By Rick Reyes, Joy C. Rosenquist, and Adam Fiss © Littler

October 13, 2023

On Oct. 11, California Gov. Gavin Newsom signed a bill into law allowing for up to five days of time off work for reproductive-related losses.

Senate Bill 848 makes it an unlawful employment practice for an employer to refuse to grant an eligible employee's request to take up to five days of unpaid leave following a reproductive loss event.

Previously, California law required employers to provide bereavement leave upon the death of an employee's family member. Reproductive-related losses, however, largely remained unaddressed. Such losses are a common occurrence with more than 1 in 4 pregnancies resulting in miscarriage, and they may result in post-traumatic stress disorder (with almost 1 in 3 women developing pos-traumatic stress disorder after a miscarriage).

What Does this New Leave Require?

SB 848 acts as a subset of California's bereavement leave law and increases an employee's leave entitlements for a reproductive loss event, which is defined as "the day or, for a multiple-day event, the final day of a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction." Covered employers must provide up to five days of leave for reproductive loss events.

The law limits the amount of reproductive loss leave to a maximum of 20 days within a 12-month period.  Thus, although an employee may be subject to multiple reproductive loss events in a 12-month period, an employer is not required to provide more than 20 days of reproductive loss leave.

Like many other California leave laws, SB 848 prohibits employers from retaliating against any employee for requesting or taking leave for a reproductive loss.

California employers with five or more employees are covered under the law. Only employees who have worked for the employer for at least 30 days are eligible for reproductive loss leave.

Subject to narrow exceptions when an employee takes applicable leave under state or federal law, eligible employees must take the leave within three months of the event triggering the leave (i.e., reproductive loss events), but need not be taken on consecutive days.

Leave under the statute is unpaid, unless the employer has an existing policy requiring paid leave. Eligible employees may choose to use any accrued and available paid sick leave or other paid time off for reproductive loss leave.

SB 848 does not contain any provision permitting employers to request any documentation in connection with reproductive loss leave.

In light of this new leave entitlement, steps that a California employer may wish to take include:

• Updating their employee handbooks and/or leave policies to incorporate this new leave entitlement.
• Training management, supervisors, and HR on this new leave law.
• Determining whether reproductive loss leave will be paid pursuant to any existing employer-provided leaves or policies.
  

Rick Reyes, Joy C. Rosenquist, and Adam Fiss are attorneys with Littler in California. ©2023. All rights reserved. Reprinted with permission. 

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Source: SHRM 

https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/california-reproductive-loss-leave.aspx

The payout represents the “largest ever in an ERISA case alleging a retirement plan improperly offered proprietary funds,” according to the plaintiffs.

Published Oct. 13, 2023 by Ryan Golden

Dive Brief:

• General Electric will pay $61 million to settle a class-action lawsuit brought by participants and beneficiaries of its 401(k) retirement plan, according to court documents filed Oct. 6.
• The settlement concludes nearly six years of litigation stemming from a complaint filed in the U.S. District Court for the District of Massachusetts in 2017. The plaintiffs alleged GE breached its fiduciary duties under the Employee Retirement Income Security Act by limiting actively managed funds available to participants to a group of five funds that were managed by a wholly owned subsidiary of GE.
• The funds at the center of the suit also “substantially underperformed” other comparable investment options, and GE refused to consider replacing the funds or their managers, the plaintiffs alleged. Per the settlement terms, GE denied all claims and allegations of wrongdoing.

Dive Insight:

In their motion for approval of the settlement, the plaintiffs claimed that the $61 million payout represents the “largest ever in an ERISA case alleging a retirement plan improperly offered proprietary funds.” Additionally, a plaintiffs’ damages expert calculated the reasonable recoverable damages in the range of $283 million, the plaintiffs said.

The settlement total nonetheless represents approximately 21.5% of the figure cited by the plaintiffs, “which is at the higher end of settlement recoveries approved in other ERISA class action settlements,” according to the motion.

