If labor market trends were made into a motion picture, it might be titled Honey, I Shrunk the Workforce. The eight-county Madison region lost 25,000 jobs between 2007 and 2009, according to Thrive’s annual State of the Madison Region Report, as the number of employed workers fell to just under 500,000. In this snapshot of the labor forecast for 2011, we found that dislocated workers, recent graduates, and future retirees are playing a waiting game as they anticipate an economic rebound.
Treading Water
Even a relatively encouraging jobs report — 151,000 new jobs added in October — could not bring our experts to predict a major dent in the nation’s unemployment rate, which stands at 9.6%, or Wisconsin’s, which stands at 7.8%. The reasons more employers hired is they are ramping up for the holiday season and because they had reduced their inventories to such an extent that they now have to restore them “just to make their orders,” said Pat Schramm, executive director of the Workforce Development Board of South Central Wisconsin.
The ability to more precisely control inventory with technology has been a huge factor. In manufacturing, companies have deployed robotics, programmable control logic, and other technologies to better manage their businesses and run lean. “Even on the merchandising platform, they know exactly what is coming in and what’s coming out,” Schramm added.
Nationwide, the demand for temporary workers was expected to increase nearly 21% compared with the same period of 2009, according to survey by the California-based G. Palmer & Associates. This supported a Bureau of Labor Statistics report that seasonally adjusted temporary jobs grew by 23.4% year-over-year in September.
Diana Schafer, owner of Spherion Staffing and Recruiting, said more than 450,000 temporary jobs have been added nationally in the past 12 months. Manufacturing and warehousing increases are leading the pack, and IT firms are adding staff to handle new e-initiatives that had been put on hold.
In Madison, Spherion sees an upsurge in customer service positions, especially in call centers. “That customer experience is a critical piece, especially with the importance of holding onto the business you have,” said Schafer. “There is still a lot of unpredictability out there, which is why companies are going to staffing firms.”
The industry that has gained the most, even in recession, is health care, one of the largest employment sectors in Madison. Roberta Gassman, secretary of the Department of Workforce Development, said health care added 3,200 jobs here since the start of the recession, and has helped Madison regain some of the lost jobs.
The industry most likely to remain in a downsized status quo is commercial construction, according to Ginny Gilbert of Gilbert Cost Control Consultants Corp. “What I’m hearing in talking with architectural firms and contractors, and what I know just looking at the number of projects going forward, is there isn’t a sense that next year is going to be better,” Gilbert said. “Most of the firms have downsized as much as they realistically can, so they are keeping their core staff.”
The trend that most worries the Workforce Development Board involves the young people who have graduated since December of 2008 and have made little career headway. “People have graduated with associate degrees or four-year degrees, and they are not landing in their professional experience yet,” Schramm said. “By this time, they should have two or three years under their belt working in the professional area they have trained in.”
Also blocking their access to the workforce is the delayed retirement of Baby Boomers, which has postponed the onset of an expected labor shortage by at least two years. Workers in health care, information technology, and utilities have yet to pass the torch, and are trying to rebuild their depleted nesteggs.
In addition, the philosophy behind a new On the Job Training program is that most jobs are becoming more and more technical in nature, and since there are not many jobs that are not engaged with computers, it’s taking longer for new hires to get up to speed. Under the On The Job Training program, the federal Workforce Investment Act provides employers an opportunity to put dislocated workers back to work while they receive the training they need to achieve some level of upward mobility.
Employers hire WIA-eligible workers and train them on-the-job. In return, employers can be reimbursed for the costs associated with training the new employee. Participants work a maximum of 320 hours at a base wage rate of $14.57, and a total of $362,100 is available to place eligible workers in Columbia, Dane, Dodge, Jefferson, Marquette, and Sauk Counties.
“As we have looked at the results of workers who have lost jobs, those who participate in the programs and those who don’t, those who do absolutely do better,” Gassman said. “They get back to work more quickly, and they end up with a better level of pay.”
Employment Law: 5 new employment laws you need to know and comply with.
Ripping your supervisor on Facebook might be next year’s point of employment law, but plenty of new employment laws were created in 2010, and IB asked local attorneys Cynthia Van Bogaert of the Boardman Law Firm and Meg Vergeront of Stafford Rosenbaum for their compliance advice.
- Employers must make quick adjustments to respond to changes brought about by the Patient Protection and Affordable Care Act. According to Van Bogaert, employers are scrambling to identify the employee benefit plans that are subject to the new law, and that’s not always straightforward. “Say you have a wellness benefit and you find that it is subject to health care reform, and you really didn’t think of it as a benefit plan before,” she explained. “There are other laws like ERISA and COBRA that you need to think about with respect to these plans.” In addition, there are employee notices and employer reporting requirements, including special enrollments and a new requirement to report the aggregate cost of employer-sponsored coverage on the W-2 form, among other record-keeping requirements.
Compliance: It’s a good time to look at all health-related compliance issues, not just those linked to your major medical plan. Employers should properly identify the plans that are subject to various provisions and requirements in the new law. “It’s really a provision-by-provision analysis,” Van Bogaert said.
- Effective July 16, 2011, there are new 401(k) plan disclosure requirements on fees and conflicts of interest for service providers. The law requires mandatory reporting from the service provider to the employer group health plan, and it’s designed to make sure employers have adequate information to assess whether fees are reasonable and whether they have a conflict of interest working with the service provider, Van Bogaert said.
Compliance: This is going to be a large undertaking for the 401(k) industry, but employers also have a role to play. Before July 16, fiduciaries should review existing service providers and determine, based on regulations, which are subject to mandatory reporting rules. “This is not a new obligation, but the reporting is new,” Van Bogaert explained. “It’s pretty well accepted that if you hire someone to undertake something that involves your pension plan, you should be doing a periodic evaluation where you compare them to competitors.”
- As part of the health care law, employers are required to provide a reasonable break time for nursing mothers who need to express their breast milk, and provide a private area for the break other than a restroom. There is an exception for employers for 50 or fewer employees if they can show the requirement would impose an undue hardship. Under Department of Labor guidance, an undue hardship is determined by looking at the difficulty or expense of compliance for a specific employer, but official regulations are still pending.
Compliance: The bottom line is that employers who don’t fall under the hardship exception need to designate a break area, amend their handbooks accordingly, and train managers and supervisors on the new policy.
- Many employers are confused about the difference between regular employees and independent contractors. Regular workers are subject to worker’s compensation and unemployment insurance taxes; independent contractors are not. Vergeront said a new law raises the stakes for misclassification by giving the state Department of Workforce Development the power to receive and investigate complaints, and refer complaints to other state and local agencies that administer laws related to classification. DWD can require an employer to provide proof they have maintained proper employee records; if an employer fails to provide that information, DWD has the right to order the business to stop work and impose forfeitures of $250 a day.
Compliance: Vergeront said this is a situation where an employer should consult with an attorney. “There is one definition under the unemployment insurance law, another definition under the worker’s compensation law, and another test the IRS applies,” Vergeront said. “They are similar, but not identical.”
- The HITECH Act and health care law have increased penalties and enforcement for HIPAA privacy violations. One penalty calls for up to $1.5 million per identical violation in a calendar year, and state attorney generals are allowed to file lawsuits.
Compliance: Make sure HIPAA polices reflect changes in the law and operation of the health plan. “Things as innocuous as handling your trash need careful attention under HIPAA privacy rules,” Van Bogaert said.
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