2019 Liberty Publishing, Inc. All rights reserved.

Recent College Graduates Are Increasingly Willing To Forego Pay for Personal Fulfillment

Recent College Graduates Are Increasingly Willing To Forego Pay for Personal Fulfillment

As the strong labor market gives job seekers the confidence to enter occupations that reflect their interests and values, recent college graduates are expressing more interest in jobs in the arts and social service sectors and less interest in business and finance than they did in the past, according to the results of an analysis of job seeker activity on recruitment website Indeed.

In an article published on April 11 on the Indeed Hiring Lab website, “Today’s Recent College Grads Prioritize Passion Over Pay,” economist Nick Bunker presented an analysis of data from 2018 and 2014 on job seeker interest in various occupations among recent college graduates; defined as workers with a college degree who were between the ages of 22 and 27. Job seeker interest was measured by clicks on postings on the website.

The analysis identified which jobs were getting more attention from recent college graduates by determining which occupations recent graduates were more likely to show an interest in than the average Indeed job seeker. The results showed that new graduates were far more inclined to click on jobs in the broad categories of arts, design, entertainment, sports, and media in 2018 than they were in 2014. Other occupational categories that attracted more interest among recent graduates over the period were community and social services, law, education, training and library, and health care support.

Bunker also noted that a more detailed comparison of job search activity among recent college graduates in 2014 and 2018 confirmed the shift toward arts and entertainment, as graphic designer, film and video editor, writer and author, and photographer were on the list of the top 10 occupations that drew increasing attention from new graduates.

By contrast, Bunker reported, interest among new graduates declined between 2014 and 2018 for occupations in the broad business and finance categories, as well for jobs in production; fishing, farming, and forestry; sales; construction; and extraction. He added, however, these jobs remained relatively popular in 2018, and recent graduates were still more likely than the average job seeker to click on jobs in all but one of the occupations on the list of 10 jobs for which interest declined the most.

“A tighter labor market is giving new job seekers the security to seek out occupations that might be a better fit for them personally,” Bunker said. “This is great news for employers in the arts and social services, but employers hiring for business and financial roles might have to recruit more actively than they did a few years ago.”

From Benefit Trends Newsletter, Volume 62, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2019 Liberty Publishing, Inc. All rights reserved.

Salaries Are Projected To Surge Due To Global Talent Shortages

Salaries Are Projected To Surge Due To Global Talent Shortages

Compensation for highly skilled workers could rise sharply in response to global talent shortages, which could jeopardize the profitability of companies and threaten their business models, a new study conducted by executive recruitment firm Korn Ferry has warned.

The study, released on June 20, examined the impact of the global talent shortage on payrolls in 20 major global economies at three milestones: 2020, 2025, and 2030; and across three sectors: financial and business services; technology, media, and telecommunications (TMT); and manufacturing. The aim of the study was to measure how much more employers might be forced to pay workers above normal inflation increases.

The results of the analysis showed that if salaries continue to increase at their current rate, $2.5 trillion could be added to annual payrolls globally by 2030. Broken down by sector, the study found that financial and business services face a potential wage increase of more than $440 billion by 2030; or more than double the wage premium of the other sectors examined. The findings also indicated, however, that the wage premium for TMT could almost triple within the next decade, jumping from more than $59 billion in 2020 to $160 billion by 2030; while manufacturing could face additional salary increases of more than $197 billion by 2030.

The study also found that surging salaries will have a huge impact at the country level, with U.S. and Japanese companies seeing the largest increases: according to the analysis, the U.S. is projected to face a wage premium of more than $531 billion by 2030, while Japan is on course to pay an additional $468 billion in compensation by 2030.

The results further showed that the average pay premium (i.e., the amount employers have to pay above the amount salaries would have risen over time due to normal inflation) per highly skilled worker by 2030 across the 20 economies studied is $11,164 per year. The countries projected to face the largest wage premiums per year per highly skilled worker by 2030 are Hong Kong ($40,539), Singapore ($29,065), and Australia ($28,625).

Researchers observed that smaller markets with limited workforces are likely to feel the most pressure: for example, Singapore and Hong Kong are projected to experience salary premiums equivalent to more than 10% of their 2017 gross domestic product (GDP) by 2030. The analysis also found that while the UK and France have a better short-term outlook, by 2030 the UK’s wage premium could be equivalent to 5% of its 2017 GDP, and France’s could be equal to 4% of its 2017 GDP.

Turning to the largest Asian countries, the study estimated that by 2030, China may see an additional salary increase of more than $342 billion. Researchers noted that India is the only economy in the study expected to avoid a surge in wages because, unlike the other countries in the sample, India is projected to have a surplus of highly skilled talent at each milestone.

