Economic Reseach Institute Newsletter Sept 2010

In This Issue:

1. Thinking about Salary Increases in 2011
2. Analyzing and Using Salary Survey Data Webinar
3. Job Classification: State Variations
4. Many Employers Revising 2011 Health Benefit Programs
5. ERI Survey Overview
6. ERI Distance Learning Center Online Courses
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Thinking about Salary Increases in 2011

Merit salary increase plans/levels are a totally different topic than salary structure movements. Even in down times with high unemployment, organizations will keep their increase methodology disciplines. Although not publishing a Salary Increase Survey this year, ERI has collected data indicating 2.3% as the mode target average of merit increases in the private sector; this is a bit below the all industry average of ~2.7% forecasted by associations and consulting firms.

Consider these key points:
1) Not every salaried employee will receive a salary increase.  One employee might get 4%, while the next may receive 0%.
2) Even though a merit increase budget exists, the average salary for many jobs may go down because there is always turnover caused by retirements, those finding work elsewhere, internal promotions, salary cuts in 2008-10, etc. Examples follow:

• If a senior engineer earning $75,000/year retires, a less experienced engineer may be hired to take his/her place at $35,000/ year.
• If a draftsperson accepts an internal job promotion (e.g., an estimator position), his/her replacement might be a draftsperson at a lower salary who will receive a modest promotion adjustment or none at all.
• If an enterprise wishes to focus on variable pay or impose further salary cuts, average guaranteed pay levels may tumble.

With 2% merit budgets, it doesn’t take much turnover to see the average surveyed wage/salary per job going down. That is, turnover causes average salaries paid per job to slip, often offsetting any growth caused by small merit budgets. To see a gain in salaries for specific jobs from one year to the next, merit budgets have to be larger than the slippage caused by turnover described above. ERI researchers, who have been at this since 1968, have seen this before. There is nothing new here except for the modest size of the salary increases and the magnitude of the economic downturn. It might be time to spread one’s salary structure ranges a bit.

For up-to-date Salary Data, Go Here...
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Analyzing and Using Salary Survey Data Webinar

Date: Sep 14, 2010, 9:00 AM - 10:30 AM (Pacific)

Overview:
Price: $110
External competitiveness is a prime objective for most organizations, but the approach taken to measure competitiveness may differ from one organization to another. In fact, competitive objectives may change within the same organization over time, especially when financial performance fluctuates.

The goal of "market pricing" is to collect and analyze data that will meet the organizational objective of identifying external competitiveness. Market pricing is not an exact science, but a sound and practical approach using summary statistics from published surveys can add validity to the market pricing process.

This webinar will discuss practical guidelines that may be used for identifying, selecting, analyzing, and using market data to complete essential tasks in determining external competitiveness and establishing a competitive market-based pay program. The importance of communicating the compensation program effectively will also be discussed and practical tips will be provided to assist you in “getting the message” to your employees so that they may understand and, ultimately, buy into the program

Learning Objectives:

• How to define your organization’s compensation philosophy and market pricing objectives
  
• Identification and selection of salary survey sources
  
• The importance of matching benchmark jobs
  
• How to interpret salary survey data
  
• How to determine market rates and competitiveness of current pay
  
• Considerations in developing salary ranges
  
• Ways to adjust or update a pay structure
  
• Tips on communicating the compensation plan

Register now...
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Job Classification: State Variations

ERI is in the process of adding state exempt/nonexempt estimations to the Occupational Assessor. There are four basic state divisions:

1) those with no overtime laws and only the federal law applies;

2) those with regulations, but they are aligned (for the nonexempt/exempt tests) with the US Part 541 rules;

3) those that use the FLSA measures and tests, but exempt certain positions, industries, and/or job families
(e.g., mining and shrimp processing workers in Alaska, golf caddies and private country clubs in New Hampshire, etc.), representing ~30% of all jobs, illustrating the problem with a classification system that must cover all situations; and

4) those that enhance the US FLSA far past special citations by adopting unique overtime testing methodologies, best described as evolutions of the pre-2004 FLSA short or long tests, but all with slight differences that can be significant. For example, Connecticut requires executive exemptions to “not devote more than twenty percent ... of work ... to activities which are not directly and closely related to the performance of the work described,” while New Jersey defines the same test threshold as “devotes less than 20 percent of his or her workweek to non-exempt work. ” California is the most unconventional, discarding “primary duty” for “primarily engaged in,” meaning that more than one-half of the employee’s work time must be spent engaged in exempt work; this differs substantially from the federal test. State lawmakers also exempt favored classes (e.g., camping guides in Montana, sheepherders in California, beer delivery truck drivers in Connecticut, etc.). Maximum and minimum thresholds, a long list of jobs defined as exempt and nonexempt (e.g., registered nurses), and other variances make manual testing a complex administrative task.

Learn more by signing up for one of our complimentary Webinars...
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Many Employers Revising 2011 Health Benefit Programs

Are you one of many employers looking at revising your 2011 health benefit programs as a result of both health reform and anticipated health benefit cost increases? Maintaining competitive health care benefits represents a significant financial obstacle for most organizations. Start with current, reliable comparative data from hundreds of organizations throughout the United States when evaluating your 2011 health care plans.

Plan features and comparative values are reported by industry, geographic region, total employment and organization sector. The data effective date is January 1, 2010.

2010 Health Care Benefits Benchmarking Survey
$289.00 (Non Participants)
$144.50 (Participants)

Features of the Survey:
•  Health Care Benefits for Part-Time Employees
•  Health Care Benefits for Retired Employees
•  Tax-Advantaged Programs
•  Eligibility Requirements
•  General Features of Medical Coverage
•  Types of Medical Plans Offered
•  Opt-Out Provisions
•  Co-Payments and Coinsurance Amounts
•  Medical Plan Costs
•  Plan Maximums
•  Pharmacy
•  Cost-Saving Measures
•  Types of Dental Plans Offered
•  Dental Plan Costs
•  Vision Benefits

ERI Survey Overview

ERI’s “old-fashioned” salary surveys, released July 2010, reported a  slowing in salary growth, but not for highly skilled jobs. Also apparent was the decrease in rates at the bottom of salary ranges. From ERI’s other data collections (e.g., digitization, leasing of datasets, one-position survey purchases, etc.), the distribution of salary ranges  is “spreading,” with the mean and higher earners’ salaries moving slightly upward, and the lower pay levels decreasing dramatically (in contrast to their historic gentle following of these other values). Salary surveys with long established participant groups may mask this in work forces that do no have much turnover (or by including the public sector with its high salary increases; see the July 2010 newsletter). The results fit logic if one accepts the U-6 employment rate at ~16%; there should be an available workforce to fill these job openings at lower rates.

Learn more...
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ERI Distance Learning Center Online Courses
Human Resource Training:

Learn more...