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  • With 2024 in full swing, employers are starting to plan for employee salary increases this year. While economic concerns have prompted some employers to take a more conservative approach with compensation compared to 2023, the consensus remains positive for employees. Research shows that U.S. employers are expected to provide an average salary increase of four percent in 2024. Although this is slightly lower than the previous year’s increase, it is still significantly higher than salary budgets in recent years.

    Factors Influencing Salary Increase Strategies

    There are two key factors driving employers’ decisions regarding salary increases in 2024. The first is high inflation, which has led to steep prices for essential goods and services such as food, housing, and health care. It now requires $119.27 to buy the same goods and services a family could afford for $100 before the pandemic. Although inflation has decreased minimally since reaching a 40-year high in the summer, workers continue to struggle with the rising cost of living. The second factor is the tight job market, which has increased competition for talent. To attract and retain skilled employees, employers must offer competitive pay to combat the increasing prices.

    The Impact Of Inflation

    Even though inflation has eased somewhat, its effects continue to be felt by employees. A recent survey showed that months of high living costs have pushed employee financial well-being to an all-time low. Workers are burdened with credit card debt, and many find it challenging to save for retirement due to inflation pressures. Employers recognize this and have responded by increasing salary budgets. Surveyed employers cited inflation as the primary reason for the salary increases planned for 2024.

    In addition, voluntary turnover and attrition rates are at 11% overall, indicating the importance of offering competitive compensation packages. However, this survey revealed that fewer organizations report difficulties finding and retaining workers compared to previous years, suggesting a slight improvement in the labor market.

    Employers’ Strategies Beyond Salary Increases

    In addition to salary bumps, employers are adopting various strategies to attract and retain talent. 58% of employers are embracing workplace flexibility, recognizing the importance of work-life balance for employees. Furthermore, 59% of employers are placing a greater emphasis on inclusion, equity, and diversity, acknowledging the need for a diverse and inclusive workforce. In response to these ongoing pressures, organizations are taking the following actions:

    • 50% of respondents have reviewed the compensation of specific employee groups
    • 43% are increasing starting salary ranges
    • 42% are reviewing the compensation of all employees
    • 40% are enhancing the use of retention bonuses or spot awards
    • 36% are increasing training opportunities 

    These efforts reflect a commitment to creating a positive and rewarding working environment in the face of economic challenges.

    In Times Of Uncertainty, Partner With A PEO

    For small business owners, staying informed about salary trends and the challenges employees face in the current economic climate is crucial. By understanding the impact of inflation and the tight labor market, small business owners can make strategic decisions regarding salary increases and employee retention. Or you can partner with a professional employer organization (PEO) with experts to help you every step of the way, including answering questions and concerns about employee compensation and benefits.

    GMS, a certified PEO (CPEO), helps small businesses navigate the complexities of salary planning, ensuring competitive pay for employees while managing costs effectively. In addition, we provide access to resources and tools to support recruitment, compliance with employment regulations, and more. Partner with us so you can focus on what you do best – growing your business. Start the new year off on the right foot and partner with GMS. Get a quote from us today!

  • The constant climb of health care expenses in the United States is causing increasing concern, particularly as inflation continues to impact the nation. The Nationwide Retirement Institute Health Care Cost in Retirement recently released a survey that paints a worrying picture of Americans’ financial confidence as they approach their retirement years.

    Decreasing Confidence In Facing Health Care Costs

    The survey shows Americans’ doubts about their ability to manage health care expenses as they grow older. 59% of respondents express uncertainty about their capacity to meet these financial burdens, and 57% are anxious about the costs associated with caregiving for their partner or spouse.

    Further complicating financial planning is the anticipation of medical advancements driven by artificial intelligence (AI), which could potentially extend lifespans. 26% of respondents expect AI to grant them an additional 10 years of life, with different generational expectations. Gen Z envisions 15-year extensions, while millennials anticipate 12 years, Gen Zers expect eight years, and boomers foresee a 9-year extension. This implies that Americans may need to financially prepare for health care costs over a more extended period, emphasizing the need for a robust financial strategy.

    Kristi Rodriguez, Senior Vice President of the Nationwide Retirement Institute, noted, “Advances in AI and health care technology are moving at an unprecedented pace, offering hope for treating chronic diseases and other health concerns. However, longevity demands enhanced planning. Therefore, it’s vital to consult a financial professional to devise a comprehensive plan that caters to immediate and potentially extended health care needs.”

