Post-COVID Compensation, Time Off, and Benefits
With a possible recession looming on the horizon and the workforce finally getting back into (mostly) full swing, workers are starting to broach the larger topics of compensation, time off and benefits in a (mostly) post-COVID environment. While yes, many are still working from home, workers at the managerial and executive levels are typically devoting those hours that used to be dedicated to drive-time into additional worktime.
There are three areas that affect all workers: compensation, time off and benefits. Although time off is considered a benefit, we are distinguishing it for these purposes.
Insights into pay parity and transparency including minimum wage requirements at state and local levels; new standards for paid sick leave and paid time off; and the umbrella of broader benefits all continue to be in the spotlight.
Compensation and inflation
According to an article in SHRM.org, many companies are increasing pay transparency to reduce gender and racial pay gaps. Pay range disclosure is being carried out in 17% of companies – even where not required by law, according to a WTW survey. An added 62% plan to or are considering disclosure. While 71% will use a consistent approach across all jobs; 57% will apply a geographic policy to decide rates or ranges.
The posting of compensation will soon be required in a dozen U.S. states and cities. In fact, California, Colorado, Connecticut, and Nevada have already passed legislation requiring the inclusion of salary ranges in job postings. And it will be required in Washington state starting January 1, 2023.
Currently, the hourly minimum wage is set to rise in several states on January 1, 2023, with others following on July 1, 2023. For many states, the minimum wage will increase by approximately $1 per hour. Generally, in states with a high standard of living, the minimum wage is higher – $11 – $15 per hour. Some cities also have their own wage standards. The federal minimum wage of $7.25 per hour remains, and several states will continue to adhere to this guideline and do not anticipate any increases in 2023.
According to the U. S. Bureau of Labor Statistics, total compensation among private industry workers in all industries and occupations have gone up exponentially over the past two years. However, after the pandemic, prices have gone up exponentially as well. This leaves companies combatting inflation and trying to provide a living wage while still turning a profit.
Time off challenges
Even with many working from home, paid sick leave and paid time off are still hot buttons because workers don’t want to be “on” 24/7 just because they work from home and have access to their work computers. Surprisingly, some laws regarding paid sick leave have remained unchanged since 2012 in certain states. Each state varies with maximum accruals and carryovers, minimum hours per day, and annual allowable amount limit, so when workers move, some of the changes are shocking. Additionally, most states have a waiting period to be eligible for benefits and sick time, which is typically 90 days; but it can range from no waiting period to a lengthy 180 days in the U.S.
And then there’s the policy for COVID-related illness…or lack thereof. While some states or municipalities such as California, Colorado, New York, and Washington, D.C. offer COVID-specific guidance; others such as Alabama, Iowa, and Texas neither protect nor allow for any COVID-specific sick leave. This can pave the way for some unique challenges not only for workers but for companies. Unpaid time off, especially any extended time off, can lead to a worker not meeting monthly obligations such as mortgages, rent, or car notes.
Benefits or not?
There are some benefits that are mandates by law depending on a company’s size. When considering benefits, an article by The Balance states that “depending on the company, a standard benefits package of an employee may include health insurance (required to be offered by larger companies), dental insurance, vision care, life insurance, legal insurance, paid vacation leave, personal leave, sick leave, child care, fitness, retirement benefits and planning services, college debt relief, pet insurance, and other optional benefits offered to employees and their families.”
Some companies – especially tech and other startups – also offer creative perks such as company-sponsored meal plans (or on-site cafeterias), housekeeping services, car washes, half-days for errands and other interesting incentives. And, of course, benefits for full-time employees may be different for workers in contingent roles.
Inflation continues to play a large role regarding compensation and benefits, affecting businesses as well as workers. It’s becoming increasingly more challenging for a company to balance the needs of the worker with the expectations of the shareholder.
Employers recognize that inflation is having an impact on their team and are continually examining their position on the overall worker experience. They’re working diligently to analyze areas where they can make an impact on aggregate compensation and benefits.
Many factors contribute to an organization’s ability to stay competitive to attract and retain talent. Recently, the Federal Reserve announced another 0.75 percentage point rate hike following its November 1-2 meeting. So, for example, if an organization relies on a revolving line of credit, they’re going to feel the squeeze right along with consumers due to higher interest rates, which impacts their bottom line.
We believe that leaders will continue to work with their employees to establish incentive programs that are fair to all parties and drive the desired results, while continuing to create a remarkable culture in an increasingly complex environment.