Category Archives: Compensation

Pay for Performance in Modern Compensation Practices

Source: Sanghee Park, OnlineFirst, Compensation & Benefits Review, Published December 28, 2018
(subscription required)

From the abstract:
Although researchers have long discussed the mixed results regarding the effectiveness of pay for performance (PFP), compensation research has not fully captured the complexity of the current PFP environments. Using individual data gathered from diverse organizations through an online survey, this study shows the current status of PFP environments that employees now face within an organization. The theoretical and practical implications for understanding the complex environments in current organizations regarding the effectiveness of PFP plans are discussed. Suggestions for future compensation research are also provided.

Millennial Motivation Issues Related to Compensation and Benefits: Suggestions for Improved Retention

Source: Daniel L. Morrell, Kristie A. Abston, Compensation & Benefits Review, OnlineFirst, Published January 7, 2019
(subscription required)

From the abstract:
Millennials are currently the largest generation at work and will reach an estimated 75% of the labor force by 2025. Studies have shown that millennials hold slightly different attitudes toward work when compared with previous generations. They more readily change jobs and are generally less committed to their organizations, with an estimated 66% of millennial employees planning to leave their current company within 5 years. These differences in work values necessitate changes in current approaches to compensation and benefit packages that would better align with these changing values. The goal of this article is to review recent empirical data on Millennials as compared with previous generations and then offer suggestions for what changes might improve retention.

What labor market changes have generated inequality and wage suppression?

Source: Josh Bivens and Heidi Shierholz, Economic Policy Institute, December 12, 2018

Employer power is significant but largely constant, whereas workers’ power has been eroded by policy actions.

What this report finds: Labor markets in capitalist economies are fundamentally tilted against individual workers’ ability to bargain effectively with employers. Policy does not have to be rigged for employers to give them particular clout in labor markets; instead, the very nature of these labor markets gives them clout. In the past, when economic growth was broadly shared across the population, it was because policymakers understood this basic asymmetry and used policy levers to bolster the leverage and bargaining power of workers. Conversely, recent decades’ rise of inequality and anemic wage growth has resulted from a stripping away of these policy bulwarks to workers’ labor market power.

Why it matters: Recent research on “monopsony power”—the leverage enjoyed by employers to set their workers’ pay—is a valuable contribution to our understanding of the asymmetry inherent in labor markets. However, “monopsony power” is often a confusing term to even the most savvy economic writers and researchers, and too often it is used only to describe markets that are concentrated (i.e., where there are relatively few employers). Market concentration can indeed suppress workers’ wages, but employer power exists even in markets with lots of employers. If only the narrow conception of “monopsony power” is recognized and policymakers focus only on interventions that target the effect of market concentration (antitrust, for example), then other measures that could more effectively restore the balance of power in labor markets might not get the consideration they should.

What can be done about it: There is no one panacea for restoring workers’ leverage and bargaining power in labor markets. Policymakers must be committed to working on every available margin, including restoring genuine full employment as a macroeconomic policy priority; reforming labor law so that workers who want to form a union to collectively bargain to improve their wages and working conditions are able to do so; raising the minimum wage; and strengthening enforcement of labor standards and workplace civil rights laws.

Pay Communications and Fairness: An Employee Perspective

Source: Dow Scott, Compensation & Benefits Review, Advance Access, First Published November 20, 2018
(subscription required)

From the abstract:
A variety of tools are used to create perceptions of fairness including job evaluation, pay surveys and merit pay guide charts, but without effective pay communications the benefits of fair pay programs can be lost. Increased access to information about pay (e.g., salary.com, O’net and Monster.com), along with increased use of social media where personal information is routinely shared, has changed employee attitudes about pay transparency and information employers should communicate about pay. This study examines the relationships of pay communications, pay transparency and pay understanding with employee perceptions of pay fairness. Data collected from 300 full-time employees across as many organizations found that pay understanding mediated the relationship between pay communications and pay fairness, while controlling for gender, education level, age and income level of respondents. When pay communications was controlled for in mediation analysis, variance attributed to pay transparency disappeared.