    Managing Health Care Expenses

    As Americans grapple with the prospect of an extended lifespan, current economic uncertainty is straining their finances and forcing them to make difficult decisions with long-term implications for their health care. Studies show that 18% of adults admit to delaying essential health care actions such as medical procedures, physical exams, or prescription renewals in the past year to save money. In addition, 10% of Americans are contemplating downgrading their health insurance plans due to high inflation, including 19% of Gen Z, 11% of millennials, and 14% of Gen Xers. In their quest for more manageable monthly premiums, 60% of adults opt for health insurance policies with lower premiums but higher deductibles, potentially leaving them unprepared to cover unexpected out-of-pocket health care expenses.

    The Role Of Financial Professionals In Health Care Planning

    With inflation and soaring health care costs causing widespread anxiety, consulting a financial professional is the most vital step individuals and business owners can take. These experts can help tailor financial plans to ensure people are well-prepared for the rising health care expenses without compromising their overall financial stability.

    Conversations with financial professionals are pivotal, particularly in understanding complex issues such as Medicare coverage. The survey underscores a substantial knowledge gap among respondents, with 72% expressing a desire for a deeper understanding of Medicare.

    In addition, Americans significantly underestimate the average cost of health care in retirement, estimating it at $55,343, while the actual 2022 cost stood at nearly triple that figure: $172,500 for an individual and $315,000 for a typical 65-year-old retired couple. This highlights the need for Americans to seek greater knowledge, guidance, and ongoing support for informed financial planning.

    Nationwide’s Health Care Cost Assessment tool is an invaluable resource that helps financial professionals and clients estimate future medical and long-term care expenses by considering individual health risks and facilitating comprehensive planning for the impending rise in health care costs.

    Have You Considered Partnering With A PEO?

    In the face of mounting health care costs and economic uncertainties, it’s clear that thoughtful financial planning is essential for safeguarding our well-being. Financial professionals, like those found within a professional employer organization (PEO), are pivotal in guiding us through these complex financial landscapes. They offer tailored solutions to bridge the gap between our goals and financial reality. By consulting with a PEO like GMS, business owners can pave the way for a secure, confident future, free from unmanageable health care expenses. Remember, preparation is the key to not just surviving but thriving in the ever-evolving world of health care and finances. Contact us today to learn more.

  • The impact of inflation extends beyond immediate price increases and into long-term, far-reaching consequences for individuals and families. The current surge in inflation rates, particularly in the wake of the COVID-19 pandemic, has created financial strains and challenges that may not be apparent yet.

    What Is Inflation?

    Inflation is the rate at which the cost of a good or service increases. The cost of food, housing, gasoline, utilities, and other goods have skyrocketed by 7.7% over the past 12 months – nearly a 40-year-high. Rising inflation rates directly affect the purchasing power of individuals and families. As the cost of goods and services increases, it becomes more difficult for households to maintain their standard of living. This can lead to reduced discretionary spending, limited savings, and a need to prioritize basic necessities over other financial goals or aspirations.

    While inflation is hitting almost everyone, low-income households are experiencing a harsher impact than others as employee wage increases fail to keep up with inflation. This has forced families to shift their budgets to cover the necessities to survive during these challenging times.

    Cutting Back On Retirement Savings

    Inflation’s economic influence is so strong that it doesn’t stop at budget adjustments; it also affects Americans’ retirement savings habits. With the rising cost of living, individuals and families find it increasingly difficult to allocate funds toward retirement savings. A recent survey found that half of U.S. adults saving for retirement had to pause their saving efforts in 2022 because of inflation. On top of that, 32% withdrew from their retirement savings, and 41% indicated they stopped contributing to their retirement funds altogether. The strain on household budgets due to inflation is providing a real challenge to set aside money for long-term financial goals.

    For those already nearing retirement, the increased cost of living poses a significant threat to their retirement savings. Higher prices for essential goods and services can erode the purchasing power of their retirement funds, potentially requiring them to adjust their retirement plans or dip into their savings sooner than anticipated. Furthermore, individuals still in the earlier stages of their careers may face difficulties prioritizing retirement savings amidst the current inflationary environment. When faced with higher costs for daily necessities, there may be less available income to contribute to retirement accounts or invest in long-term financial vehicles.

