CEO–Employee Pay Gaps Widen in US and UK

CEO–Employee Pay Gaps Widen in US and UK

The latest analysis by the left-leaning Economic Policy Institute calculates that the CEOs of the largest 350 companies in the US out-earned their employees by a factor of 312:1 last year, the Guardian reported on Thursday:

The rise came after the bosses of America’s largest companies got an average pay rise of 17.6% in 2017, taking home an average of $18.9m in compensation while their employees’ wages stalled, rising just 0.3% over the year. The pay gap has risen dramatically, with some fluctuations, since the 1990s. In 1965 the ratio of CEO to worker pay was 20-to-one; that figure had risen to 58-to-one by in 1989 and peaked in 2000 when CEOs earned 344 times the wage of their average worker. …

The astronomical gap between the remuneration of workers and bosses has been brought into sharper focus by a new financial disclosure rule that forces companies to publish the ratio of CEO to worker pay. Last year, McDonald’s boss Steve Easterbrook earned $21.7m while the McDonald’s workers earned a median wage of just $7,017 – a CEO to worker pay ratio of 3,101-to-one. The average Walmart worker earned $19,177 in 2017 while CEO Doug McMillon took home $22.8m – a ratio of 1,188-to-one.

In the UK, meanwhile, new research by the CIPD and the High Pay Centre finds that the median CEO-employee pay ratio for FTSE 100 companies stood at 167:1 in 2017, rising from 153:1 the previous year:

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Salary Budget Surveys Project Only Modest Wage Growth for US Employees Next Year

Salary Budget Surveys Project Only Modest Wage Growth for US Employees Next Year

Despite historically low levels of unemployment and high demand for labor, salary budget surveys for 2018-2019 suggest that US wages will grow on average by just about 3 percent both this year and next year, continuing a trend of lackluster raises despite labor market conditions that theoretically should push earnings higher. The WorldatWork 2018-2019 Salary Budget Survey projects a mean average wage growth of 3.2 percent and a median 0f 3.0 percent next year, little changed from 3.1 percent (mean) and 3.0 percent (median) in 2018.

Employers are continuing to devote a significant share of their salary budgets to variable pay, WorldatWork found, but these budgets also aren’t growing, SHRM’s Stephen Miller observes:

Some 85 percent of U.S. employers gave out performance-based bonuses or other forms of variable incentive pay in 2018, the survey shows, and the amount of variable pay budgeted and paid out, for all employee categories, has been stable for several years. When total rewards professionals were asked about their variable pay budgets for 2019, their responses were virtually unchanged from the amounts budgeted for this year and … for 2017.

Alison Avalos, director of membership and total rewards strategy at WorldatWork, tells Miller that one reason why these budgets aren’t increasing is that employers are increasingly using benefits to attract and retain talent instead of cash rewards, including intangible benefits like professional development opportunities and purpose-driven organizational cultures that align with employees’ personal values.

Similarly, Willis Towers Watson’s 2018 General Industry Salary Budget Survey finds that US professionals can expect raises of 3.1 percent on average next year, compared to 3.0 percent this year. Wage growth has leveled off at around 3 percent per year over the past decade. Their survey also found that star performers would once again see higher increases next year, and registered a slight increase in budgets for discretionary bonuses:

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UK Labor Market Tightens as Europeans Leave, but Wages Remain Stagnant

UK Labor Market Tightens as Europeans Leave, but Wages Remain Stagnant

The latest labor market bulletin from the UK Office for National Statistics, released on Tuesday, shows that the number of citizens of other EU countries working in the UK has declined in the past year by the largest amount since the government began collecting comparable records two decades ago. Between April and June 2018, approximately 2.28 million EU nationals were employed in the country: 86,000 fewer than in the second quarter of 2017. In the same period, the number of employed UK nationals increased by 332,000 to 28.76 million, while the number of non-EU foreign workers increased by 74,000 to 1.27 million.

Gerwyn Davies, senior labour market analyst at the CIPD, comments on the report to Personnel Today:

“Today’s figures confirm that the UK labour market has suffered from a ‘supply shock’ of fewer EU-born workers coming to live and work in the UK during the past year, compared with previous years. This has contributed to labour supply failing to keep pace with the strong demand for workers; which is consistent with another welcome fall in unemployment.” …

“The tightening labour market is putting modest upward pressure on pay, but this still isn’t leading to more widespread pressure due to ongoing weak productivity,” said Davies.

New employer survey data released on Monday by the CIPD and the recruitment firm Adecco showed that UK employers were experiencing staff shortages due to the low-unemployment environment and a decline in migration from the EU. The survey found that the number of applicants per vacancy had dropped across all roles since last summer, while 66 percent of employers said at least some of their vacancies were proving difficult to fill.

Nonetheless, this tight labor market isn’t translating into higher wages for most UK employees.

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Amazon Mulling Health Clinics for Seattle Employees

Amazon Mulling Health Clinics for Seattle Employees

Amazon is considering opening its own primary health care clinics for employees at its Seattle headquarters, CNBC reported on Thursday, becoming the latest in a series of major US companies pursuing innovative approaches to health care outside the traditional group insurance model. Two people familiar with the confidential discussions told CNBC that the company was planning to start with a pilot clinic for a select group of employees later this year, then expand the program in 2019:

Amazon was previously looking to outsource its clinics and brought vendors in to pitch their services. After numerous rounds of discussions, Amazon ultimately decided to develop clinics internally, one of the people said. Providers including Crossover Health and One Medical offer on-site or nearby services for other companies, including those in the technology sector. …

Amazon started its effort by hiring primary care experts, beginning last year with Christine Henningsgaard, who was previously vice president of operations at One Medical. In January, the company brought in Martin Levine from Iora Health, a primary care group with clinics in Seattle.

