Wage pressures coming?

NEW YORK Early indications of wage pressures in pockets of corporate America have begun emerging in recent weeks, suggesting labor costs could be a bigger headwind for U.S. companies in 2016.

Over the course of the latest corporate earnings reporting season, executives from nearly 20 S&P 500 companies have flagged labor costs, shortages or wage pressure as headwinds.

That is up from about a dozen companies who singled out these concerns a quarter earlier and a year ago, a sign that more companies are talking about wage issues, an analysis of earnings season comments by Thomson Reuters showed.

Wage inflation has been largely nonexistent in the plodding economic expansion out of the Great Recession, a key factor behind the robust recovery in company profits over the past six years even as sales growth has remained muted.

Now, though, a combination of rising U.S. payrolls, political pressures to increase state and federal minimum wages and some industry-specific issues, such as expensive labor contracts in the airlines and automakers and labor shortages in construction, could finally be gelling to force up labor costs.

“The conditions are beginning to be in place for something that has been languishing really since the bottom of the recession,” said Mark Dawson, chief investment officer at Rainier Investment Management in Seattle. “We’re closer to the point where wage pressures in certain areas are increasingly going to be seen. I would expect it to be more of an issue next year.”

Wage concerns that started popping up a year ago in a handful of industries such as fast food restaurants and retailers have persisted and are spreading to a more diverse range of companies, including homebuilding and construction companies and airlines.

Wal-Mart (WMT.N), the world’s largest retailer, has said next year’s earnings could decline as much as 12 percent, partly because of costs to raise entry-level wages.

Executives at Shake Shack (SHAK.N) have said it plans to increase menu prices in January, though they do not expect those higher prices to fully offset higher labor costs.

For home builders, tight labor markets have been a constraint.

“No question, labor is tight. Reports coming out of other builders, we’re not immune to it,” David Auld, D.R. Horton’s president and chief executive said in a Nov. 10 conference call.

The company said it has been able to offset the higher costs so far through its prices.

Among other homebuilders citing labor as an issue, PulteGroup (PHM.N) reported a quarterly profit decline and said construction delays from labor shortages dampened sales. Also, Chief Financial Officer Bob O’Shaughnessy said during the earnings call Pulte is paying more to attract and retain labor.

Similarly, real estate investment trusts Ventas (VTR.N) and Welltower (HCN.N) mentioned concerns about wage pressures in the recent reporting period.

“It’s something that we are very focused on,” Scott Brinker, Welltower’s chief investment officer, said in a conference call.

Some industries are expecting higher labor costs from renewed contracts, such as the case with airlines.

Contract negotiations are in the works for pilots at major U.S. airlines United (UAL.N), Delta (DAL.N) and Southwest (LUV.N) that could result in higher wages and costs in 2016. Hospital providers, too, are citing higher employee costs.

When it warned on results last month and cited higher labor costs, HCA Holdings (HCA.N) triggered a selloff in the hospital provider space. Its labor costs as a percentage of sales increased in the third quarter from a year ago.

Universal Health Services (UHS.N) CFO Steve Filton, though, said the industry was not yet experiencing the same wage pressure as it was a decade ago.

To be sure, plenty of companies are still laying off workers to cut costs further, especially in the energy sector, which is hard hit by falling oil prices.

Last month, nonfarm payrolls recorded their largest gain since December 2014, while the unemployment rate fell to a 7-1/2-year low of 5.0 percent.

The number of unemployed persons to job openings is as low as it was in 2007, according to U.S. government data.

Moreover, the debate over whether to raise the minimum wage has been gaining steam and is a hot topic among U.S. presidential candidates, suggesting the issue is likely to persist at least through next year’s election.

The current federal minimum wage is $7.25 an hour, compared with proposals for minimums of $12 to $15 an hour.

“It’s really a combination of more competition for low-wage workers, and the fact that there’s pressure to raise those wages in a number of jurisdictions and just in general,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

(Reporting by Caroline Valetkevitch; additional reporting by Jeffrey Dastin; editing by Linda Stern)

Read more at Reutershttp://www.reuters.com/article/2015/11/19/us-usa-companies-laborcosts-idUSKCN0T82WN20151119#6oo6L7YtbeCHOfzQ.99

Telecommuting – employees enter the sharing economy?

Telecommuting – employees enter the sharing economy?
Blog Labor & Employment Law Perspectives

USA November 16 2015

As onrushing technological changes continue to disrupt our society, the concepts of how we work and, more particularly, where we work, are not immune from that disruption. Forbes Magazine reports that 11 percent (8,000 employees) of Xerox’s employees now work remotely 100 percent of the time. At Aetna, as many as 43 percent of its employees telecommute (in some form) while 20,000 Dell employees telecommute. This sector of the workforce will only expand and, like many disruptive technological changes, will challenge how we measure, regulate, and compensate work, requiring reexamination of yardsticks developed when workers clocked in at a factory gate, took a mid-shift meal break, and traveled home at the end of the work day.

