AGENDA. Economic Overview National and Local Pay Trends Trends in Compensation Practices Budget Data Considerations Your Next Steps

Transcription

1

2 AGENDA Economic Overview National and Local Pay Trends Trends in Compensation Practices Budget Data Considerations Your Next Steps

3 SEATTLE AREA: TIGHT JOB MARKET Low Unemployment rate Nation-wide = 8% 2017 = 4.1% as of July 2018 = 3.9% Regional Statewide 1 = 4.6% Seattle/Tacoma/Bellevue 1 = 4.1% Olympia/Tumwater 1 = 4.7% City of Seattle 2 May 2018 = 3.0% ECONOMIC AND COST OF LIVING BOOM Huge business growth 2 Service Retail Construction Rent and housing costs skyrocket Median home price gain in 2017 = 14.1% 4 LOCAL WAGE GROWTH Seattle average income gains outpace 2 +30% > Nation +20% > State Min wage increase <500 = +$1 $14 (no benefits) +$.50 $11.50 (with benefits) >501 = +$1.50 $15 (with benefits) 1 Bureau of Labor Statistics Website (Regional data reported as of July 2018) 2 Seattle Office of Economic Development 3 Seattle Office of Labor Standards 4 Windermere Real Estate

4 Unemployment by Industry - King County 2.2% Industries with 2% or lower Unemployment: 2.4% 3.7% 4.3% 4.5% 4.8% Finance and Insurance Real Estate and Rental and Leasing Crop and Animal Production Management of Companies and Enterprises 5.1% Utilities 5.2% Mining, Quarrying, and Oil and Gas Extraction 5.3% 7.1% 7.6% 7.6% 9.0% 10.4% Almost 5% higher than national unemployment rate Almost 3% higher than national unemployment rate 16.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% Over 5% higher than nat l unempl. rate Source: Seattle Office of Economic Development

5 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2.9% 2.9% 1.9% 2.0% 1.7% 1.1% 3.1% 3.1% Increase to Total Compensation Cost* June June 2018 According to the BLS 1, Seattle/Tacoma area has seen the largest increase to Total Compensation Cost in the US, more than any other major metropolitan area 2.1% 1.8% 3.0% 3.4% 1.9% 1.8% Total Compensation 3.3% 3.1% 3.1% 3.2% 3.1% 2.7% 3.0% 2.8% Only Wages/Salaries 3.0% 2.8% 3.5% 3.6% 4.0% 4.5% 7.8% 3.9% 3.5% 3.1% *Total compensation costs are part of the national Employment Cost Index (ECI) Included are: wages, salaries and employer costs for employee benefits. Seattle area includes following counties: Island County King County Kitsap County Lewis County Mason County Pierce County Skagit County Snohomish County Thurston County 1 - Bureau of Labor Statistics -

6 NATIONAL PAY TRENDS, Employers spent slightly more on promotional increases in 2017 than in 2016 Fewer employers are keeping salary structures the same (e.g., not increasing the structure), but average across all regions of US is still 2.0% Between , employers report increase in usage of: special cash bonus programs employee referral bonuses increased market adjustments intentionally paying above market retention/stay bonuses

7 LOCAL PAY TRENDS HOW DID SALARIES MOVE IN SEATTLE, FROM ? AVG INCREASE HOT JOBS IT JOBS - Programmers, Database Admins, Sys Engineers +3.2% Sr Sys Engineers +8% ACCOUNTING JOBS from Clerks to Supervisors +3.6% Supervisors +16% PROJECT MANAGEMENT JOBS from Entry to Management +3.7% Entry level +14% ADMINISTRATIVE JOBS Admin Asst s, Office Coordinators +6.1% Office Admin, exp d +18% HR JOBS Generalists and Recruiting +8.5% Sr HR Generalists +11%

8 LOCAL PAY TRENDS TOP JOBS HIRED, SEATTLE AREA 2016/17: SOFTWARE DEVELOPMENT / ENGINEERING REGISTERED NURSES SALES JOBS RETAIL JOBS (BOTH STORE MANAGERS AND RETAIL ASSOCIATES) Source: Seattle Office of Economic Development, pulled from 2016/17 hiring data

9 More market based increases More offering variable pay (tax law may impact this) Multiple salary structures LOCAL TRENDS IN COMPENSATION PRACTICES More equity increases More use of signon and hiring bonuses More use of retention and stay bonuses

10 NATIONAL SALARY BUDGET DATA National Salary Budgets = Average 3.1% in 2018 Smallest (under 500 employees) organizations reported slightly higher spending on salary budgets, at 3.4% Average budgets projected to be slightly more for 2019, but this is typical

11 SEATTLE & SURROUNDING AREAS SALARY BUDGET DATA 1 Salary Budgets, Actual 2017 Seattle - between 3% to 3.5% Actual reported for 2018 is 3.3% More budgeted for Executives - 3.5% Smallest companies (<50) spent less for Executives - 2% vs 3.5% Medium sized ( ) spent more on total budgets - +.5% more Minimum wage will absolutely impact this, be it planned or not! 1 Compiled using 4 different survey sources, both local and national

12 LOCAL COMPANIES SHOULD CONSIDER: More structured market based approach Use published market surveys Consider formal salary structure, with minimums, midpoints and maximums Proactive salary analysis Review data on why employees leaving, how salary equity plays to this, and how often retention increases are being given Organized title or job coding system, with job families or career paths Higher level titles made sense when small, but may not make sense as org grows larger Pushing out (or pulling back) pay decisions Smallest companies may need to pull back decisions from management (to central HR) Larger companies may need to push out decisions to managers (with guidelines!)

13 YOUR NEXT STEPS Be proactive Think local Collect job-specific market data Not able to do all jobs? Use phased approach. Expect to increase spending on salary increases and structure budgets this year Prep leaders Salary compression due to increased min wage Plan for it! Be open to new compensation methods sign on bonuses, stay bonuses, referral bonuses Be prepared to intentionally pay above market for certain jobs

14 CALL IF YOU NEED HELP! DAYNA PROVITT