ERISA requires persons or entities who exercise discretionary control or authority over retirement plan management or assets to uphold fiduciary responsibilities. Such responsibilities include running the plan solely in the interest of participants and fiduciaries and diversifying plan investments in order minimize risk, according to the U.S. Department of Labor.

Recent years have seen retirement plan litigation settled for similarly high dollar amounts. In July, DOL announced that one investment management firm would pay upwards of $124 million to settle allegations that it mismanaged an employer’s 401(k) plan through a “self-proclaimed strategy of non-diversification,” resulting in losses for more than 9,000 participants.

In 2022, the agency settled with Wells Fargo, which agreed to pay $145 million over claims the bank overpaid for preferred stock. That same year, DOL sued the owner of a New Jersey-based design firm for allegedly using plan assets to invest in a bank owned by the owner’s spouse. The defendants in that case entered a consent order with DOL in which they agreed to pay more than $1.8 million to plan participants.

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Source: HR Dive

https://www.hrdive.com/news/general-electric-401k-settlement-fiduciary-class-action/696607/

The average premium was nearly $8,500 for single coverage and nearly $24,000 for family coverage this year, according to the study published in Health Affairs.

Published Oct. 18, 2023 by Emily Olsen

Dive Brief:

• The average annual premium for both employer-sponsored single and family health insurance coverage rose 7% in 2023, faster than last year but consistent with inflation and wage growth, according to a survey conducted by KFF and published in Health Affairs. 
• The average premium was $8,435 for single coverage and $23,968 for family coverage this year. On average, workers contributed 17% of the premium for single coverage and 29% of the premium for family coverage.
• Many employers surveyed raised concerns about their workers’ views of health plan performance. Fifty-eight percent said their employees had a high or moderate level of concern about the affordability of cost sharing. About half said their workers had a high or moderate level of concern about their ability to schedule timely appointments or the complexity of prior authorization requirements. 

Dive Insight: 

Employer-sponsored insurance is the largest source of health coverage in the country, covering almost 153 million nonelderly people this year, according to the survey.

Providing insurance is also increasingly pricey for employers, and many are disappointed with their plans when assessing their ability to provide high-quality care, according to a report from the Leapfrog Group published earlier this year.

The KFF survey on employer health benefits, which is conducted annually, noted that premiums have historically risen faster than inflation and wages, with the average family premium growing 47% over the past decade while inflation grew 30% and wages grew 42%.

However, during the past five years, these metrics have seen similar cumulative increases.

“This is in part due to the decline in use of health services during the COVID-19 pandemic, as well as the end of a prolonged period of very low inflation,” the study’s authors wrote. “There is no way to know whether this is a transient trend or a new pattern in the costs of care.”

People with employer-sponsored coverage generally have to pay for some portion of their care out of pocket. Ninety percent of workers were enrolled in a plan with a general annual deductible for single coverage this year, according to the survey. Nearly two-thirds of them had a deductible of $1,000 or more, while 31% were enrolled in a plan with a deductible of $2,000 or more. 

Eighty-three percent of employees faced some type of cost sharing for inpatient hospital services, while 68% had a copayment and 19% had a coinsurance payment when visiting a primary care doctor this year. 

Despite the increased premiums, employers report some challenges with their provider networks.

Though most said their largest plan had enough primary care providers to offer timely access to care for their workers, firms weren’t as satisfied with access to mental healthcare or substance use services. Only 68% of small companies, with three to 199 workers, and 59% of large firms, with 200 or more employees, felt there was a sufficient number of mental healthcare providers. 

Coverage for abortion care, facing upheaval in the wake of the Dobbs decision, is still up in the air for many firms. Among large employers, 32% said legally provided abortions are covered in most or all circumstances, 18% said they’re covered only under limited circumstances and 40% responded “don’t know.”

“The fairly large share of respondents (40 percent) who answered ‘don’t know’ to the abortion coverage question may reflect the complexity and fluidity of the issue as states continue to consider and pass abortion legislation and state courts continue to consider legal challenges seeking to block these abortion restrictions,” the study’s authors wrote.

