Annual Wage Growth Continues To Accelerate In a Tight Job Market

Annual Wage Growth Continues To Accelerate In a Tight Job Market

In the second quarter of 2019, wages for U.S. workers were 4.0% higher than at the same point in 2018, with the average wage level increasing $1.09 over the year to reach $28.54 an hour, according to the findings of a quarterly analysis of workforce trends performed by the ADP Research Institute.

The results, released on July 24, indicated that this year-on-year wage growth as of June 2019 was driven by large wage gains for workers in the manufacturing (4.4% wage growth, $29.83 hourly wage) and construction (4.4% wage growth, $28.65 hourly wage) industries. The survey also revealed that the service sector industries that contributed most to annual wage growth were information (4.2% wage growth, $41.56 hourly wage), trade (4.3% wage growth, $25.27 hourly wage), professional and business services (4.1% wage growth, $36.45 hourly wage), and leisure and hospitality services (4.2% wage growth, $17.42 hourly wage).

In addition, the analysis looked at the wage gains of job switchers as of June 2019. The findings indicated that job switchers in the information industry made the largest gains (9.7% wage growth, $41.08 hourly wage), and that job switchers in professional and business services and construction also experienced strong wage growth of 8.3% and 8.7%, respectively. However, the results showed that job holders in trade, the largest sector, saw more wage growth than workers who switched into the sector (5.2% versus 3.8%), but lagged in terms of annual employment growth (0.6%).

Broken down by region, the analysis found that the region with the highest average hourly wage rate as of June 2019 was the Northeast ($31.99), followed by the West ($30.69). Yet the findings also indicated that the highest level of annual wage growth was in the Midwest (4.5%), even though this region had the lowest hourly wage rate ($26.57) and the lowest employment growth rate (1.0%). The results further showed that job switchers in the West had the strongest average wage growth (7.3%), while workers in the South and the Northeast had the lowest wage growth (3.6%). Broken down by firm size, the analysis revealed that workers at large firms had the highest wage growth (5.1%) and employment growth (3.1%) rates.

Researchers observed that the tight labor market is leading companies to increase compensation, with businesses in most sectors having to raise their wages to retain their skilled workers. They also noted that female job holders have been experiencing larger wage gains than their male counterparts: since January 2019, female job holders registered average wage gains of 5%, while male job holders had average wage gains of 4.6%.

Employee Benefit Packages Show Signs Of Stability Despite Cost Pressures

Employee Benefit Packages Show Signs Of Stability Despite Cost Pressures

U.S. employers have largely maintained the status quo in terms of their benefit offerings in 2019, but they are also looking for opportunities to make changes to their benefit programs that lower costs while still enabling them to attract and retain talent in a competitive labor market, according to the findings of a survey published by professional services provider PwC in June 2019.

The “Health and Well-being Touchstone Survey,” which was completed in spring 2019, asked U.S. employers and employees for their views on the current and projected status of their rewards programs. The results indicated that employers expect medical costs to increase 6.5%, or 4.2% after plan changes, from 2018 to 2019. According to researchers, this trend is consistent with the actual increase of 6.2% from 2017 to 2018.

The survey also showed that employers are still seeking to reduce their long-term retirement benefit liabilities, with the shift away from defined benefit plans and toward defined contribution plans continuing. Specifically, the survey found that just 20% of employers offer a defined benefit plan; and that of those, 37% have frozen entry to these plans for new participants, up from 29% in 2018.

While 82% of the employers surveyed said they believe their current plans and practices provide the framework necessary for retirement readiness, less than half indicated that they think that their employees will be ready to retire when they want to. The findings also revealed that the prevalence of retiree medical benefits is continuing to decline, with less than one-third of employers reporting that they provide any kind of stipend, subsidy, or coverage for retiree health costs.

The survey results further suggested that employers are increasingly recognizing the importance of managing employee stress, burnout, and other mental health issues, with the share of employers saying they offer stress management programs rising sharply from 40% in 2018 to 61% in 2019. Researchers pointed out, however, that many of these employers are not incorporating their stress management programs into their overall wellness and well-being programs.

Moreover, the survey asked both employers and employees what they consider to be the most important benefit offerings or employer attributes that would attract and retain employees. A comparison of the responses showed that there is a disconnect between the views of employers and employees. For example, 86% of employees, but just 49% of employers, said they think flexibility and work/life balance options are likely to attract talent; while 74% of employees, but only 18% of employers, said they believe inclusion and diversity are important.

The survey also examined the flexibility, time off, and work/life balance benefits offered by employers. The surveyed employers reported offering full-time employees an average of 10.8 annual holidays, 9.1 paid sick leave days, and 12 paid vacation days. Around 60% of employers said they provide parental leave, with maternity leave being slightly more common than paternity leave. The work/life benefits offered most frequently by employers were found to include mothers’ rooms (89%), walking or stand-up desks (80%), free parking (78%), and on-site gym and/or fitness classes (59%).

