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<b style="color: blue">Human Resource Associates</b>
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<span class="heading">HR - On The Job</span>
<p class="issue">Workforce 2010</p>
<p>We are in the midst of some of the most dramatic and sweeping workforce changes in the United States in decades. These changes are not coming gradually; they're cascading down like an avalanche.</p>
<p>So, What's happening? What does it mean? and, Where is this all going?</p>
<p class="section">What's Happening?</p>
<p>Although there is much to say about how we got to this point, too much government or the lack of it, unemployment is the 800 pound gorilla in the room. Here's what the U.S. workforce looks like right now:</p>
<p><b>Unemployment:</b> Unemployment shot up from 5 percent in early 2007 to 10 percent by late 2009. At this writing, the unemployment rate is at 9.7 percent, which translates to roughly 15 million unemployed individuals. The average length of time on unemployment benefits is 31 weeks. Fifty-nine percent of unemployed workers have been out for over one year. There are 6.2 unemployed workers for every job opening. The current extension of time for unemployment benefits brings the total of $300.00 to $500.00 per week for up to 99 weeks.</p>
<p>The numbers for almost all private industry jobs are in decline. The construction industry is the biggest loser, with an unemployment rate at 14 percent. Only federal jobs are increasing as the government is actually hiring 100s of thousands of new employees. The federal government has the lowest unemployment rate at 4 percent.</p>
<p><b>Wages:</b> The average hourly wage in the United States is currently $22.57 per hour; the average weekly pay is $771.89 Although those wage numbers keep going up, so too does the price of everything we buy. As a result, the actual buying power of that money continues to drop, which technically means that wages are dropping.</p>
<p><b>Productivity:</b> Productivity is measured by dividing the total value of all American goods produced by the number of work hours it took to produce it. Just prior to the start of the recession in 2008, productivity numbers were less than 1 percent growth per quarter. Once job cuts began, the productivity rates began to climb. By the end of 2009, productivity had jumped to 6.9 percent.</p>
<p><b>Unions:</b> The number of people in unions has been dropping steadily for more than 50 years. Back then, more than 36 percent of the American private industry workforce belonged to a union; that number is now at 7.2 percent and dropping. However, the percent of government union members, which use to be less than 2 percent back then, is now at 37.4 percent and growing.</p>
<p><b>Labor legislation:</b> Almost all new labor laws include more benefits for employees and more mandates and restrictions on employers, accompanied by thousands of new investigating agents and heavy penalties for violations. The new health care bill requires most companies to provide all their employees with health insurance or face stiff fines. Several bills are proposing paid sick leave not only for employee illness, but also for pandemic flu, family illnesses, and school closings. There are also new posting requirements that encourage employees to consider joining unions and new regulations providing tax benefits for companies that hire new employees.</p>
<p class="section">What Does It Mean?</p>
<p><b>Unemployment:</b> Although unemployment is high and hourly workers are easier to find, there is, as always, competition for the best talent. People who are skilled, talented, productive, and successful are in demand. If you have workers with these attributes, take good care of them as other companies are trying to get them. If you don't, you will find there is a very competitive market for good talent, and those employees are being offered handsome employment packages. Some surveys are saying that the unemployment benefits of $300 to $500 per week for as long as 99 weeks are causing many of the unemployed to delay the stressful process of job hunting as they find that they can survive as long as that cushion lasts.</p>
<p>Manpower, the provider of workers to private industry, has now branched out into the federal government, as it says that's where job growth is going to be. Currently, the unemployment rate for federal government employees is at 4 percent; this year, the federal government employee count is expected to hit 2.15 million. There will be more government jobs as government is now competing with private industry for talent in more fields, and government jobs tend to pay more. Also, all government agencies have been directed to convert as many private industry jobs to government jobs as reasonably possible. This will keep private industry unemployment high and government unemployment rates low.</p>
<p><b>Wages:</b> More than half of all companies cut or froze wages in 2009. Fifty-four percent of these companies plan to return to normal pay practices in 2010, and 33 percent will continue with pay freezes until at least 2011. However, 15 percent said the pay cuts that were made are permanent. More than 40 percent said there would be no merit pay increases in 2010.</p>