Some companies have added travel benefits for workers who can’t access abortion services where they live. Seven percent of large companies either provided or planned to provide financial assistance for abortion travel expenses, while 19% of firms with 5,000 or more workers reported these benefits. 

Telehealth care, which experienced its own disruption as utilization increased during the COVID-19 pandemic, still remains a part of employer-sponsored coverage. Nearly all employers offered health benefits that covered services provided via telehealth in their largest health plan this year. 

Forty-one percent of firms with 50 or more workers said they believed telemedicine would have a “very important” role when it came to delivering behavioral healthcare going forward, compared with 27% for primary care and 16% for specialty care. 

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Source: HR Dive

https://www.hrdive.com/news/premiums-rise-7-percent-employer-sponsored-health-insurance-kff-health-affairs/697057/

October 12, 2023

Still, many struggle to educate their managers and employees effectively on pay and pay equity

ARLINGTON, VA, October 12, 2023 – A majority of U.S. organizations are communicating pay information to their employees, according to a new survey by leading global advisory, broking and solutions company WTW (NASDAQ: WTW). The 2023 Pay Transparency Survey found that increasing regulatory requirements are encouraging organizations to communicate their organization’s broader pay policy. However, barriers to pay transparency remain as employers fear increasing questions and are concerned about their effectiveness in educating their workforce on this complex topic.

“

Many U.S. organizations are providing more visibility into their pay programs and practices.”

Mariann Madden | North America Fair Pay co-lead, WTW

The survey found most U.S. organizations are communicating different components of their pay program information to employees. Six in 10 are disclosing job levels to their employees, and almost half (48%) are communicating how individual base pay is determined and progresses. Over one-third of companies (36%) are disclosing individual pay ranges to employees, but an even larger number (46%) are planning or considering doing so in the future.

Regulatory requirements are the most commonly cited (81%) factor for encouraging greater levels of pay program communication. Other commonly cited factors include company values and culture (55%) and employee expectations (54%), followed closely by an environmental, social and governance and diversity, equity and inclusion agenda (53%).

“Many U.S. organizations are providing more visibility into their pay programs and practices,” said Mariann Madden, North America Fair Pay co-lead, WTW. “Boards of directors are taking ownership for pay equity and pay transparency and are looking for organizations to define, monitor and report on their commitments and priorities. Pay equity and transparency are closely linked. It will be very difficult to have confidence in one without the other in place.”

WTW’s survey found 38% of U.S. employers are communicating or planning to communicate publicly a pay equity commitment. A smaller number have communicated their pay transparency commitment; however, 44% of companies are planning or considering what they will share.

While these mandates are still only enacted in less than 10 states, regulatory requirements are driving more employers to communicate pay information. For prospective employees, nearly two in five respondents are communicating or planning to communicate pay rate or pay range information regardless of requirements. Of the 91% of companies communicating or planning to communicate pay ranges, 65% are disclosing a hiring rate/range for the job. A majority of organizations are using a consistent approach to what is shared and what pay range/rate is disclosed.

Half (50%) of employers believe communicating pay rates or ranges will increase questions from current employees. Manager effectiveness concerns are also top of mind for employers (47%). Indeed, although managers are the most common channel for communicating pay program information (84%), only 38% of organizations report being effective at educating managers about this complex topic.

“We are at a tipping point with pay transparency,” said Lindsay Wiggins, North America Fair Pay co-lead, WTW. “Organizations need to get their house in order by developing and actively managing foundational job architecture and leveling frameworks and conducting equal pay, pay gap and pay driver analyses to uncover and address areas of risk. Understanding their current state will support businesses in their efforts toward addressing the various legislative requirements but also in providing greater transparency into their talent and rewards programs and practices.”

About the survey

WTW’s 2023 Pay Transparency Survey was conducted in July 2023. In the U.S., a total of 448 respondents completed the survey. Globally, a total of 1,313 respondents completed the survey.

