Facing one of the tightest labor markets in living memory, US retailers and other companies staffing up for the holiday season have had to get creative about finding and attracting the extra workers they need for the seasonal rush. Some retail chains started hiring for the winter holidays all the way back in the early summer, raised entry-level wages for store employees, and offered a variety of bonuses and perks like store discounts.
The retail sector was already feeling pressure to bump up pay, the Star-Tribune reported this week, citing a survey by the hiring platform Snag that found retailers expected wages to rise by 54 percent this year. That’s partly a product of a labor shortage, but also reflects the growth of online shopping:
As more shoppers order online and opt to have items shipped to the store or their front door, retailers’ backroom operations are changing. Mass merchants still need cashiers, salespeople and shelf stockers. But they need more people to package orders for store pickup and to work in warehouses and distribution centers, which increasingly requires more technology skills.
Target is doubling the number of staff it needs to handle digital orders. Macy’s, which is hiring about the same number as last year, will shift its mix and add 5,500 more people for its fulfillment centers. Best Buy says it, too, will bulk up on workers to package up online orders.
Labor market competition, the need to attract and retain more skilled employees, and “HR-as-PR” considerations are all coming to bear on retailers’ decisions to raise pay for their hourly employees. They are also courting hires with new benefits, including intangible benefits like flexibility, Steve Bates notes at SHRM:
On Tuesday, October 2, Amazon announced that it would raise its internal minimum hourly wage for US employees, including part-time workers and those hired through temporary agencies, to $15 an hour. This includes workers at the company’s warehouses or “fulfillment centers,” as it calls them, in addition to store employees at Whole Foods, which Amazon acquired last year. The e-commerce giant also said it planned to lobby the US government to raise the federal minimum wage from its current hourly rate of $7.25, last updated in 2009, the New York Times reported:
The new wages will apply to more than 250,000 Amazon employees, including those at the grocery chain Whole Foods, as well as the more than 100,000 seasonal employees it plans to hire for the holiday season. The change will not apply to contract workers. It goes into effect on Nov. 1. “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Amazon’s chief executive, Jeff Bezos, said in a statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”
The move came amid growing pressure on Amazon from the media and politicians regarding its pay practices and the work conditions of its lowest-paid employees, particularly those at its warehouses or “fulfillment centers.” Vermont Senator and former presidential candidate Bernie Sanders has been an outspoken critic of Amazon’s CEO Jeff Bezos, who is currently estimated to be the wealthiest individual in the world, citing news reports that large numbers of Amazon’s low-wage employees were dependent on public assistance. Sanders and California congressman Ro Khanna have been pushing legislation that would require companies to compensate the federal government for the cost of public assistance benefits received by their employees, including food stamps, Medicaid, and public housing.
The next day, however, Bloomberg reported that Amazon was cutting monthly bonuses and stock awards for hourly employees to help offset the costs of the minimum wage hike. Still, the company insists that these workers’ total compensation is rising:
The Time to Vote campaign, announced on September 24, is a nonpartisan effort aimed at increasing voter participation in the US by getting companies to enable or encourage their employees to vote. Some 140 CEOs have signed on to the initiative, including the heads of some of the country’s largest private employers:
The U.S. has one of the lowest voter participation rates in the developed world, recently as low as 36 percent, and one of the most common reasons that people give for not voting is that they are too busy, or have work and life demands that prevent them from voting. To change this paradigm, a diverse coalition of companies including Kaiser Permanente, Levi Strauss & Co., Patagonia, PayPal, Tyson Foods and Walmart are coming together, starting with the November elections, to increase voter turnout.
The Time to Vote campaign also aims to increase awareness about the steps employers can take to allow time for their employees to vote. The companies joining this campaign are committed to increasing voter participation through programs such as paid time off, a day without meetings and resources for mail-in ballots and early voting. And all of them care about their workforces and supporting democracy.
Whereas many countries hold elections on weekends or make voting days public holidays to ensure that most voters can take part, election day in the US is observed on the first Tuesday after the first Monday in November and is not a national holiday.
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The latest compensation data from the US Labor Department’s Bureau of Labor Statistics show that total compensation for US employees has increased modestly over the past year, from $35.28 per hour worked in June 2017 to $36.22 per hour worked in June 2018. Wages and salaries averaged $24.72 per hour worked and accounted for 68.3 percent of these costs, while benefits averaged $11.50 and accounted for 31.7 percent. For private sector employees, compensation has increased from $33.26 per hour worked to $34.19. Wages made up $23.78 or 69.6 percent of that figure, while the remaining $10.41 (30.4 percent) consisted of benefit costs, in which the BLS includes supplemental pay.
