Change and productive disruption are sweeping through countless aspects of our modern world, advancing the domains of technology, knowledge, education and social responsibility. Age-old discrimination practices are finally being outed and condemned on the global stage. With all this upheaval, the overwhelming societal trend for 2018 is toward progress, equality and fairness — and employers are being challenged to rise to the occasion.
These cultural and economic shifts are having an unmistakable impact on U.S. workforce trends to the extent that a new precedent has taken root. People are becoming more concerned with the overall employee experience and aligning their personal values with company values. Accordingly, today’s top workforce trends are about fair pay practices, supporting individuals and making a positive contribution to workplace change.
The top five workforce trends to follow for the rest of 2018 are:
- Salary history bans
- Paid family leave
- Continuing education (triggered by the rise of artificial intelligence)
- Health-care ambiguity and disruption
- Maximization of the total rewards budget.
SALARY HISTORY BANS
In December 2017, Delaware became the first state to enact a salary history ban into law, effectively prohibiting employers from seeking salary history information from job applicants. Requesting the salary history of job applicants is not universally banned in the United States, but it’s quickly gaining momentum. There are now policies in place in California, Delaware, Massachusetts, New Orleans, New York City, Oregon, Pittsburgh and Puerto Rico.
Behind this increasingly popular policy is the rationale that salary history questions contribute to promoting the gender pay gap and wage discrimination. If someone was affected by wage discrimination in the past and moved to a new job in which he or she was required to report his or her wage history, the new employer would hypothetically offer this person a salary based on his or her previous earnings. In turn, the cycle of wage discrimination would continue to snowball through the course of this person’s career. By implementing a ban on wage history information, this cycle can be broken, and the potential for a fairer playing field can begin to emerge.
Regardless of whether your state or municipality has a ban on salary history, it is important to be cognizant of the shift in the collective mindset taking place. Failing to adapt hiring practices could result in developing a reputation of being insensitive or behind the times. Many multistate employers choose to adopt the most stringent individual state policies into their universal hiring process.
PAID FAMILY LEAVE
Only eight countries do not guarantee paid maternity leave; one is the United States. An Associated Press-NORC Center for Public Affairs Research poll shows that 72% of Americans support paid family leave, and yet only 14% of the U.S. private-sector workforce has access to such benefits. It’s predictable, then, that changes to paid family leave policies are a primary total rewards trend in 2018 and the coming years. There are two main contributors to the current rise of paid family leave.
First, we are in the midst of a women’s movement. More women are using their voice to demand change and advocate for women’s issues. Sen. Kirsten Gillibrand (D-NY), a pioneer for paid family leave, said, “One of the only silver linings of the Trump presidency is that more and more women are feeling emboldened to raise their voices and fight for the issues that matter most to them, from sexual harassment in the workplace to paid leave.”
In the past year, we’ve seen women taking a stand to effect change, beginning with the millions who took to the streets for the Women’s March and the many more that built on this momentum to power the #MeToo movement. As a result, the spotlight is shining brightly on related workplace issues, such as the fact that women still make 80 cents on the dollar compared to their male counterparts, and the unfortunate reality that the U.S. is lagging the rest of the world in protecting paid family leave. Paid maternity leave has been shown to increase the number of women in the workforce and to improve their average wages, according to a recent study by the Boston Consulting Group.
Secondly, Millennials, who place more importance on family leave than any prior generation, will make up 75% of the workforce by 2025. This generation not only has different values than prior generations, its members (born from 1982 through 2000) have a much higher Incidence of dual-earner households. Millennials (78%) are almost twice as likely as Baby Boomers (47%) to have a spouse/partner working full time, according to a recent survey by EY.
In the absence of federal legislation, many forwardthinking companies have taken the initiative to offer generous paid leave benefits and have attracted a lot of media attention by doing so. Though the movement began in the tech industry, the media attention that followed aroused demand in other sectors, especially within companies wanting to be seen as industry leaders, or those that are committed to a “best place to work” reputation.
It is likely that more companies will enrich their benefits policies to include paid family leave in their total rewards package. If paid family leave becomes a new standard, it is because companies want to attract and retain talent and remain competitive in the Millennial-dominated job market.
(Triggered by the Rise of Artificial Intelligence)
We see AI everywhere — Siri is in our pockets, Alexa and Nest are in our homes, Pandora chooses songs it thinks we will like, and Facebook can recognize faces. As technology and AI continue to advance, creating phenomenal industry disruptions in their wake, many jobs and career paths are becoming obsolete. One such example is the rollout of autonomous vehicles. Elon Musk noted in a recent talk that as autonomous vehicles replace people whose job it is to drive cars, 12% to 15% of the global workforce will become unemployed. Additionally, per an article by McKinsey, 45% of people’s job duties could be automated by existing technology alone.