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Source: WTW

https://www.wtwco.com/en-us/news/2023/10/us-companies-to-increase-levels-of-pay-communication

October 18, 2023 — 03:08 pm EDT

Written by Jody Godoy for Reuters ->

By Jody Godoy

Oct 18 (Reuters) - A U.S. appeals court upheld Nasdaq's board diversity rule on Wednesday, requiring companies listed on the exchange to have women and minority directors on their boards or explain why they do not.

National Center for Public Policy Research and the Alliance for Fair Board Recruitment, a group formed by conservative legal activist Edward Blum, had asked the 5th U.S. Circuit Court of Appeals to block the rule.

The groups sued the U.S. Securities and Exchange Commission (SEC), which approved the rule in August 2021.

The rule requires companies to have one director who identifies as female, a member of an underrepresented racial or ethnic minority, or LGBTQ+ by the end of this year or explain why they do not. Companies would generally need two diverse directors to satisfy the rule by 2026.

Companies also have to disclose annually how board members identify in those categories, although the individuals can decline to answer.

The groups said the rule violates the U.S. Constitution's prohibition of discriminatory laws and restraints on free speech. They argued that those restrictions on government extend to Nasdaq because the SEC could penalize the exchange if it does not enforce the rule.

The SEC and Nasdaq argued that the exchange is a private entity not bound by restrictions on government. They said the rule is not a quota but a disclosure requirement that provides standardized information on board diversity.

Several Republican state attorneys general had weighed in against the rule, while institutional investors and a coalition of Nasdaq-listed companies, among others, filed briefs in support.

The case is Alliance For Fair Board Recruitment v. SEC, 5th U.S. Circuit Court of Appeals, No. 21-60626.

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Source: Nasdaq.com

https://www.nasdaq.com/articles/u.s.-court-upholds-nasdaq-board-diversity-rule

Salary negotiation is one of the most common topics professionals seek content on, but it’s still hard to get a macro understanding of who’s negotiating and who isn’t. Professionals in the Glassdoor community are weighing in on if they negotiated their salary for their most recent job and the data may surprise you. More than 6,500 professionals weighed in and more than half of them (54%) did not negotiate their most recent salary. 

How does that break down by industry? Salary negotiation is most common among advertising, marketing, and tech professionals—with 67%, 62%, and 56% of them negotiating their most recent salary, respectively. Which industries had the least negotiation? Just 22% of graduate students and 37% of accounting and law professionals negotiated their most recent salary. 

What about age? 56% of professionals between the ages of 36-40 negotiated their most recent salary, while 55% of those aged 41-44 and 50% of those aged between 30-35 did the same. Younger professionals are less likely to negotiate pay, with just 27% of those aged 21-25 and 44% of those between 26-29 negotiating their most recent salary. 

And gender? Men and women are equally as likely to negotiate, with 46% of men and women having negotiated their most recent salary.  

Methodology: This poll ran from August 9, 2023 through August 14, 2023 and was answered by 6,673 professionals on Fishbowl by Glassdoor. Respondents could answer with either “Yes” or “No” to the question, “For your most recent job, did you negotiate your salary?” 

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Source: Glassdoor

https://www.glassdoor.com/research/conversation-starter-more-than-half-of-professionals-did-not-negotiate-salary-for-most-recent-job

September 25, 2023 09:28 AM Eastern Daylight Time

NEW YORK--(BUSINESS WIRE)--Today, Mercer, a global leader in redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being, and a business of Marsh McLennan (NYSE: MMC), released the results of its August 2023 Mercer QuickPulse™ US Compensation Planning Survey. According to the survey, employers in the US plan to raise their compensation budgets by 3.5% for merit increases for 2024 and 3.9% for their total salary increase budgets for non-unionized employees. This compares to actual merit increases of 3.8% and 4.1% for total salary increase budgets for non-unionized employees in 2023.i

“While preliminary compensation budgets for 2024 are showing a slight decline, they remain well above pre-pandemic levels, reflecting the ongoing tightness of the labor market and low levels of unemployment. However, if the labor market continues to stabilize and inflation cools further as we move towards the end of the year, compensation pressures are likely to continue to decline. This could prompt further reductions in 2024 compensation increase budgets, as employers adjust their strategies to reflect the changing economic landscape,” said Lauren Mason, Senior Principal, Career, Mercer.