Blue-Collar Worker Shortages: Navigating a Business Environment of Higher Labor Costs

Source: Gad Levanon, Frank Steemers, The Conference Board, December 2018
(subscription required)

From the abstract:
The threat of labor shortages is more acute in blue-collar and low-pay services occupations than in more highly educated white-collar occupations, the exact opposite of the prevailing trends in recent decades. We expect that by the end of 2019, the labor market will be historically tight. Industries that employ large shares of blue-collar workers, such as agriculture, mining, utilities, construction, manufacturing, transportation, accommodation and food services, repair, maintenance, and personal care services, are strongly affected by rising wages and shrinking supply. While the labor white-collar market is also tight, wage growth for the 40 percent of workers in management, professional, and related occupations is slow to accelerate. Sales and office workers, most of whom do not have a bachelor’s degree, are in shorter supply than management and professional workers.

Related:
Blue Collar Worker Shortage Turns U.S. Labor Market on Its Head
Source: Rich Miller, Bloomberg, December 13, 2018

The Salary Question: Negotiating the ins and outs of earning a fair compensation

Source: American Libraries, Vol. 49 nos. 11/12, November/December 2018

For more than 10 years, David Connolly has interacted with job seekers and employers in his role as recruitment ad sales manager with ALA JobLIST, the online career center administered by American Libraries, ACRL’s College and Research Libraries News magazine, and ALA’s Office for Human Resource Development and Recruitment. We asked Connolly for his insights on salary negotiations, including the biggest mistake applicants make regarding salary…..

Look West for Strongest Growth Since the Recession

Source: Barb Rosewicz & Joe Fleming, Pew Charitable Trusts, November 19, 2018

The second-longest U.S. economic expansion has played out unevenly across states. Growth has been strongest in North Dakota and a group of mostly Western states and weakest in Connecticut, as measured by the rate of change in each state’s total personal income since the start of the Great Recession. In the first half of 2018, all but a couple of states shared in widespread gains.

The national recovery has been long-running, but growth in total U.S. personal income is still off its historic pace. As of the second quarter of 2018, the combined personal income of U.S. residents rose by the equivalent of 1.9 percent a year over the 10-plus years since the recession began, compared with the equivalent of 2.3 percent over the past 20 years, after accounting for inflation.

The rates represent the constant pace at which inflation-adjusted state personal income would need to grow each year to reach the most recent level and are one way of tracking a state’s economy.

After tumbling nationwide except in West Virginia during the depths of the recession, personal income totals have recovered in all states but have grown at far different rates.

Eight states’ growth since the start of recession beat the 20-year U.S. rate as of the second quarter of 2018, and nearly all were in the West. North Dakota once again led; the sum of its residents’ personal income has increased the equivalent of 3.3 percent a year. Connecticut and four other states recorded the weakest recovery, with growth rates at or below the equivalent of 1 percent a year. None of those states are in the West.

Related:
States’ Personal Income Recovers Unevenly From Recession (PDF)
49 States’ Estimated Personal Income Grew Over Past Year (PDF)
Number of States in Which Inflation-Adjusted Personal Income Fell (PDF)

Five-Year Trends Available for Median Household Income, Poverty Rates and Computer and Internet Use

Source: U.S. Census Bureau, Press Release, Release Number CB18-187, December 6, 2018

Today, the U.S. Census Bureau announced the release of the 2013-2017 American Community Survey (ACS) five-year estimates, which features more than 40 social, economic, housing and demographic topics, including homeownership rates and costs, health insurance, and educational attainment. The ACS five-year data release produces statistics for all of the nation’s 3,142 counties. It is the only full data set available for the 2,316 counties with populations too small to produce a complete set of single-year ACS estimates. ….

Some highlights from the report include that, when comparing the 2013-2017 period to the 2008-2012 period, median household income increased in 16.6 percent of all counties (521 counties) between the 2008-2012 period and the 2013-2017 period while poverty declined in 14 percent of all counties 441 counties). Alternatively, when comparing the same time periods, median household income declined in 222 counties (7.1 percent) and poverty rates increased in 264 counties (8.4 percent)…..