Open Shop Committee Web Meeting January 29, 2014 Quick Learn: COMPENSATION UPDATE Jeff Robinson PAS, Inc. Saline, MI 1-800-553-4655 http://www.pas1.com Topics Topics � Still a big problem… Losing top talent - and not being able to easily replace that talent. � Compensation trends – activity in the market place. � Base pay � Cost of Labor verses Cost of Living 1
What Others Were Saying What Others Were Saying • AGC 2014 Construction Hiring and Business Outlook. • Alpha Resources reported the Gulf Coast workforce needs grew from 76,100 to 106,075 craft workers. A change of 39.4% in the Gulf Coast between January 2013 and January 2014. • Louisiana Workforce Commission (Building Louisiana’s Workforce – October 30, 2013). Reported more than 60 billion dollars in expansions and new building. More than 86,300 new craft workers needed by 2016. 35,000 new jobs and 51,300 jobs available because of attrition. • Unemployment Rates Employment Cost Index Employment Cost Index 6.0% 5.0% 4.0% 4.0% 3.1% 3.0% 3.4% 1.8% 1.7% 2.7% 2.0% 1.6% 1.5% 1.4% 1.6% 1.0% 1.2% 1.2% 0.7% 0.7% 0.0% 2007 2008 2009 2010 2011 2012 Sep-13 Wages and Salaries - All Wages and Salaries - Construction 2
Percentage of Companies Freezing Percentage of Companies Freezing Pay ay 50.0% 45% 43% 40.0% 36% 32% 30% 30.0% 26% 26% 21% 18% 20.0% 15% 15% 14% 12% 11% 11% 9% 8% 10.0% 5% 0.0% 2008 2009 2010 2011 2012 2013 Craft Staff Executive What Others Were Saying What Others Were Saying Other compensation folks… • Mercer study – U.S. organizations averaging 3.0% • Hay Consultants projecting 3.0% • Culpepper anticipates 3.0% • Towers Watson forecasting 2.9% • AON projects 3.0% increase • WorldatWork (formerly known as the American Compensation Association) is projecting 3.0% 3
What Others Were Saying What Others Were Saying But, look deeper… • WorldatWork reported an actual of 3.0% for 2013 and is forecasting 3.0% for 2014. Almost all sectors are reporting 3%. But there is one glaring exception. • The “Quarrying, Mining, and Gas & Oil” sector reported an actual 4% increase in 2013 and is again projecting 4% for 2014. This applies to all employee levels. Trends Trends - Wage Increases Wage Increases 5.0% 4.0% 3.0% 2.0% 2007 2008 2009 2010 2011 2012 2013 2014 Executive Staff Craft 4
Change Since 1984 Change Since 1984 –Current vs. COL Current vs. COL $25.95 $26.00 $25.09 $24.73 $24.00 $23.16 $21.67 $21.62 $21.69 $21.62 $22.00 $20.00 All Crafts Carpenter Pipefitter Heavy Equipment Op. Escalated by CPI Actual Reported One Year Change One Year Change 7.50% 6.22% 4.83% 5.00% 2.66% 2.46% 2.50% 0.00% All Crafts Carpenter Pipefitter Heavy Equipment Op. Change from 2012 to 2013 5
A Few Areas with the Largest Increases A Few Areas with the Largest Increases Per Diem and Subsistence Per Diem and Subsistence � Probably the hottest topic at all employee levels. � By May 2013 we saw an upswing in the use of per diems. Alpha Resources began tracking per diems in earnest by September 2013 in the Gulf Coast. � Average of $67 per day in the Greater Houston area (used on 24% of the projects) � Average of $72 per day in the Greater Baton Rouge area (used on 50% of the projects). � In May 2013, remote areas (across all regions) were already running at $70 per day or higher. 6
Cost of Labor vs. Cost of Living Cost of Labor vs. Cost of Living • Be careful what you pay for. • Cost of labor - Pay differences between two locations for the same work. • Cost of Living - Difference between locations in the cost of goods. • Overly simplistic – but you get the picture… • Des Moines carpenters = $25.28 ($36.45 total package) • District of Columbia carpenters = $26.74 ($34.19 total package) • Impact on Superintendent pay Take Away Take Away � Pay attention to any turnover or failure to attract new employees. Be ready to take action to keep your best people. � If your folks travel, distinguish between cost of labor and cost of living. � Monitor industries that compete for similar talent. Consider the impact their trends might have on your company, and if appropriate, mesh their trends into your own human resource planning. � And, remember your best people are always in demand and will be welcomed by a competitor. 7
QUESTIONS? Jeff Robinson PAS, Inc. Saline, MI 1-800-553-4655 http://www.pas1.com 8
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