    While inflation may appear to be slightly winding down, it’s not going away anytime soon. Kelly LaVigne, VP of Consumer Insights, Allianz Life, expressed, “While we all hope that the pace of inflation will slow, it will take time to moderate. Consumers need to prepare themselves by talking to a financial professional and incorporating ways to help fight the effects of inflation into their portfolio so that long-term inflation doesn’t affect retirement.”

    Tom Smith, Director of Retirement Services at GMS, stated, “With inflation increasing and the cost of living rising, it’s essential you are saving in your 401(k), especially if your company offers an employer match. You’re leaving free money on the table if you stop contributing altogether. If you’ve exhausted all options for cutting back on spending and are still looking to dial back your deferral amount, try and take full advantage of the employer match. This means if you’re contributing eight percent right now, but the match requires you to contribute at least five percent, don’t decrease your contribution to less than five percent. If you want to retire at some point, you need to have a variety of sources to draw income. It’s important to pay yourself first, and a 401(k) is a great option to do that with convenient payroll deductions and tax advantages.”

    How Can You Step In As An Employer 

    As we all remain concerned about the economy and how it could affect us, it’s essential as a business owner to ensure you take every step to help your employees. Offering a retirement plan is a great way to provide long-term financial security and demonstrate a commitment to their future. By providing a plan, you empower employees to save for retirement and establish a foundation for their financial stability.

    Matching program

    Furthermore, implementing an employee matching program can significantly enhance the attractiveness of your business’s retirement plan. By matching contributions, employers contribute a percentage or dollar amount corresponding to the employee’s contributions. This approach not only motivates employees to save more for retirement but also amplifies the growth of their retirement savings over time.
    Plus, matching programs have several advantages for your business. Firstly, they help attract top talent by positioning your company as one that values employees’ financial well-being. It differentiates your business from competitors and becomes a valuable tool in recruitment efforts. Additionally, these programs contribute to higher employee retention rates, as employees are more likely to stay with a company that offers robust retirement benefits.

    Retention bonuses

    Retention bonuses refer to a one-time payment or reward given to an employee apart from their regular salary. This is given as an incentive to keep a valuable employee in their job, and it can be an effective strategy to help reduce the financial impact of inflation on employees. These bonuses are typically reserved for employees who have been with the company for a specific period, incentivizing them to remain loyal and committed. By offering retention bonuses, you can provide financial relief to employees without directly increasing their base pay.

    This approach allows you to address the challenges posed by inflation while maintaining flexibility in their overall compensation structure. There are various ways to structure retention bonuses. For example, they can be a one-time lump sum payment or distributed over a defined period. The bonus amount can factor in tenure, job level, or performance metrics.

    Financial education and planning

    Additionally, you can offer financial education and planning resources. Financial education programs can cover various topics, including budgeting, saving strategies, debt management, investment basics, and retirement planning. These programs can include workshops, seminars, online courses, or one-on-one sessions with financial experts. Equipping employees with the knowledge and skills to make sound financial choices can positively contribute to your employees’ economic resilience and stability.

    By offering retirement plans with matching programs, retention bonuses, financial education, and planning tools, you demonstrate a commitment to your employees’ economic well-being beyond their working hours. These initiatives not only help employees navigate the challenges of inflation but also contribute to reducing financial stress, improving productivity, and fostering a positive work environment.

    Let Us Help 

    If you’re unaware of where to start, contact Group Management Services (GMS). GMS is a professional employer organization (PEO) that helps small businesses by taking on the administrative burdens you don’t have the time or expertise to handle. We help in all areas of your business, whether it be risk management, HR, benefits, or payroll; we do it all. We can help you set up a fully customizable retirement savings plan that makes your company more attractive to quality employees. When you partner with GMS, you can easily establish the following for your business: 

    • 401(k) eligibility requirements 
    • Vesting schedules 
    • Tax-deductible matching 
    • Profit-sharing 

    Contact us today so you can begin helping your employees during these challenging times. 

