HR Professionals’ Next Great Challenge

Economic Performance is Up - Consumer Confidence is Down?

Here's a conundrum: the economy's robust, but consumer sentiment isn't matching up.

The misery index, a blend of inflation and unemployment, is comfortably low at 6.8%. Historically, that's a good sign. Yet, the University of Michigan's August sentiment report paints a different picture at 71.2. It's a tad down from July but an improvement from June. In essence, while our economy's thriving, consumer confidence is on a rollercoaster. Why the disconnect?

In the backdrop, whispers of a 2023 US recession had been growing over the years. But as 2023 unfolds, that buzz is dimming, largely credited to a resilient job market. Despite challenges like inflation spikes, occasional bank hiccups, and the Federal Reserve's boldest rate hikes in decades, the economy remains steadfast. Job additions this year have been impressive by historical standards.

The job market's tenacity is evident. With inflation in check, banks stabilizing, and the Fed's rate hikes on a pause, the market's momentum is noteworthy. However, potential curveballs like government shutdowns or the latent impacts of rate hikes loom.

For employers, this sentiment-economy mismatch is a crucial opportunity.

It's not just about the immediate economic landscape but how employees perceive it. HR has a role to play here, such as considering benefits that help employees best prepare for potential economic downturns. By offering benefits like child care, financial literacy programs, and employee assistance, they can bridge this perception gap. Bolstering financial security with tools like retirement plans and emergency funds can also make a difference.

In short, while the economy's numbers look promising, consumer sentiment tells another story. It's a reminder that perception and reality can diverge, and addressing this gap is essential.

Economic Outlook

New Jobs/Unemployment

The U.S. added 187 thousand new jobs last month, continuing a few-months-long trend of solid but slowing job growth.?

The unemployment rate fell to 3.5%, landing just one-tenth of a point above a historic low of 3.4%, which has been recorded twice already in 2023 despite not having been recorded since the 1960s prior to this year.

Job Openings

The number of job openings fell to about 9.6 million in June (the most recent data available) - down from an initially reported 9.8 million million in May, continuing the general trend.

New hires dropped to about 5.9 million, a reduction of approximately 330 thousand from the month before.

The adjusted hiring rate remained largely unchanged at 3.8% on a national basis month-to-month, although each of the four quadrant regions that make up the U.S. saw decreased hiring rates. The Midwest recorded the steepest drop in hiring rate at minus 0.4% (down from 4.1% to 3.7%), followed by the South at minus 0.2% (down from 4.5% to 4.3%). The Northeast and West regions each registered a hiring rate reduction of 0.1%, landing at 3.1% and 3.5%, respectively.

Separations

The separation rate ticked down a couple tenths of a point to 3.6% and total separations fell by about 300 thousand to 5.6 million.

The number of job quitters also fell by about 300 thousand month over month to 5.6 million, while the quit rate dropped by about two-tenths of a point from 2.6% to 2.4%.

Layoffs and discharges fell slightly from 1.6 million to 1.5 million while the layoff and discharge rate was unchanged at 1%.

Inflation

CPI for the last 12 months ticked pack up two-tenths of a point from 3% as of last month’s report (the lowest point in the last 2 years) to 3.2%, which beat estimates and is still significantly lower than the 3.8% average annual inflation that the US registered over the last 40 plus years.?

Employee Benefits

Employee Financial Wellbeing

Prioritizing employee financial wellbeing by offering comprehensive financial wellness benefits promotes a healthier workforce that delivers increased earnings through improved efficiency and requires less medical care, thereby further boosting the bottom line.?

Employee morale can also see a significant boost, as believing that their employer is invested in their well-being outside the paycheck for labor exchange can help instill genuine loyalty and improve job satisfaction, which can positively impact recruitment and retention efforts in addition to helping build cohesive, cooperative teams that are more inclined and better equipped to make meaningful contributions to the business.

Underutilized Mental Health Benefits

According to one survey, 85% of employees have never used any of the mental health benefits that are available to them through their employer, even though approximately 40% believe that their companies should be offering more mental health care services than they currently do.

The accompanying report cites 3 primary factors as to why mental health benefits are going neglected - employees either are not aware that they have access to these benefits, are uncertain about how they can access these benefits, or are confused about what is covered and what is not.?

Modern Job Applicants

Prospective employees today are often doing a deeper analysis of the underlying companies for which they are considering working in order to have a more complete understanding and make a more informed decision about for whom they put their skills and experience to use.

Some of the additional considerations that would-be employees in the current job market are taking into account when evaluating employment opportunities are the financial health of the company; available training, professional development, and internal growth opportunities; and company culture.?

Commuter Benefits

A recent survey determined that nearly half of all workers singled out their commute as the largest annoyance associated with returning to on-site work.

The Federal Reserve also recently released some data showing that for US workers who were working at home at least part-time during the pandemic, returning to the office effectively reduced their net earnings by 2% to 3% on average.?