Employers Report an Ongoing Commitment to Providing Employee Benefits

Employers Report an Ongoing Commitment to Providing Employee Benefits

While employee benefit offerings are largely holding steady in the U.S. amid a stable labor market and regulatory environment, certain benefits, such as student loan repayment programs, paternity leave, telecommuting, standing desks, and telemedicine are becoming increasingly common, according to the results of an annual survey on employee benefits released by the Society for Human Resource Management (SHRM) on June 25.

In the survey, which was conducted in April 2019, 2,763 randomly selected HR professionals were asked whether over the past 12 months their organization had increased, decreased, or sustained their benefit offerings in certain categories. When the respondents were asked which benefit categories they consider most important, the leading answer was health care, followed by investment and retirement, leave, and flexible working.

The findings indicated that family-friendly and wellness benefits in particular are continuing to grow in popularity. The results showed, for example, that 60% of the employers surveyed currently offer standing desks, compared to one-quarter just five years previously. The survey also found that onsite lactation or mother’s rooms are offered by 51% of employers, up 16 percentage points from 2015.

The survey provided clear confirmation that leave and flexible working benefits are gaining traction, with telecommuting on a part-time basis now being offered by 42% of employers. The results also indicated that the share of employers offering family leave above the time required by the Family and Medical Leave Act (FMLA) increased by six percentage points between 2018 and 2019. Moreover, the findings showed that although the share of employers offering paid leave benefits for new fathers went up only slightly between 2018 and 2019, it has increased 14 percentage points over the past five years.

In terms of health care benefits, the survey showed that 70% of respondents have maintained their health care benefits at existing levels in 2019, with just 20% saying they have increased benefits, and only 3% reporting that they have decreased benefits. The findings also showed that of the health plan types, preferred provider organizations (PPOs) continue to be the most popular health insurance option, with 85% of the organizations surveyed indicating that they offer PPO plans. The second-most popular plan type was found to be high-deductible health plans linked to a savings or spending account, with 59% of respondents reporting offering such plans.

Moreover, the results indicated that the share of employers providing telemedicine and telehealth services increased by 10 percentage points between 2018 and 2019. Additionally, 71% said they offer long-term disability benefits, 61% indicated that they offer short-term disability benefits, and 27% said they offer accident insurance.

While still relatively rare, the share of employers offering company-provided student loan repayment benefits was found to have risen from 4% in 2018 to 8% in 2019. According to researchers, this category is expected to gain additional traction if pending Federal legislation is approved. A further 56% of respondents said they offer tuition assistance.

In addition, the findings indicated that the share of companies offering relocation lump-sum payments increased by six percentage points between 2018 and 2019. Researchers noted, however, that while housing and relocation benefits were once commonly provided by employers, they are now offered by less than one-third of the organizations surveyed.

Small Businesses Provide Employee Benefits to Recruit and Retain Talent

Small Businesses Provide Employee Benefits to Recruit and Retain Talent

As their employee numbers grow, small businesses increasingly seek to offer a competitive compensation package that includes comprehensive benefits, including health benefits, retirement benefits, family leave, and paid time off, according to the findings of a recent survey of small business owners and managers conducted by business-to-business ratings and review firm Clutch.

The results of the survey of 529 owners and managers of small businesses in the U.S. (defined as having one to 500 employees) were released on April 18. Respondents were asked about their benefit plans for 2019.

The findings indicated that nearly half (47%) of the small businesses surveyed offer benefits, and that businesses are significantly more likely to offer benefits as they hire more employees. For example, while just 32% of businesses with 2-10 employees said they offer benefits, 68% of companies with 11-50 employees and 76% of firms with more than 50 employees said they provide benefits.

The results also showed that of the small businesses surveyed that offer benefits, 69% provide health benefits, 52% offer retirement benefits, 48% provide family leave, 45% offer paid time off (PTO), 33% provide in-office benefits, and 17% offer student loan repayment. Of the businesses that offer PTO, 28% reported providing 11 to 15 business days off.

When asked if they plan to expand their benefits offerings in 2019, 56% of the small businesses surveyed said they intend to do so: 19% plan to begin offering PTO, 15% expect to start offering health benefits, 14% plan to start providing in-office benefits, 11% expect to begin offering retirement benefits, 11% are considering offering family leave, and 8% plan to introduce student loan repayment. Moreover, when the small businesses that intend to offer new benefits in 2019 were asked about their reasons for doing so, 30% cited employee requests, 27% said they want to reduce employee turnover, 13% said they are doing so in response to legal requirements, and 9% indicated they are doing so as a result of union negotiations.

When asked about their strategies for gaining access to human resource services, 25% of the small businesses surveyed said they have full-time, in-house HR staff; 12% reported that they have part-time, in-house HR staff; 9% said they contract with an HR consultant, 8% said they work with a professional employer organization, and 6% indicated that they work with an outsourcing service. However, 30% of the respondents admitted that they do not invest in formal HR services.

The survey also found that there is a strong association between having access to formal HR services and offering benefits: whereas 64% of respondents that reported having some level of HR services offer benefits, just 10% of the small businesses surveyed that said they lack access to formal HR services provide benefits.