  • We all know that the COVID-19 pandemic affected individuals and families worldwide. Most recently, inflation has flooded into the daily lives of Americans, causing the price of necessities to skyrocket. It remains clear that the highest inflation we’ve seen in decades has affected individuals in ways you may not have considered. Inflation is defined as the rate at which the cost of a good or service increases. The cost of food, housing, gasoline, utilities, and other goods have skyrocketed by 7.7% over the past 12 months – nearly a 40-year-high. While inflation is hitting just about everyone, low-income households are experiencing it a little harsher than others as employee wage increases fail to keep up with inflation. This has forced families to shift their budgets to cover the necessities needed to survive these challenging times.

    Cutting Back On Retirement Savings

    Many Americans have had to reevaluate their retirement saving habits because of inflation. A survey showed that half of U.S. adults saving for retirement had to pause their saving efforts in 2022 because of inflation. On top of that, 32% withdrew from their retirement savings, and 41% indicated they stopped contributing to their retirement funds. While inflation may seem like it’s winding down ever so slightly, inflation is not going away anytime soon. Kelly LaVigne, VP of Consumer Insights, Allianz Life, expressed, “While we all hope that the pace of inflation will slow, it will take time to moderate. Consumers need to prepare themselves by talking to a financial professional and incorporating ways to help fight the effects of inflation into their portfolio so that long-term inflation doesn’t affect retirement.”

    Tom Smith, Director of Retirement Services at GMS, stated, “With inflation increasing and the cost of living rising, it’s essential you are saving in your 401(k), especially if your company offers an employer match. You’re leaving free money on the table if you stop contributing altogether. If you’ve exhausted all options for cutting back on spending and are still looking to dial back your deferral amount, try and take full advantage of the employer match. This means if you’re contributing eight percent right now, but the match requires you to contribute at least five percent, don’t decrease your contribution to less than five percent. If you want to retire at some point, you need to have a variety of sources to draw income. It’s important to pay yourself first, and a 401(k) is a great option to do that with convenient payroll deductions and tax advantages.”

    How You Can Step In As An Employer

    As we all remain concerned about the economy and how it could affect you, it’s essential as a business owner to ensure you take every step to help your employees. For starters, if you don’t already offer a retirement plan for your employees, consider doing so. From there, consider matching your employee’s contributions. Employee matching is the best way to maximize your retirement savings while also receiving benefits for your business. If you’re unsure where to start, contact Group Management Services (GMS). GMS is a professional employer organization (PEO) that helps small businesses by taking on the administrative burdens you don’t have the time or expertise to handle. We help in all areas of your business, whether it be risk management, HR, benefits, or payroll, we do it all. We can help you set up a fully customizable retirement savings plan that makes your company more attractive to quality employees. When you partner with GMS, you can easily establish the following:

    • 401(k) eligibility requirements 
    • Vesting schedules
    • Tax-deductible matching
    • Profit-sharing 

    Contact us today so, you can begin helping your employees during these challenging times.

  • As inflation continues to hit U.S. workers, they struggle to pay for basic needs such as gas, housing, groceries, and much more. When inflation rises, the buying power of workers’ take-home pay shrinks. A study by the U.S. Bureau of Labor Statistics (BSL) showed that average hourly earnings fell 3.6 percent from June 2021 to June 2022. While wage growth rose to the highest it has seen in years during the pandemic, 55% of employees still say their earnings are not keeping up with the highest inflation seen in decades. This has forced many employees to look for other jobs that pay more, or for some, they had to take on side hustles to earn extra money to get through these challenging times.

    What To Do As A Business Owner

    Inflation has put more pressure on business owners to increase the wages of their employees. According to a study, 63% of businesses say they will adjust wages in response to inflation. Even after many employers increased wages, these increases haven’t been significant enough to cover increased prices for necessities. As a business owner, you understand the effects of inflation and how it affects your personal life, so you can only imagine its impact on your employees.

    If increasing the wages and salaries isn’t working with the detrimental effects of inflation, what else can you do? The following are ways you can support your employees during these unprecedented times:

    • Offer bonuses more frequently
    • Offer flexibility 
    • Provide competitive benefits
    • Promote from within
    • Offer career development

    Conduct A Market Analysis

    In addition to being creative with how you can offer your employees more money, a market analysis is an additional step you could take. A market analysis is a detailed assessment of your business’s target market and the competitive landscape within a specific industry. They typically include quantitative data such as the actual size of the market you want to serve, prices consumers are willing to pay, and revenue projections.