Despite the negative feelings surrounding commutes amongst the employee population, however, only a very small percentage of employers offer any sort of commute-related employee benefits or perks, with a little more than 1% of job postings citing commuter benefits. That number, however, is growing, with 43% more companies including reference to commuter benefits in their job postings over just the last 2 years.

Legal/Compliance

Pregnant Worker Accommodations

As of June 27th, 2023, new standards under the Pregnant Workers Fairness Act require employers with 15 or more employees to provide accommodations to their pregnant workers.

Some of those accommodations can include (although the list is not exhaustive):

• Allowing pregnant workers more frequent and longer breaks;
• Broadening work policies that may limit food and drink consumption;
• Providing seating;
• Decreasing maximum weight loads that the employee must carry; and
• Incorporating additional schedule flexibility.

Religious Accommodation Standards

In the recent case of Groff v. DeJoy, the Supreme Court has interpreted Title II of the Civil Rights Act to require employers to make all reasonable accommodations unless the employer can show that the accommodation would lead to “substantial increased costs in relation to the conduct of its particular business.”?

Ths new standard heightens the burden placed on employers to deny accommodations.

How to Avoid ERISA Lawsuits

There are a number of different ideas and strategies to consider in order to minimize legal exposure related to the Employee Retirement Income Security Act, including:

• Holding regular training sessions as legal guidelines evolve conducting regular audits of internal processes to ensure strict continued compliance;
• Prioritizing timeliness, transparency, and thoroughness in all plan-related communications;
• Investing in fiduciary liability insurance; and
• Procuring the services of a seasoned benefits advisor to combine your team’s company-specific experience and internal process familiarity with outside perspective and subject-matter expertise.

Mandatory Paid Family & Medical Leave Momentum

Minnesota has become the 12th state (including Washington DC) to enact mandated paid family and medical leave and Maine appears to be close behind.?

Eligible employees can receive weekly payments amounting to:?

• 90% of their average weekly pay that doesn’t exceed 50% of the average weekly pay across Minnesota as a whole;
• 66% of their wages that fall between 50% and 100% of the average weekly wage in Minnesota; and
• 55% of their wages that exceed 100% of the state’s average weekly wage.

Mental Health & Addiction

A joint effort between the Treasury Department, Department of Labor, and Department of Health and Human Services has produced some analysis and guidance to help companies comply with the Mental Health Parity and Addiction Equity Act (MHPAEA).

The guidance as it currently stands focuses on improving employee access to treatment for mental health and substance abuse and ensuring that those mental health and substance abuse treatment options are comparable in availability and quality of care for all employees.

New OSHA High Hazard Rules

The Department of Labor will require employers that operate in industries with high hazard rates to provide their injury and illness data directly to the Occupational Safety and Health Administration (OSHA) via electronic submission beginning on the first of January 2024.?

Companies or organizations that fall within the high-hazard industry category and have at least 100 employees must now provide to OSHA data accounting for all of their Form 300 work-related injury log as well as their Form 301 injury and illness report on an annual basis. It is also now required that companies make these submissions using their legal company name in order to improve the consistency of the data and subsequent analysis.

Tech

Cross-Utilizing Benefit Data

Through analyzing employee benefits-related data, companies can get a more complete picture of their employee pool - as a whole and as individuals - including demographic data and benefit utilization.

With this data, companies typically refine benefits offerings on an ongoing basis according to best meet employee needs, but there are many other potential ways the same information can be an advantage to other aspects of your business, such as by analyzing and improving communications strategies or identifying and bridging employee engagement gaps.

Going Paperless

Intelligent Document Processing (IDP) is revolutionizing the insurance industry by simulating a humanesque approach to data to document interpretation, inputting, and analysis that requires very little actual human oversight and can produce results faster with incredible accuracy 24 hours a day, 7 days a week, 52 weeks a year.?

Among the top 5 ways that IDP is revolutionizing the industry are:

• Processing Documents: IDP systems can automate the matching, categorization, and verification of applications, claims, contracts;
• Administering policies: IDP is increasingly providing critical contributions throughout the policy lifecycle, inducing validating data and sending premium reminders;
• Managing claims: IDP improves claims processing efficiency and minimizes the need for human oversight and intervention;?
• Underwriting: IDP extracts the pertinent data from input sources and incorporates that information when and where appropriate in downstream systems;
• Processing Invoices: Similarly, data extracted from invoices can be automatically incorporated into accounting and other relevant systems to lower the incidence of transcription errors and save a lot of data entry time.

Enter Mployer Advisor

Navigating today’s economic patterns and employee perceptions is crucial.

• Hard numbers show a thriving economy ??
• Consumer sentiment tells a deeper story ????

Lessons for businesses:

In today's dynamic economic landscape, it's imperative to evolve based on both clear indicators and the often nuanced human sentiment. By fostering a culture of understanding and adaptability, businesses can ensure they remain at the forefront of industry trends.

Mployer Advisor offers our benefits benchmarking report to help organizations compare the quality of their benefits coverage against industry peers, ensuring they remain competitive and aligned with both market expectations and employee sentiment.