FreshView
a publication of Cascade Employers Association
 

SEPTEMBER 2012    

  In This Issue:

• Aging Is Refreshing …
• 2013 Minimum Wage Increase
• Survey Spotlight
• Do You Know: How Much Do We Save?
• Wellness Programs Pay Off For Employers

Aging Is Refreshing …

By Jerry E. Bumgarner, CCP
Vice President, Great Performance Solutions
jbumgarner@cascadeemployers.com

I believe people can grow fresher with age … fresher in mind that is. As I’ve “matured” into my senior years, life has clearly become easier for me to take. You might say … like fine wine, it is feasible to say that some things get better with time.

With personal aging as a backdrop, let’s move on to the real subject of this article … the aging of market pay survey data. While market survey data can become too old to use after a period of time, it can also be made fresh again through a process known as aging. For many pay surveys, the data is at least three months old when it is published. While some sources fail to recognize that pay changes over time, the more credible surveys permit you to refresh the data by applying an aging factor to project the data to current and future market pay levels based on historical trends. If your survey doesn’t provide an aging factor it is missing an important feature. By aging the data, users can account for the time lag between data collection, survey publication, and data usage.

Aging is critical for anyone using market pay data to establish competitive pay levels for employees. Your organization’s ability to attract and retain the right talent may depend on aging. This is especially true in a tight labor market when talent supply and demand considerations can place upward pressure on wage and salary levels.

When aging, it is important to recognize that market pay levels don’t necessarily change at the same pace year after year. In fact, based on extensive analysis of historical pay trends in Oregon and the Northwest, Cascade Employers Association recently found that average pay rates increased at a faster pace in the last twelve months than the changes experienced over each of the previous two years. As a result, to be sure its data continues to be representative of actual market practices, Cascade recently increased its survey aging factor from 1.5% to 2.0% annually or (.02/12 = .001667 per month).

But why just 2%? Everyone knows that pay increases have been averaging closer to 3% per year (sources: WorldatWork Salary Budget Survey, Employer Associations of America Salary Budget Survey, and Milliman Surveys). In a word, the answer is erosion. Yes, I said erosion. You can liken it to washing away a layer of top soil. You see, when employee increases are averaging 3% per year, the change in average job rates may only be 2%. These are two very different numbers. Let me try to clarify … whereas average wage increases refer to actual increases awarded to employees during the course of a year, average wage movement reflects the net change in wages for jobs after terminations, new hires, transfers, pay freezes, etc. have been taken into account.

Although a 2% per year aging factor may not seem significant enough to bother with, wage movement does add up over time and will need to be addressed sooner or later … or you might be left with pay practices that adversely affect your ability to recruit and retain qualified talent.

Recommended survey data aging factors are summarized in the table below assuming .001667 per month (12 X .001667 = 2.0% per year).

For the number of months specified, multiply the wage/salary amount in question times the corresponding aging factor to get the aged wage/salary amount. For example: $35,000 X 1.015003 (assumes 9 mos.) = $35,525.11.

It is also important to keep in mind that the right aging factor for individual jobs, job groups, and your specific location may be different depending on local market pay trends.

Aging Made Easy

With the Oregon Regional Pay Survey from SalaryTrends^® (a brief tutorial), Cascade has made the aging of data easier than ever through a custom reporting tool that, among other valuable features, allows you to age the pay data to any date you choose in the future. You won’t want to miss this feature. If you would like help determining what aging factors are right for jobs in your area, contact us any time.

TOP

2013 Minimum Wage Increase

By Jenna Reed, JD, MBA
General Counsel and Director, Compliance Services
jreed@cascadeemployers.com

Effective January 1, 2013, Oregon’s minimum wage will increase from $8.80 per hour to $8.95 per hour.

Washington state has yet to announce if its minimum wage will also increase.

