Employee compensation remains in a holding pattern
A new compensation report released Wednesday suggests workers' wages and benefits barely budged through the first quarter of 2015.
Private sector employers spent an average of $31.65 per hour on wages and benefits for each of their workers in March, according to a report released Wednesday by the Labor Department. That's up only 1 percent from December's $31.32 hourly compensation, though it's still 5.5 percent higher than last March's $29.99.
The Wednesday report is the latest chapter in a saga of sluggish wage and compensation gains for America's workforce. A report from the Bureau of Economic Analysis showed disposable personal income in April ticked up only 0.4 percent month over month after increasing less than 0.1 percent in March.
And a separate report released by the Labor Department Friday showed American workers' average hourly earnings in May have increased less than 1 percent since March and were up a meager 2.3 percent year over year.
"Everybody's waiting for the other shoe to drop on wages," says Andrew Chamberlain, chief economist at employment site Glassdoor. "We know wages will eventually start picking up."
Tightness in the labor market may help drive that increase sooner rather than later. A separate Job Openings and Labor Turnover Summary released by the Labor Department on Tuesday showed a record number of job openings at the end of April, but the number of new hires that month dropped 81,000 from March. The number of workers who chose to quite their jobs voluntarily in April, which is generally considered to be a sign of labor market confidence among employees, also fell nearly 200,000 month over month.
The Tuesday report suggests plenty of employers are looking to attract talent, but they aren't having much luck reeling in precisely what they're looking for. Plenty of factors could be contributing to this trend, ranging from a skilled labor shortage, a less-than-confident consumer or unreasonable employer expectations.
The bottom line is increasing compensation is one of the most fundamental ways an employer can attract new talent. And raising wages is far from an employers' only option.
"People take their compensation in a bunch of ways – wages plus benefits – and that employer cost [report] captures a lot of those other [benefits]," Chamberlain says.
That Wednesday report showed wages and salaries in March accounted for only 68.3 percent of all employee compensation costs to employers. The rest of the costs were paid out in the form of benefits.
Health insurance benefits made up 7.7 percent of workers' total compensation in March, while 4.1 percent of employers' costs went into employee retirement and savings plans like 401(k)s.
Paid leave made up 6.9 percent of workers' compensation in March, down slightly from March 2014's 7 percent. Paid leave has become a particularly contentious issue among workers and employers, especially as it relates to maternity and paternity leave.
A reported 58 percent of U.S. employers offered "some replacement pay beyond any paid sick, vacation, or personal days" for new mothers last year, according to a 2014 study released by the Families and Work Institute nonprofit. Only 14 percent of employers offered some form of paternity leave.
Federal law requires employers with at least 50 employees within 75-miles of their worksites to offer at least 12 weeks of unpaid leave for "childbirth, adoption, foster care placement, a serious personal medical condition or care of a child or spouse with a serious medical condition," assuming the employee worked at least 1,250 hours the year before, according to the report.
And while Democrats in particular have recently pushed for more paid leave reforms, a report issued Monday by the Independent Women's Forum indicates such reforms may not be the best option for workers or their employers.
"When we have these policy discussions about pay equity or paid leave, we're often working under the assumption that women's preferences in the workplace are all the same," Sabrina Schaeffer, the forum's executive director, said in a statement Monday. "One-size-fits-all workplace solutions that Democrats continuously propose won't benefit women or the economy."
The study surveyed a sample of 1,000 women to get a feel for their ideal work compensation, benefits and flexibility. It found that women were 17 percentage points more likely to choose a job that offered 15 paid vacation and sick days than one without any form of paid leave.
"Offering paid days off has a big impact, even compared with salary increases," according to the report. "But the impact of paid days off levels around the 15-day mark, and there is little or no benefit to offering employees more paid days off beyond that point."
But employers looking to attract new talent while cutting corners on costs could potentially offer more job flexibility in place of raises or paid leave, according to the report.
"Offering a combination of flexible schedules, telecommuting, and reduced hours is about equivalent to offering 10 paid vacation and sick days or between $5,000 to $10,000 in extra salary," according to the report. "Salary has a huge impact on job choice, but other forms of compensation matter as well."
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