Countless people are facing the loss of their jobs in the foreseeable future and will need to acquire new skills to stay relevant in the job market. This, in turn, creates a major demand for affordable education at a time when college tuition and fees are still on the rise. This issue has caused a wave of people to abandon traditional education and turn to free and low-cost online resources for their professional development needs. Not only are these avenues more affordable, they are tenfold more convenient for working professionals, as lessons can be viewed remotely and at any time. Learning platforms such as LinkedIn Learning, Skillshare and Coursera are transforming education, making it accessible to a wider range of people.
Those technological changes are predicted to produce a large skills gap in the coming years. Many jobs that will need to be filled are not yet in existence. To get ahead of this, organizations have begun sponsoring the continued training and education of their employees through these low-cost online learning platforms. Supporting employees with continuing education, training and development will continue to be a valuable component of an employee’s total rewards package and establishes a supportive relationship between the employer and employees.
HEALTH-CARE AMBIGUITY AND DISRUPTION
The future of U.S. health care is shrouded in mystery, making both businesses and individuals apprehensive of what’s to come. The only thing that seems certain in the short term is that health-care costs will continue to rise. With such sentiments, many agree that the healthcare
industry is prime for disruption, a project that Amazon.com Inc., JPMorgan Chase & Co. and Berkshire Hathaway are actively taking on. Amazon already is beginning to make inroads, offering lower prices than its brick-and-mortar competition on over-the-counter medication. It will be interesting to see how health-care disruption plays out, and what this will mean for the future of U.S. health care.
In the meantime, a popular response to rising healthcare costs is for employers to select higher deductible plans and increase cost sharing with the employees. Not many companies are immune to this trend, so it is unlikely to be a large deterrent for a prospective employees, for now.
Another popular strategy is employers setting up health savings accounts (HSAs) for their workforce. This trend is catching on, as it requires employees to manage their own accounts and become responsible for how much they are spending, potentially resulting in more cost-effective health-care choices. Employees are able to contribute pre-tax dollars, while employers can enhance their benefits offerings by also funding these HSAs. The contribution limits for 2018 are $3,450 for a single person and $6,900 for a family.
MAXIMIZATION OF THE TOTAL REWARDS BUDGET
With trends such as paid leave and employer-sponsored education, some might argue that they don’t have room in their budget for additional programs. The key to offering a great total rewards package is focusing on the things employees value the most. Performing an annual audit of your rewards expenditures compared to the value they provide can be an eye-opening exercise.
Often, once programs are in place, they continue running without question or re-evaluation, even if their value is no longer significant. For example, one program under scrutiny in today’s agile business environment is severance. First invented to bridge separated employees to their next job opportunity, severance has morphed to represent a windfall entitlement. It often looks like large sums of money walking out the door with someone who has a new job already lined up.
Some companies are re-examining their severance programs and replacing their conventional structure with a strategy borrowed from the 1950s union era: supplemental unemployment benefits (SUB) plans. Under a SUB plan, separation benefits are non-FICA taxable and are paid in conjunction with state unemployment compensation. Like unemployment, the SUB payments end when the employee finds another job while severance pay runs for a set time regardless of the laid-off employee’s job status. Employers using a SUB plan to make separation payments typically incur savings of 30% to 50% compared to traditional lumpsum severance programs. A SUB plan allows released employees to be kept whole, while also freeing up significant company resources. These resources then can be reallocated to the benefits most relevant to employees, such as paid family leave, HSA funding and training and education.
GOING BEYOND A REGULAR PAYCHECK
Online forums such as Glassdoor.com make it easy for employees to share information about workplace culture and polices. Pay practices, benefits, work environment, and the company’s commitment (or non-commitment) to work-life effectiveness and health are now a part of the public domain for all to see. With such increased transparency, it’s essential for companies to engage in fair compensation and employment practices aligned with company values and social responsibility.
Based on current workplace trends, how employers attract and retain top talent largely will depend on their ability to tune in and adjust their total rewards perspective to best support employees financially and holistically. Employees want to be proud of the place they work. They crave a supportive relationship with their employer that empowers them to reach their goals in and out of the office. Today’s employees expect their employers to go beyond providing a regular paycheck. They want to see them make a positive contribution to workplace change and progress.
Lana R. Mellis is manager of business development and client services at Transition Services Inc..