<p><b>Productivity:</b> The big increase in productivity is a noticeable factor in all business cycles. As workloads and profits increase, more people are hired. But, more support people are hired than frontline producers. Most companies then see an increase in overhead and employee costs and a decrease in measurable productivity. When the business cycle turns down, it's the support people who are the first to be let go. The percentage of frontline producers is then higher and each employee focuses more on doing his/her best work. Productivity goes up. This means that companies will experience a higher profitability and will be a little reluctant to start the hiring cycle again.</p>
<p><b>Unions:</b> Although the Employee Free Choice Act (EFCA) doesn't seem likely to pass this year, some version of it will likely come to be. Simply stated, EFCA takes away the right of the employee to a secret ballot in unionizing elections and denies the company the right to present its side of the issue to its employees. It also reduces the number of votes it takes to bring in a union. Eighty-five percent of the federal stimulus bill expenditures have been spent on hiring or retaining state employees who are union members. Earlier in 2009, the president authorized federal agencies to require the use of union-only contractors on government-funded jobs in excess of $25 million. Unions are using this new power to begin new organizing campaigns in many industries. Primary targets include any industry with large numbers of hourly paid employees. High on the list of targets are employees in computer professions and those in medical fields.</p>
<p><b>Labor legislation:</b> Labor costs are going up as regulations mandate more employees be provided with paid leave and benefits. New laws allowing unions greater access to workplaces and to a company's intranet systems have been announced. Companies that have had layoffs will not be allowed to hire H-2B workers, and many of those that are allowed will be inspected to assure that no American workers were available for those jobs. Overall, employers will experience more federal inspections for various labor regulations. The initial focus will be on exempt versus nonexempt misclassifications, independent contractors versus employees, wage and overtime violations, and safety. Tax benefits and credits for hiring new employees, including CEOs as well as laborers, may be tempting for those companies that qualify. However, in a recent poll by Business and Legal Reports (BLR), 74 percent of employers said they would not hire a new employee to get the tax break.</p>
<p class="section">Where Is This All Going?</p>
<p><b>Unemployment:</b> The unemployment rate is expected to remain at 8 to 9 percent through 2011. Leading employment authorities, including the Department of Labor (DOL), predict a continuation of very high unemployment rates for at least three years. Many are saying that the tremendous annual economic growth we became accustomed to before this recession will never be seen again. They forecast slower growth while companies focus more on lean management, and employees have adapted to a new view of their work and of their leaders at work. This new view is creating a new attitude in the workforce as indicated in a recent Towers Watson report.</p>
<p>Surveys by Towers Watson indicate that the average American workers have dramatically lowered their career and retirement expectations. They now feel less inclined to take risks or to attempt achievements that might "rock the boat." Job advancement now takes a backseat to job security and stability. More employees are seeking greater job security and more benefits. Even the old concept of one employer for life is gaining credence again. Seventy-seven percent of the employees surveyed said they would take a pay cut in return for job security. Although 60 percent of participants said they would like to find a different job this year, 81 percent said they are not looking and don't plan to for the foreseeable future. Their focus is on long-term commitment to their employer in return for some semblance of job security. Beyond security, their primary interest is "higher levels of compensation." The clearest picture arising from these new attitudes is a "workforce that is hunkered down, risk adverse, and hanging on as long as it can until, it hopes, it can afford to retire. But keep in mind that those top performer know who they are, and there is always a market for their skills and talents. Many will be looking for greener pastures.</p>
<p><b>Wages:</b> The freeze on wages will begin to thaw as employers want to keep those high productivity workers. Nationally, those who will provide merit increases in 2010 say that the average merit pay increase is forecasted to be 1.85 percent. The future is focused on merit. High performers will see generous increases, average performers will see lower increases than in the past, and mediocre employees will see no increases from most employers; many may be released when higher performers are available. Higher-level employees will see much of their increases in merit incentives and bonuses and more of that will be in company shares or stock.</p>
<p>In large European companies, there is a rising trend to eliminate or limit incentives and bonuses altogether as a means to discourage risk taking. That trend is beginning to appear in American financial institutions. The pay is higher, but the incentives and bonuses are gone or reduced. The end result overall is lower compensation. As benefit costs rise, the large pay increases of the past are expected to remain in the past.</p>
<p><b>Productivity:</b> Productivity is expected to remain high but will taper off some later this year. The economy is improving, but hiring is not expected to significantly improve for the foreseeable future. However, productivity will become a major metric companies use to identify the best performers and determine their compensation.</p>