Across industries, Healthcare Services are projecting 2024 budgets that lag other industries, with merit budgets of 3.1% and total increase budgets of 3.4%, as the industry continues to recover from the financial impact of the pandemic. Recent layoffs and financial strain on the high-tech industry also appear to be impacting merit budgets, with projected increases of 3.3%, a reversal of historical trends where high-tech typically led increases across industries. Several industries, including Energy and Consumer Goods, are planning merit budgets above the national average, projecting an increase of 3.7%.

The survey also found that employers are planning to promote less (8.7% of the employee population) and therefore will allocate less of their budget (1.1%) to promotional increases in 2024. In 2023, employers reported that they promoted 10.3% of their population, allocating 1.2% of their salary budget to do so.

Looking back at actual compensation increases over the last year, employer base salary levels increased 5.6%ii on average, despite 2023 merit increase budgets of 3.8%. This is a result of off-cycle pay increases which 59% of employers reported providing in 2023. The top reasons cited for off-cycle increases were to address retention concerns, counteroffers, market adjustments, and internal equity.

Ms. Mason continued, “As employers plan for 2024, it is crucial that they move away from the reactive approach of the past few years and adopt a more strategic approach. This will enable employers to focus their compensation investments on the most critical attraction and retention segments of their workforce, while also ensuring that pay increases are distributed fairly and equitably.”

Note to editors:

Total increase budgets include other base pay increases such as promotional pay increases and cost of living adjustments, in addition to merit increases.

About Mercer’s US Compensation Planning Survey

The August 2023 Mercer QuickPulse™ US Compensation Planning Survey includes data from more than 900 organizations in the US, from small employee bases (less than 500 employees) to very large employee bases (over 20,000 employees) across 15 industries. This study was fielded between July 31st - August 11th. You can review more of the survey findings here.

About Mercer

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with more than 85,000 colleagues and annual revenue of over $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.

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Source: Mercer

https://www.businesswire.com/news/home/20230925303517/en/US-employers-plan-more-modest-compensation-increases-in-2024

By Dawn Kawamoto - September 7, 2023

U.S. employers made bold moves this year on compensation, pushing salary increase budgets to a 20-year high, despite fears of resurgent inflation and recession, according to a WorldatWork survey released this week. But the momentum is expected to slow by next year.

Increases to salary budgets rose to 4.4% on average this year, slightly higher than earlier projections of 4.1%, and also marking the highest level since the 2001 peak of 4.5%, according to the survey of more than 2,000 U.S. employers. Last year, salary increase budgets stood at 4.1%.

A tight labor market and cautious economic optimism contributed to the increase, Liz Supinski, director of research and insights at WorldatWork, tells HRE.

“While there are still many concerns about recession, there is significant speculation among economists that we might achieve a soft landing,” Supinski says. “A number of economists are now speculating that we might see a novel kind of recession that is not accompanied by the large-scale job loss that we’ve seen in past recessions.”

But despite higher-than-expected salary increase budgets this year and more optimistic outlooks on the economy, budgets are expected to slightly drop next year, to 4.1%, according to the survey.

Supinski characterizes the shift as a migration back to what was seen as “normal”: 3%-3.5% salary increases that largely prevailed for most of the last 20 years, until 2022.

The forecasted 2024 decline, she adds, may also be the result of an easing of the intensity of the labor market pressures as the impact of economic policy decisions filters out.

This year, salary hikes were more impacted by labor market pressures than recessionary fears, though the increases were still moderate, she notes.

HR can address those labor market pressures by looking beyond base salaries.

“Variable pay continues to play an important role in compensation and allows organizations greater flexibility in responding to business and economic conditions than do base salary increases,” Supinski says. “So, [this] will continue to be a focus for many employers.”

Notable salary increase budgets around the world

WorldatWork’s report found higher-than-anticipated salary boosts around the world this year. In the United Kingdom, for instance, the average salary increase rose 4.5% compared with a projected 3.9%, according to the survey.