    In addition, conducting a compensation analysis reviews employee pay about an organization’s pay philosophy. It ultimately considers internal equity and external competitiveness to ensure your pay is fair and will attract, engage, and retain talent. During unprecedented times, you must stay competitive and do your best to attract and retain top talent.

    Partner With GMS

    As a new year approaches, you’re getting ready to kick-start the year strong. However, adding in inflation and dissatisfied employees makes it quite challenging. Fortunately, when you partner with GMS, we give you the resources you need to start the new year off the way you had planned. Our HR experts work with you to conduct a market analysis to ensure all employees are paid fairly and create salaries for future employees that are competitive enough for your industry. GMS makes your life simpler, safer, and stronger. Start the new year strong and partner with GMS. Contact us today.

  • As economic uncertainty looms over the U.S., many employers have been left to make challenging budgeting decisions. There are a variety of reasons an organization may downsize its workforce, including cost-cutting, economic declines, mergers, and more. Regardless of the reason, there are proper steps employers and management teams must take.

    Before considering employee layoffs, an employer must evaluate the risk of properly managing federal and state regulations. Discharging a single employee can expose an employer to legal claims such as class action or collective action lawsuits. Employers may experience ongoing communication with former employees in terms of benefits administration, reference requests, verification of employment, and possibly responding to lawsuits.

    Why Layoff Employees?

    Layoffs often are the result of cutting organizational costs. According to SHRM, cutting compensation and benefits typically represent half of a company’s total operating expenses. As a result, organizations looking to reduce expenses tend and tend to look towards removing employees.

    Layoff Alternatives

    Employers who are considering layoffs must understand the importance of considering every alternative. Finding and implementing workplace alternatives rather than cutting employees can be done with a proper human resource management team. Alternatives to layoffs include:

    • Reducing hours worked
    • Adopting a Voluntary Separation Program (VSP)
    • Identifying and removing wasteful practices

    Selection Criteria 

    It is important to carefully consider why you are laying off that employee. By using the proper criteria, employers may use this as a defense against any legal or discrimination allegations. When conducting a layoff, employers must be transparent about the criteria.

    The following are examples of selection criteria:

    • Seniority-based selection
    • Employee status-based (full-time, part-time, contingent status) selection
    • Performance-based selection
    • Skills-based selection 

    Best Practices

    Once it has been decided that employee layoffs are the best option for your organization, consider the following steps to begin to process.

    Planning

    Careful planning is required to complete layoffs properly. From the beginning, employers should be considering alternatives to communicating the layoff. Planning must also go into post-layoff reactions and considerations.

    Team selection

    When it comes to choosing a team to dive into the criteria set, you want a diverse team. This will maintain employees from experiencing bias and allow them to focus strictly on the task at hand.

    Keep it professional 

    When tasked with implementing a layoff, employers must allow their employees to know why this is happening and the decision process behind it. Developing a clear message and a united front will show that the decision was thoroughly considered.

    Emotional impact

    While this is a challenging time for the employer and employees, there are new challenges to consider. When delivering the news, treat your employee with kindness and compassion. It is important to consider the compounding effect on their family and future. Retained employees may have new responsibilities that may take time to implement.

    Show Your Support

    There are many ways to ease the impact of the layoff on employees. Offering a separation package is one way that businesses can provide employees with financial benefits. Reach out to other local employers and see if they would consider hiring any lost employees.

    Employment Assistance Programs (EAP) can help manage employment separations. Implementing an EAP provides a confidential source that your employees can use to find support and resources for certain challenges they face.

    Re-recruit Your Staff

    During this time, you want to put emphasis on communication with your employees. This is the time to re-recruit your remaining employees. It is not only vital to show support, but also your commitment to the current staff. Reassure your team and let them know that you are invested in them. Place an emphasis on the organization’s mission to ensure your business continues to thrive.

    GMS’ Support

    Employee layoffs can leave a lasting impact that goes beyond the employee and employer. When you experience setbacks within your business, allow GMS to step in. Our team of HR experts can help you find and weigh your options. Ultimately, if you decide employee layoffs are what is best for your business, our team will ensure the layoffs are completed properly. When you partner with GMS, any setback can be turned into a comeback. Contact GMS today to learn more.