<p><b>Unions:</b> Regardless of how current legislation plays out, the union movement is on the rise. Most companies won't want it, but with government influence, more employees seeking more benefits and job security, and less interest in the free market entrepreneurial spirit, we are likely to see more union organizing.</p>
<p><b>Labor legislation:</b> There will almost certainly be some form of federally mandated paid leave. Some of these laws will affect every employer; some will affect only larger employers with 50 or more employees. But, even part-time and seasonal employees will be provided with the new paid leave benefits. Many employers will stop hiring just before that one employee moves them into the next size bracket that would obligate them to a new range of mandated regulations.</p>
<p>Few changes are expected in the availability of H-2B workers. However, immigration regulations are being proposed that issue biometric Social Security cards to all workers as a means to control the hiring of illegal immigrant workers. The government's E-verify program is now required for federal contracts and some states are requiring it for all employees. Equal Employment Opportunity Commission charges have skyrocketed during the recession, and the new laws will almost certainly see an even higher increase in those charges. More laws favoring labor unions and organizing will be passed, but the greatest union growth will continue to be in government.</p>
<p>One new trend of note is the increase in employers using contingent workers (workers brought in only for specific projects or specific periods). Long used in some industries, the "use them when you need them; lose them when you don't" concept seems to be very attractive to companies in this new risk-adverse environment. Now that part-time and temporary employees will be covered under the new benefit regulations, more workers favor the idea of working when and where they like. According to the Staffing Industry Analysis Survey produced by the law firm Littler Mendelson, the contingent labor force is now estimated to be 13 percent of the American workforce. That figure is estimated to rise to 30 percent — and possibly as high as 50 percent — after the recession.</p>
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<p align="center"><b><i>Have an employment question?</i></b></p>
<p align="center">Send it to <a href="mailto:[email protected]?subject=From HR On The Job">[email protected]</a>.</p>
<p align="center">Please include Company Name and Association in your e-mail. Company identification will be kept confidential.</p>
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<p class="heading">Hitchhiking on the Information Highway</p>
<p><b>Dateline:</b> July 2010</p>
<p><i>(Note: Although we attempt to provide the HRU update on the first of each month, we are normally delayed awaiting the release of several monthly government statistical reports. We will hereafter update the information as each report becomes available without waiting for all of them to be released.)</i></p>
<p class="section">Goals</p>
<p class="quote">"Man is a goal seeking animal. His life only has meaning<br />
if he is reaching out and striving for his goals."<br />
- Aristotle</p>
<p class="quote">"No man or woman is an island. To exist just for yourself is meaningless.<br />
You can achieve the most satisfaction when you feel related to some greater purpose in life,<br />
something greater than yourself."<br />
- Denis Waitley</p>
<p class="section">Q&A</p>
<p style="font-weight: bold">Q: One of our employees had to service a customer on the holiday. Does he get paid overtime and if so at what rate?</p>
<p>A: No, he doesn't get paid overtime on the basis of it being a holiday. The laws requiring holidays only apply to government employees. As a private employer you are not required to provide holidays at all. If you do provide paid holidays and an employee works on that day, you are only required to pay the employee's normal pay. Only if he works over 40 hours does the Federal Labor Standards Act (FLSA) require overtime at one-and-one-half (1½) time.</p>
<p>However, in that holidays are the most undesirable days of the years for most employees to work, the national norm is to pay the employee for the holiday and to also pay for the hours worked i.e double time.</p>
<p style="font-weight: bold">Q: I have an employee on FMLA leave (Family and Medical Leave Act). The holiday occurred during her leave. Should she get paid, not paid or does it even count as FMLA leave time?</p>
<p>A: The holiday has no impact nor does it change the FMLA count of days on leave. The entire week is counted as FMLA leave.</p>
<p>However, if the place of business is closed <em>for at least one week</em> and employees are not required to report that week, then the week does not count toward the FMLA leave. The concept is that the employee is not missing work as there is no work being scheduled, so no leave is being granted or used.</p>
<p>Also, if the employee is using the FMLA leave in increments of less than one week then the holiday does not count towards the FMLA leave time unless the employee was scheduled to work on that holiday.</p>
<p>(Note: The federal requirement to provide FMLA only applies to companies with 50 or more employees.)</p>
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<p style="text-align: center"><sub>© William J. Cook</sub></p>