One country posting consistent growth in salary increase budgets was Mexico. In 2021, the average rose to 4.7%, then 5.7% the following year and last year jumped to 6.3%.

India, meanwhile, garnered the largest increase of the 18 countries where employers were surveyed. The average salary increase in India was a hefty 9.8% this year, bringing it closer to the pre-pandemic level of 9.9%. Last year, however, employers there doled out salary increases that averaged 10.1%.

Meanwhile, in the U.S., all states are expected to experience a decline in 2024, which is anticipated to range from a 0.1% drop in salary increase budgets in Arizona and California to a 0.4% fall in Alaska and North Dakota.

Layoffs may be even lower in 2024

In addition to salaries rising across the globe this year, employers are scaling back on layoffs, according to the WorldatWork survey.

This year, 70% of employers worldwide reported no layoffs and a whopping 91% expect the same for 2024, states WorldatWork in its report.

And in the U.S., 61% of employers report no layoffs this year and 87% have similar expectations for next year.

Despite that, Supinski cautions HR not to read too much into the numbers.

“It was a broad, exploratory question, intended mostly as a screener to identify what portion of organizations were repurposing savings from layoffs for salary budget increases,” she notes.

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Source: Human Resource Executive

https://hrexecutive.com/u-s-salary-increase-budgets-hit-20-year-high/?oly_enc_id=1127F6638590B7V  

Newly Expanded Participant Pulse Report Also Finds Health Savings Account Balances Up Nearly 12% This Year

August 8, 2023 at 8:00 AM Eastern

CHARLOTTE, NC – Today, Bank of America released its Q2 2023 Participant Pulse (PDF)(MAP5773977), which found average 401(k) balances increased by $7,250 (9.6%) since the end of 2022.1  The report also found that a growing number of 401(k) participants are initiating withdrawals from their plans. The number of participants taking hardship distributions increased 36% year-over-year,1 following increases in Q12 this year. In addition, the percent of participants borrowing from their workplace plan in Q2 also increased (2.5%, up from 1.9% in Q1).1

The Pulse monitors plan participants’ behavior in Bank of America recordkeeping clients’ employee benefits programs, which is comprised of more than 4 million participants as of June 30, 2023.

“The data from our report tells two stories – one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America. “This year, more employees are understandably prioritizing short-term expenses over long-term saving. However, it’s critical that employees continue to invest in life’s biggest expense – retirement.”

Amid rising 401(k) plan withdrawals, employee contributions remained steady, with the average rate remaining at 6.5% throughout the first half of 2023.1 Meanwhile, more participants increased their rate than decreased their rate (10.2% vs. 2.2%) in Q2,1 which was led by Gen Z3 and Millennial3 employees (19.3% vs. 2.6% and 11% vs. 2.6%, respectively).

Health Saving Account and Financial Wellness Trends

To provide a more holistic look at confidence around financial preparedness, Bank of America has expanded the quarterly Participant Pulse report series to examine engagement across Health Saving Accounts (HSA)4 and overall feelings of financial wellness, in addition to 401(k) trends. Key HSA and financial wellness findings include:

• HSA account balances increased by 11.9% over year-end 2022. Average HSA account balances increased from $3,931 to $4,397 in the first six months of 2023.4
• Many HSA account holders continue to save their contributions for future expenses. Nearly 4 in 10 account holders contributed more than they withdrew in Q2, consistent with year-end 2022.4
• Baby Boomers invested their HSAs at higher rates than other generations. On average, only 12% of account holders invested their HSAs for future growth in Q2, with Baby Boomers3 leading at 15%. In addition, more men invested than women (18% vs. 11%).4
• Feelings of financial wellness declined slightly. Out of a possible 100 points, the average financial wellness score for employees was 56, down one point from 57 at year-end, with women trailing men (52 vs. 59).1

Read the full report and methodology (PDF) to learn more.

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Source: Bank of America

https://newsroom.bankofamerica.com/content/newsroom/press-releases/2023/08/bofa-report-finds-average-401-k--balances-up-nearly-10--in-2023-.html

U.S. companies across a range of industries seek to gain an edge in an unusually tight labor market by increasing pay.