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.

Millenial Managers Are Already Having an Impact on Workplace Planning

Millenial Managers Are Already Having an Impact on Workplace Planning

As members of the millennial generation enter the managerial ranks, they are bringing new approaches to hiring and workforce planning, according to a report recently published by freelancing website Upwork.

The third annual “Future Workforce Report,” released on March 5, explores the hiring behaviors of more than 1,000 U.S. hiring managers surveyed in October 2018. The focus of this year’s report is on generational impacts on the workforce, and specifically on how millennials, as well as some older members of Generation Z, are shaping the future of work.

The study found that 48% of the younger generation managers surveyed have already reached the director level or higher, and are thus having a major influence on workforce planning. Researchers noted that this influence will continue to grow, as these younger generations will make up 58% of the workforce by 2028, up from 38% today.

The findings also indicated, however, that the “always-on” workplace is taking a toll on younger managers, as 84% of millennial managers have reported experiencing job burnout. The study further suggested that conventional methods of hiring are no longer providing much relief, as 42% of younger generation hiring managers said they believe hiring has become more difficult in the past year, while just 18% said they think it has become easier.

In addition, the results indicated that supporting remote teams is the new norm, with 69% of the younger generation managers reporting that they have team members who are allowed to work remotely. Of the managers who said they have approved remote work options, 74% reported having team members who spend a significant portion of their time conducting their jobs remotely. By contrast, just 58% of baby boomer respondents said they have workers who work a significant portion of their time remotely.

The study also found that younger generation managers are 28% more likely to utilize remote workers than baby boomers, and anticipate that two out of five full-time employees will work remotely within the next three years. The study projects that by 2028, 73% of all teams will have remote workers. The results were approximated for future projections based on the current results for the respondents of the youngest cohort, Generation Z.

The report further emphasized that younger generation managers are particularly likely to recognize the need for better access to rapidly-changing skills and constant reskilling. However, younger generation managers were found to have a greater tendency than older managers to express support for a more independent workforce approach, as the survey indicated that younger generation managers were nearly three times more likely to say that individuals should be responsible for their own reskilling than baby boomer managers.

The study predicted that by 2028, non-traditional, flexible talent, like freelancers and temporary and agency workers, will account for 24% more of departmental headcount than they do today.

According to the report, the younger generation managers were more than twice as likely as the baby boomer managers to have increased their usage of freelancers in the past few years, and they are projected to continue increasing their usage in 2019.

The younger generation managers were also found to be more than twice as likely as the baby boomer managers to report having engaged freelancers for ongoing, strategic partnerships across multiple projects, rather than for one-time, one-off projects. The primary reasons respondents cited for using more freelancers are to increase productivity, access specialized skills, and drive cost efficiencies.

From Benefit Trends Newsletter, Volume 62, Issue 4

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.

Workers Express Concerns About Compensation and Workload

Workers Express Concerns About Compensation and Workload

In the decade since the onset of the financial crisis of 2008, employees have become more confident and secure in the belief that their employer cares about them, but have become less satisfied with their workload, career progression, and pay and benefits, according to the findings of a report published on September 11 by organizational consulting firm Korn Ferry.

The report’s findings are based on an analysis of engagement data for more than one million U.S. employees at around 180 companies for the 2008-2018 period. The study found that there have been distinct shifts in employee attitudes toward their workplaces in the 10 years since the start of the Great Recession.

The analysis found that employees are 28% more likely in 2018 than in 2008 to say they believe that their immediate managers support their development, and are 15% more likely to report that their organization demonstrates care and concern for employees. The results also suggest that employees are feeling more confident in the future, as they are 17% more likely in 2018 than in 2008 to say they believe their companies will be successful over the next 2-3 years.

The findings indicated, however, that employees have more negative opinions today than they did a decade ago about several issues, including pay and benefits, workload, career paths, and training and performance management. The study found that compared to 10 years previously, workers in 2018 are 15% less likely to agree that the benefits their companies offer them are competitive, and they are 4% less likely to say they believe their pay is fair considering the compensation of people doing similar jobs in other companies. Moreover, compared to 10 years ago, employees in 2018 are 10% less likely to indicate that they experience strong cross-team support within the company, and are 11% less likely to say they believe that decisions are made at the lowest appropriate level.

In addition, the results suggested that today’s employees are increasingly worried about their workload, and lack certainty about their career progression. The analysis showed that compared to their counterparts in 2008, workers in 2018 are 10% less likely to say they have a good idea of the possible career paths available to them, and they are 6% less likely to agree there are enough people to do the work in their work group.

“Today’s organizations run much leaner and unfortunately, managers are sometimes too strapped with their own workloads to address the needs of their employees,” said Korn Ferry senior principal Mark Royal. “Over the past 10 years, there has also been a shift from hierarchal management to flatter, more interdependent working environments. It’s important that organizations understand the implications this has on managing employees.”

From Benefit Trends Newsletter, Volume 61, Issue 10

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.