If Amazon moves ahead with this plan, it will be pursuing a similar path to Apple, which announced earlier this year that it was establishing a network of health clinics for its employees in and around its headquarters in Cupertino, California. To staff this initiative, Apple has since hired a number of employees away from the provider that operates some of its on-site clinics in other locations, along with a variety of wellness professionals and “care navigators” to help guide patients in choosing the appropriate care for their health needs.

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Hires for Apple’s Health Initiative Highlight Its Focus on Wellness

Hires for Apple’s Health Initiative Highlight Its Focus on Wellness

Earlier this year, Apple announced that it was establishing a network of clinics near its headquarters in Cupertino, California to provide primary health care services to its employees in Santa Clara County. The AC Wellness program has been on a hiring spree since then, bringing more than 40 health professionals on board, CNBC reports, citing a LinkedIn search. The hires include a number of former employees of Crossover Health, which used to operate Apple’s onsite clinics in the Bay Area and still runs them elsewhere, and which Apple had considered acquiring before deciding to design its own clinics instead. In keeping with the name of the initiative, these early hires indicate that AC Wellness is going to be more than just a medical clinic, suggesting a more holistic focus on wellbeing and helping employees maintain healthy lifestyles:

Most of the team hired so far aren’t doctors. In fact, the hires skew toward wellness professionals like nutritionists, exercise specialists and nurse practitioners. A lot of the hires have a background in alternative or functional medicine and there’s even a “wellness lead” — Jennifer Gibson, a former head of coaching at Vida Health, a health-tech start-up. Gibson, according to her profile, is passionate about things like nutrition, stress management and smoking cessation, which aren’t always offered at primary care practices.

The company has also brought on at least a half dozen “care navigators,” who don’t have medical degrees but do have a background in directing patients to the most appropriate care. In some cases, that might involve a followup conversation with a specialist or a lifestyle change that might alleviate the problem on its own. That could reduce costs as these navigators can better ensure that Apple employees and their dependents aren’t getting unnecessary care.

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GM Partners with Henry Ford Health System on Direct-to-Employer Care Plan

GM Partners with Henry Ford Health System on Direct-to-Employer Care Plan

General Motors has made a deal with Henry Ford Health System, a Detroit-based hospital system, to provide a new health care plan to its salaried employees and their dependents in southeast Michigan, the Wall Street Journal reported on Monday. The optional ConnectedCare plan, which will be available to some 24,000 GM employees and their dependents starting next year, replaces traditional group health insurance with a direct-contract system wherein Henry Ford will manage nearly all of the participating employees’ health care needs.

The company’s existing health insurance options will remain available, but the ConnectedCare plan is expected to save them anywhere from $300 to $900 a year compared with the current cheapest option. According to a press release from the Henry Ford system, the plan will give GM employees access to more than 3,000 health care providers offering “a comprehensive range of health care services including primary care, more than 40 specialties, behavioral health services, hospitalization and emergency care as needed, as well as pharmacy and other services.”

Under the five-year contract, the hospital system agreed to specific goals for quality, cost and customer service. For instance, plan participants are promised same-day or next-day appointments with primary care physicians and appointments with specialists within 10 business days. They will also have access to a range of digital health tools, wellness services, and assistance in managing their care and choosing the right health care options, Henry Ford said in its statement.

Blue Cross Blue Shield of Michigan, GM’s insurance provider in that state, will continue to manage claims-processing and other functions, while again continuing to provide the PPO plans GM already offers its employees. ConnectedCare will not apply to GM’s large unionized workforce in Michigan, whose health benefits are negotiated under a labor agreement.

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On Black Women’s Equal Pay Day, Corporate Activism Focuses on Raising Awareness

On Black Women’s Equal Pay Day, Corporate Activism Focuses on Raising Awareness

Today is Black Women’s Equal Pay day, a date marking the pay gap between black women and white men in the US by representing how far into the next year a typical black woman has to work to earn as much as a typical white man earned in one year. It comes considerably later in the calendar than Equal Pay Day, which is observed in early April and symbolizes the gender pay gap irrespective of race; this illustrates the greater degree to which black women are disadvantaged in the American workplace than their white peers. McKenna Moore at Fortune highlights the salient statistics:

Women earn 80 cents for every dollar that men make, but black women make 63 cents for every dollar white, non-Hispanic men make. This means that black women also make 38% less than white men and 21% less than white women, according to a study published by the Institute for Women’s Policy Research. And the gap is only widening for women, both black and white. Extended over a 40-year career, the wage gap has black women earning $850,000 less than men’s median annual earnings, according to the National Women’s Law Center.

Studies show that the pay gap starts early. An data analysis of BusyKid’s app’s 10,000 users shows that parents pay boys a weekly allowance twice the size that they pay girls. By 16, black women are earning less than white men and the gap only widens as they age. As black women have families of their own, the gap means less money for their families, which is particularly harmful because more than 80% of black mothers are the main breadwinners for their households, according to the National Partnership for Women & Families.

The disadvantage lying at the intersection of racial marginalization and gender inequality is not limited to black women, either: Native American women don’t get their Equal Pay Day until late September, earning only 57 cents for every dollar paid to white, non-Hispanic men. Latina women suffer the greatest pay disparity at 54 cents to the white, male dollar; their Equal Pay Day doesn’t arrive until November.

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