Published Aug. 15, 2023 by Jim Tyson, Senior Reporter

Dive Brief:

• Roughly three out of every four CEOs (74%) plan to boost wages by at least 3% during the next year, with most top executives identifying wage growth as the sharpest spur to inflation during the coming 18 months, according to a quarterly survey by the Conference Board and Business Council.
• “Attracting qualified workers remained difficult for the majority of companies,” Conference Board Chief Economist Dana Peterson said in a statement.
• “The competition for talent is fierce,” she said, noting that two out of five CEOs “are maintaining the size of their workforce — a sign of labor hoarding in an extremely tight labor market.” The two-week survey of 127 CEOs concluded July 24.

Dive Insight:

U.S. companies for months have faced challenges hiring and retaining workers, with unemployment falling last month to 3.5% from 3.6% in June and available jobs far exceeding the number of workers seeking employment, according to the Labor Department.

Aiming to attract and retain workers, companies increased hourly wages after inflation by 0.3% last month in the fifth consecutive month of pay hikes. Yet demands for higher pay persist — inflation-adjusted hourly earnings have risen only 1.1% during the past 12 months amid the worst inflation in 40 years.

“There’s still a lot of pressure upwards” on wages, HireQuest CEO Richard Hermanns said during a second quarter earnings call on Thursday, noting “a constant shortage” of workers.

“I was flying through Minneapolis the other day, and you’ve got a restaurant in the middle of the airport closed until two o’clock because they didn’t have enough people,” Hermanns said. HireQuest provides temporary staff services.

CEOs at a broad range of industries — from financial institutions, to cinemas, to transportation firms — are using layoffs, technology and other streamlining to cope with rising labor costs, several top executives said during recent Q2 earnings calls.

UPS reduced compensation and benefits by $205 million during the second quarter by trimming management staff by 2,500 year-over-year, CFO Brian Newman said in an earnings call on Tuesday. The cuts helped blunt a 6.5% increase in average union wage rates during recent labor negotiations, he said.

“One thing that was very important for Teamsters leadership was to front-load some of the wage inflation,” UPS CEO Carol Tomé said. “We agreed to do that, so that does put a little pressure on the margin.”

“We’ll have a bit of pressure for the next year — June to August of next year — but then inflation is very manageable,” Tomé said.

TFI International, a transportation company, recently agreed to a 3% average annual salary increase for five years after cutting its year-over-year shipping costs by 15% compared with last year, CEO Alain Bédard said during a quarterly earnings call on Aug. 1.

ARKO, a convenience store operator, faced a 6.5% rise in personnel costs during Q2 compared with the same period last year, CFO Donald Bassell said during an earnings call on Tuesday.

“We, like others in the industry, have faced wage inflation,” Bassell said. “Our overtime has decreased a tremendous amount and that goes towards, I think, quality of life that we’re getting with people and also getting temp services.”

Still, “the biggest unknown is going to be labor,” he said.

Cinemark Holdings, an operator of cinemas, faced a 12% surge in global salaries and wages during the quarter, on a year-over-year basis, CFO Melissa Hayes Thomas said during an Aug. 4 earnings call. Yet such costs fell 1.6% as a proportion of revenues thanks to higher attendance and streamlining.

“We are still seeing some wage rate pressure,” she said, pointing to higher minimum wage requirements in some states rather than a “labor market dynamic.”

The increase in pay and retirement savings at many companies has buoyed performance at Principal Financial Group, a provider of insurance and manager of retirement assets.

“We are uniquely positioned, that when inflation plays through, especially when it plays through on salary levels, we do get benefits,” Principal CFO Deanna Strable said during a July 28 earnings call. “That plays through from a revenue perspective.”

Yet Principal is also buffeted by labor market headwinds. “We have had to increase salaries because of that inflationary pressure and war for talent,” Strable said.

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Source: HR Dive

https://www.hrdive.com/news/ceos-plan-raise-wages-3-percent-conference-board-inflation-labor-pay/690889/