From Benefit Trends Newsletter, Volume 61, Issue 8

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Employees Want Managers Who Are Approachable and Transparent

Employees Want Managers Who Are Approachable and Transparent

The quality of the manager-employee relationship has a large impact on job satisfaction and retention, with employees saying they place considerable value on working with managers who are approachable, transparent, and honest, according to the findings of a survey conducted by human capital management solutions provider Ultimate Software.

The results of the survey of more than 2,000 U.S. employees and managers, which were released on December 4, 2017, revealed that there are complex differences in perception and experience between managers and the people they manage. Of the employees surveyed, 93% said that trust in their direct boss is essential to staying satisfied at work, and more than half indicated that if they aren’t satisfied at work, they can’t put forth their best effort.

The findings further suggested that a good manager-employee relationship can play a significant role in retention, with more than half of the employees saying they would turn down a 10% pay increase to stay with a great boss. However, while the survey found that 75% of the employees consider approachability to be the most important quality in an effective manager today, only half of these respondents said they have an approachable manager.

The survey also looked at how well managers and employees communicate. The results showed that whereas 80% of the managers think they are transparent with their direct reports, only 55% of the employees agree that their managers are transparent. While the bulk of the employees polled said they feel comfortable communicating, 57% of the managers surveyed indicated they wish their reports would be more open about what is on their minds.

In addition, the results showed that of the managers surveyed, less than half reported having a mentor who gives them guidance on how to be a better leader, and 45% said they have never received formal management training. But despite this lack of training, the managers expressed confidence in their skills: only 16% acknowledged that they frequently make mistakes, and less than one-third admitted that they do not know what to do in personnel situations. Whereas 71% of the managers surveyed said they believe they know how to motivate their team, only 44% of the employees agreed that their manager knows how to motivate them.

Finally, researchers warned of a possible end of “the manager” as we know it: 80% of the employees surveyed indicated that they think they could do their job without managers, and deem them unnecessary.

From Benefit Trends Newsletter, Volume 61, Issue 2

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Job Candidates Avoid Negotiating Pay with Prospective Employers

Job Candidates Avoid Negotiating Pay with Prospective Employers

A majority of workers report that they do not attempt to negotiate their compensation when applying for a job, even though more than half of employers claim they are expecting candidates to make a counteroffer, according to the results of two surveys recently conducted by the online recruiter CareerBuilder.

The results of a survey of 2,257 hiring and human resource managers conducted August 16-September 15, 2017, and of a second survey of 2,369 full-time employers and 3,462 full-time U.S. workers conducted May 24-June 16, 2017, showed that 56% of workers report that they do not negotiate for better pay when they are offered a job. When the respondents who indicated they avoid negotiating were asked why, 51% said they do not feel comfortable asking for more money, 47% said they are afraid the employer will decide not to hire them, and 36% said they do not want to appear greedy.

By contrast, 53% of the employers surveyed indicated they are willing to negotiate compensation on an initial job offer for an entry-level worker; and 52% reported that when they first extend a job offer to an employee, they typically name a lower figure than they are willing to pay to leave room to negotiate. When asked to estimate how much lower their initial offer tends to be relative to the amount they are ultimately willing to offer, 26% of employers said their initial offer can be more than $5,000 less than their final offer.

The survey results also revealed some of the characteristics of the workers who are more or less likely to negotiate: workers aged 35 and older (45%) were slightly more likely than workers aged 18-34 (42%) to say they negotiate the first salary offer, and a higher share of men (47%) than of women (42%) reported that they negotiate pay when offered a job. Broken down by industry, the results showed that information technology workers (59%) were the most likely to say they negotiate salary, followed by workers in sales (55%), financial services (53%), and healthcare (48%).

When asked what motivates them to do their job, 71% of the workers surveyed said the ability to provide for themselves and their families, followed by money (63%), the ability to make a difference (38%), and the ability to create something meaningful or cool (21%).

The findings further showed that even though money is a top priority for workers, 79% of the workers surveyed said they do not earn their desired salary, with 36% reporting they do not earn anywhere near their desired level, and 58% saying they do not think they are better off financially than their parents. Moreover, while only 8% of respondents reported that they currently earn $100,000 or more, 21% said they feel they need to earn $100,000 or more in order to be successful.

Researchers also emphasized that workers who lack the courage to ask for a raise might be leaving money on the table. While 63% of the employers surveyed said they feel they have to pay workers more because the market is getting more competitive for talent, 51% of the workers polled admitted they have not asked for a raise.

From Benefit Trends Newsletter, Volume 60, Issue 12

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.