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<span class="heading">Labor Stats</span>
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<b>Federal Minimum Wage</b>
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<p align="center">
<b>$7.25</b>/hour<br />
</p>
<hr />
<b>Average Income</b>
<hr />
<p align="center">
<u>Hourly</u><br />
<span style="float: left"><i>June 2010</i></span>
<span style="float: right"><b>$19.00</b></span><br />
<span style="float: left"><i>June 2009</i></span>
<span style="float: right"><b>$18.57</b></span><br />
</p>
<p align="center">
<u>Weekly</u><br />
<span style="float: left"><i>June 2010</i></span>
<span style="float: right"><b> $634.60</b></span><br />
<span style="float: left"><i>June 2009</i></span>
<span style="float: right"><b>$612.81</b></span><br />
</p>
<hr />
<b>Federal Povery Level</b>
<hr />
<p>
<span style="float: left"><i>one person</i></span>
<span style="float: right"><b>$10,830</b></span><br />
<span style="float: left"><i>family of four</i></span>
<span style="float: right"><b>$22,050</b></span><br />
</p>
<hr />
<b>IRS Mileage Allowance</b>
<hr />
<p align="center">
As of <b>January 2010</b><br />
<span style="float: left"><i>business</i></span>
<span style="float: right"><b>50</b> cents/mile</span><br />
<span style="float: left"><i>medical or moving</i></span>
<span style="float: right"><b>16.5</b></span><br />
<span style="float: left"><i>charitable</i></span>
<span style="float: right"><b>14</b></span><br />
</p>
<hr />
<b>Postage</b>
<hr />
<p align="center">
<span style="float: left"><i>1 oz</i></span>
<span style="float: right"><b>44</b> cents</span><br />
<span style="float: left"><i>postcard</i></span>
<span style="float: right"><b>28</b></span><br />
</p>
<hr />
<b>Population</b>
<hr />
<p align="center">
<span style="float: left"><i>world</i></span>
<span style="float: right"><b>6.9 billion</b></span><br />
<span style="float: left"><i>U.S.</i></span>
<span style="float: right"><b>309.7 million</b></span><br />
<i>one birth every </i><b>7</b><i> seconds;</i><br />
<i>one death every </i><b>13</b><i> seconds;</i><br />
<i>one new immigrant every </i><b>35</b><i> seconds;</i><br />
net gain: <i>one person every </i><b>11</b><i> seconds.</i>
</p>
<hr />
<b>U.S. Civilian Workforce</b>
<hr />
<p align="center">
<u>June 2010</u><br />
<span style="float: left"><i>Total</i></span>
<span style="float: right"><b>237,690,000</b></span><br />
<span style="float: left"><i>Employed</i></span>
<span style="float: right"><b>139,119,000</b></span><br />
<span style="float: left"><i>Unemployed</i></span>
<span style="float: right"><b>14,623,000</b></span><br />
<span style="float: left"><i>Want A Job</i></span>
<span style="float: right"><b>5,895,000</b></span><br />
<span style="float: left"><i>Unemployment Rate</i></span>
<span style="float: right"><b>9.5%</b></span><br />
</p>
<p align="center">
<u>June 2009</u><br />
<span style="float: left"><i>Total</i></span>
<span style="float: right"><b>235,655,000</b></span><br />
<span style="float: left"><i>Employed</i></span>
<span style="float: right"><b>140,038,000</b></span><br />
<span style="float: left"><i>Unemployed</i></span>
<span style="float: right"><b>14,721,000</b></span><br />
<span style="float: left"><i>Want A Job</i></span>
<span style="float: right"><b>5,965,000</b></span><br />
<span style="float: left"><i>Unemployment Rate</i></span>
<span style="float: right"><b>9.5%</b></span><br />
</p>
<br /><hr />
<b>U.S. Workforce Productivity</b><br />
<sub><i>(The amount of goods produced, divided by the number of work hours it took to produce it)</i></sub>
<hr />
<p align="center">
<span style="float: left"><i>1992</i></span>
<span style="float: right"><b>3.7%</b></span><br />
<span style="float: left"><i>1993</i></span>
<span style="float: right"><b>0.5%</b></span><br />
<span style="float: left"><i>1994</i></span>
<span style="float: right"><b>1.3%</b></span><br />
<span style="float: left"><i>1995</i></span>
<span style="float: right"><b>0.9%</b></span><br />
<span style="float: left"><i>1996</i></span>
<span style="float: right"><b>2.5%</b></span><br />
<span style="float: left"><i>1997</i></span>
<span style="float: right"><b>2.0%</b></span><br />
<span style="float: left"><i>1998</i></span>
<span style="float: right"><b>2.6%</b></span><br />
<span style="float: left"><i>1999</i></span>
<span style="float: right"><b>3.3%</b></span><br />
<span style="float: left"><i>2000</i></span>
<span style="float: right"><b>3.4%</b></span><br />
<span style="float: left"><i>2001</i></span>
<span style="float: right"><b>2.9%</b></span><br />
<span style="float: left"><i>2002</i></span>
<span style="float: right"><b>4.6%</b></span><br />
<span style="float: left"><i>2003</i></span>
<span style="float: right"><b>3.7%</b></span><br />
<span style="float: left"><i>2004</i></span>
<span style="float: right"><b>2.8%</b></span><br />
<span style="float: left"><i>2005</i></span>
<span style="float: right"><b>1.7%</b></span><br />
<span style="float: left"><i>2006</i></span>
<span style="float: right"><b>0.9%</b></span><br />
<span style="float: left"><i>2007</i></span>
<span style="float: right"><b>1.9%</b></span><br />
<span style="float: left"><i>2008</i></span>
<span style="float: right"><b>1.8%</b></span><br />
<span style="float: left"><i>2009</i></span>
<span style="float: right"><b>+5.8%</b></span><br />
<span style="float: left"><i>2010 1st quarter</i></span>
<span style="float: right"><b>+2.8%</b></span><br />
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