“Working remotely” or “telecommuting” has obvious attractions for many employees and employers, often for different reasons, and there will be increasing pressure to expand its scope. But fitting this square peg into the current legal round hole is challenging and, to be successful, requires smart, multi-disciplinary advance planning and, just as important, continuous monitoring and reappraisal. In this first piece of a two-part article, we examine some of the major legal concerns that face employers who are considering, starting, or expanding their offsite workforce.

Developing a Policy Is Essential

Some employers develop telecommuting practices accidentally (e.g., a valued employee relocates with his spouse to another city). Employers should avoid developing a policy with this approach and instead plan ahead, ultimately developing a well-planned program with input from many disciplines such as IT, tax, wage and hour, insurance, ergonomics, privacy, legal, and labor.

There are many reasons for expanding telecommuting: It is viewed as a “benefit” to certain employees; a business advantage to many employers; a defensive measure to retain or attract key or hard-to-attract employees; a means to operate in different locations; and even a cost saving measure. Employers must also remember that the Equal Employment Opportunity Commission argues that, on occasion, working from home must be considered as a reasonable accommodation option, even if the employer has no existing telecommuting program. However, as we have previously noted, federal courts of appeal have concluded that regular, on-site attendance is often an essential function of many jobs and, in those circumstances, an employer is not required to offer the employee the option to work at home.

Jurisdictional Questions Must Be Considered

Some of the preliminary questions surrounding telecommuting challenges involve possible jurisdictional issues. Working remotely may permit the employee’s work location to be in a different state from the employer’s business. It must therefore be determined which state laws will regulate the work and to which state the employee will owe taxes. Moreover, the employer must check if the employee may be working in a state that insists that, because of this activity, the employer must pay state corporate taxes. (At least New Jersey and Virginia make that claim.) Indeed, telecommunication advances permit employees to work remotely from other countries, which introduces a whole other phalanx of additional complications. The employer should check whether local zoning laws or property restrictions inhibit or ban “commercial” activity in the employees’ homes.

Measuring and Regulating the Work

Once the jurisdictional questions have been settled, it is time to work on the nuts and bolts and, for many employers, the most challenging aspect of telecommuting. For non-exempt employees, work is measured and compensated by time – the amount of hours the employee is or is not “at work.” In more traditional contexts, the time an employee spends working is relatively easy to measure and monitor: a supervisor is present to observe; a time clock, or more commonly, an electronic time device, precisely records when the employee is at work and when he is not, and co-workers are present. An employer who wants to rely on more than a telecommuting employee’s say so must get creative and develop technological methods to substitute for the traditional time clock. Indeed, the Department of Labor gives no breaks to an employer and explicitly applies its rules “to work performed away from the premises or the job site, or even at home”; employers must count the time as hours worked “[i]f the employer knows or has reason to believe that the work is being performed.”

In the more heavily regulated states (e.g., California), the employer must ensure that the remote worker “receives” appropriate meal and rest breaks, has the requisite number of days off and enjoys the many other protections afforded employees. Generally, the governing employment laws will be those of the state in which the employee works, not the law where the employer’s business is located. In all situations, employers who require employees to be available such that they are on “standby,” and who “call them back” from standby, must think through the implications of such policies and practices in the context of an employee working from home to ensure they are not exposed to significant back pay claims including class action claims.

These are only some of the issues employers must navigate when assessing the increasing need to address telecommuting.

How to Reduce Work-Related Stress

How to Reduce Work-Related Stress

  • Recognize the aggravating aspects of your job.  Stop fighting them.

  • Identify your emotional needs and accept them.  Most executives are competitive, need to be liked, need to vent anger.  They should have outlets for each of these needs.

  • Practice listing.  Listening is more relaxing than talking, and it can help you know what’s really going on in the organization.

  • Be sensitive to change.  Recognize when it’s occurring on the job and figure out what adjustments are necessary.  By consciously recognizing change, you make it manageable.

  • Keep alcohol consumption under control.  Excessive drinking creates the illusion of dealing with stress, while in fact adding to it.

Source: Rosalind Forbes, author of Corporate Stress, Doubleday, Garden City, NY.

Management Wisdom

Management Wisdom

“If you think someone is smart, you’ll treat them as smart. If you think someone is a horrible person, you’ll treat them accordingly, and when they react like any other person would when being treated unfairly, you nod with confidence in your ability to predict people’s character.”

To get the most from your employees, help them create workplace identities that elevate them and create positive performance expectations that maximize their potential.

Source: http://www.helpscout.net/blog/