While the percentage ratio of wages to benefits was unchanged from June 2017, benefit costs grew at a slightly higher rate than wages year-over-year, nearly 3 percent compared to 2.7 percent. This reflects a nearly 12 percent increase in bonuses and other forms of supplemental pay, from $1.18 per hour to $1.32; supplemental pay made up 3.8 percent of the total compensation mix in June 2018, compared to 3.5 percent a year earlier. Paid leave, including vacation time, also increased slightly.
Taking a longer-term view, over the past five years, benefit costs for private-sector employees have increased by over 20 percent, from $8.64 per hour worked in June 2013; whereas wages and salaries have increased 16 percent, from $20.47 that month. Supplemental pay, by comparison, has increased 65 percent from 80¢ per hour worked in June 2013. This trajectory reflects the increasing tendency we’ve observed among employers in recent years toward variable pay schemes that reward employees for high performance with one-time bonuses rather than standard annual raises.
Competitive total rewards packages are a key battleground in the scramble for talent today. Yet many organizations still rely on outdated approaches when communicating rewards through the hiring process, focusing too much on compensation while neglecting benefits. This is becoming more difficult as salary budgets continue to stagnate: Recent salary surveys suggest that cash wages in the US are unlikely to grow much faster in the coming year than they have in 2018, despite a strong economy and a tight labor market.
While compensation is consistently a top driver of candidate attraction anywhere in the world, we know that candidates are also attracted to tangible benefits like health insurance and paid leave, as well as intangible benefits like flexible scheduling and remote work options. Even as wage growth falls short of expectations, we have seen major US employers investing more in benefits like paid family and sick leave, health insurance, and education benefits like tuition assistance and help with paying off student loans.
To better understand how employers can use their benefit offerings as talent attractors, Gartner’s Total Rewards team worked with data from our talent market intelligence portal TalentNeuron, looking for a connection between how organizations pitch their benefits in job postings and how quickly they are able to fill posted roles. Organizations that don’t leverage their benefits offerings in this way, we found, may be missing out on an opportunity to meaningfully boost their appeal to candidates.
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A private letter ruling released on Friday by the US Internal Revenue Service gave the tax authority’s blessing to a benefit program in which an company offers to make contributions to its employees’ 401(k) retirement savings if they put a certain percentage of their salaries toward paying down their student debt. The letter finds that this scheme does not violate the regulatory prohibition on making other benefits contingent on an employee’s participation or non-participation in a 401(k) plan.
The letter explicitly notes that its ruling applies only to this one employer, and written determinations such as this letter cannot be used as precedent under federal law. Nonetheless, one expert tells Employee Benefit News that this could pave the way for more employers to offer similar matching programs for student loan payments:
Historically, many plan sponsors have questioned whether such an approach would be permissible under IRS rules. But, explains Jeffrey Holdvogt, an employee benefits partner with McDermott Will & Emery in Chicago, the ruling confirmed that— under certain circumstances — “employers may be able to link the amount of employer contributions made on an employee’s behalf under a 401(k) plan to the amount of student loan repayments made by the employee outside the plan.” …
“[The letter] provides helpful guidance for employers looking for new ways to provide such benefits and, in particular, for employers looking for ways to accomplish the dual purpose of helping employees manage student loan repayment obligations while saving for retirement,” Holdvogt says.
The organization in question is not identified in the published letter, but the matching program it describes appears identical to the one the pharmaceutical company Abbott Laboratories rolled out in late June. In Abbott’s Freedom 2 Save program, if employees contribute at least 2 percent of their salary toward their student loans in a year, the company will contribute the equivalent of 5 percent of their salary to their 401(k) plan at the end of that year.
A recent data brief from the Centers for Disease Control and Prevention illustrates the growth in popularity of high-deductible health plans (HDHPs) over the past decade. Between 2007 through 2017, the CDC data show, the percentage of adults 18–64 with employer-provided health insurance who were enrolled in an HDHP with a health savings account increased from 4.2 percent to 18.9 percent, while the percentage enrolled in an HDHP without an HSA rose from 10.6 percent to 24.5 percent. In 2017, enrollment in HDHPs was highest among adults aged 30–44 than among other age demographic.
The greater an individual’s family income level and educational attainment, the more likely they were to be enrolled in an HDHP with an HSA, the CDC found, while the likelihood of enrollment in both traditional health plans and non-HSA high-deductible plans decreased as income and education rose. This may reflect a greater understanding of the investment value of HSAs among higher-earning and more educated employees.
Other recent data tells a similar story: Last year, Bank of America Merrill Lynch’s Plan Wellness Scorecard found that more employers were offering HSAs, more employees were using them, and their account balances were growing. That report also found that employees were using about 70 percent of their HSA contributions to cover health expenditures during the year and saving the other 30 percent for future expenses.
However, while the adoption of HDHPs has certainly grown over the past decade, our benefits research at Gartner shows that their popularity has been leveling off over the past three years, when deductibles for individual plans have actually been trending downward. (Gartner Total Rewards Leadership Council clients can view our full report on medical plan trends and observations for 2018 here.)