TOP

Survey Spotlight

By Tina Hamel, Survey Manager
thamel@cascadeemployers.com

SalaryTrends^® surveys from Cascade Employers Association cover the pay practices of diverse organizations from various markets (Oregon, SW Washington, Northwest Regional, and National), and include multiple relevant data summaries. These valuable tools enable users to evaluate their competitiveness within specific talent markets.

Open for Participation:

• HR Policies & Benefits (Participate Now!)
• Oregon Regional Pay Survey (Always Open)

Opening for Participation in October:

• Sales Compensation Survey

Contact us with questions at surveys@salarytrends.com.

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Do You Know: How Much Do We Save?

Source: CCH/CareerBuilder

More than a quarter of workers (27%) do not save anything each month — the same as last year. Thirty percent save more than $250 and one in ten (10%) save more than $1,000.

Sixty-seven percent of workers contribute to a 401(k), IRA or comparable retirement plan, similar to 2011 (66%). Twenty percent of workers said they reduced their contribution to these plans in the last year, which is also relatively unchanged from 2011 (21%).

Additionally, workers age 55+ are more likely than those workers age 25-54 to report saving more than $1,000 dollars a month (13%) and most likely to participate in a 401(k), IRA or comparable plan (73 percent).

TOP

Wellness Programs Pay Off For Employers

By CCH; Source: www.ifebp.org

Most employers that have analyzed the financial impacts of their wellness programs have found $1 to $3 decreases in their overall health care costs for every dollar spent, according to the report titled A Closer Look: Wellness ROI by the International Foundation of Employee Benefit Plans. The report examines data from the Foundation’s recent Wellness and Value-Based Health Care survey and compares results between organizations that have analyzed the financial impacts of their wellness programs and those that have not.

“Without question, employers are beginning to understand the direct connection that wellness initiatives can have on both employee health and health care plan cost savings,” said Michael Wilson, Foundation CEO. “While the primary goal is reducing health costs, we’re also seeing other advantages from wellness initiatives, such as higher employee morale, increased productivity and reduced disability.”

The report also found that wellness program incentives, such as insurance premium reductions, and communication tools like web links and social networks are used more by organizations that are achieving positive returns on their wellness investment.

“While only 19 percent of our members are analyzing the financial data of their wellness programs, the data gives us insights regarding initiatives in their programs that are successful and may provide a blueprint for other organizations in developing or improving their own wellness campaigns,” said Wilson.

The Foundation divided the respondents of the survey into two groups, the ROI group and the non-ROI group based on whether they measured and achieved positive returns. The data revealed significant differences between the two groups when it came to providing incentives and communicating wellness with the workforce.

Insurance premium reductions for participation in wellness programs accounted for the biggest difference between the two groups, with 49 percent of the ROI group providing this incentive as opposed to just 29 percent of the non-ROI group. Other popular incentives included gift cards and non-cash incentives/prizes/raffles. Those in the ROI group were also more likely than their counterparts to attach incentives to specific types of initiatives such as health screenings (65 percent to 43 percent), health risk assessments (74 to 51) and health care coaches/advocates (43 to 22). Participation among members of organizations in the ROI group increased dramatically when incentives are tied to health screenings and health risk assessments.

Communication was one of the most frequently cited reasons for achieving positive ROI given by organizations in the open-ended response section of the survey. Organizations experiencing ROI are more likely than the non-ROI group to provide most types of wellness information and electronic communications, such as web links (43 percent to 32 percent), social networks (18 to nine) and wellness seminars and speakers (65 to 45).

The survey, completed by members of the International Foundation, found that almost 74 percent of organizations experiencing ROI are more likely to have a broader value-based health care strategy that offers initiatives such as health screenings, stress management programs, health risk assessments, and fitness and nutrition programs compared to just 45 percent of the non-ROI group.

“Determining ROI can be of great benefit for employers—leading to increased buy-in from organizational leaders and workers,” explained Julie Stich, the Foundation’s Director of Research. “However it’s not an easy process. ROI can be difficult to measure since health improvement may be influenced by a combination of factors and because it can take anywhere from three to five years to see cost-saving results.”

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