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If your company needs to save money, address compliance issues, improve efficiencies and increase productivity, we have the solutions and the key to your success.
Trust Key HR to provide you with…
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July Economic Outlook: We Could All Use a Little More Nuance.
• Challenge yourself to go beyond the headline. If you read an economic news story that causes worry, dig deeper and look for an explanation that’s more well-rounded and insightful. It may help you evaluate similar news going forward.
• You can’t wish away prices as they are now. But you can figure out how you’re going to adjust going forward if the things you want and need stay more expensive.
There are multiple ways to interpret the economic news of the day. Click on an alarming headline only to feel anxiety? It’s to be expected. But a measured approach to the state of the financial world is possible, and just might help you remain focused on your short- and long-term goals, rather than the scary news of the moment.Here’s how to think differently about what’s going on in the economy right now.
Headlines don’t tell the whole story.
On June 7, the retail giant Target announced it was taking a short-term profit hit. Faced with too much merchandise cluttering its shelves, its management announced second-quarter moves that would help clear existing inventory.The business news reacted as you might expect. But was it? Here’s another interpretation of that Target news. Retailers can and should be paying attention to consumers and their spending habits. Both inflation and a return to pre-pandemic activities means people are swiftly adjusting what they do with their dollars. Target, and plenty of other retailers, have a glut of big TVs and pajamas and not enough entertaining supplies and going-out clothes. Big corporations, even with all the data in the world and armies of well-paid consultants, are imperfect. If they get behind the eight ball, they have to figure out how to get ahead again, quickly, with as little effect on the long term as possible.
Target could have stayed the course, letting sales wither and enduring increasingly cold shoulders from consumers. Or they could pivot, even if the short-term result meant some economic distress. Just a few days later, the business press reminded everyone of that with headlines like “Target Looks to Shed Excess Inventory With New ‘Rapid Response’ Plan.” The takeaway? When it comes to the economy, what might seem off-putting in the short term doesn’t always mean the sky is falling.
Your wallet: When it comes to your financial goals, there’s a difference between reacting and responding. Winston says—like selling off everything in a stock market portfolio. Responding is checking in with a financial professional to ensure your investing allocation matches your risk tolerance and presumed retirement age.
Making a little peace with prices can help your outlook. Have you been planning a road trip this year? You’re not alone: 80% of Americans will take to interstates, highways, and back roads for a vacation in 2022. But have you adjusted your road trip ideal based on the climb in gas prices? Six out of 10 Americans have. Of all the things that inflation has affected, Americans are laser focused on gas prices. It is more expensive right now to fill a tank. We want that fixed, and we want someone to blame. But we aren’t really paying attention to the mechanisms at work that have always created those prices.
Your wallet: If inflation has impacted a long-term goal such as saving for a house or retirement, can you adjust to get back on track, or review your timing for meeting that future goal? If you haven’t done so in a while, it might be time for a budget check-in, or to plan a retirement budget, too.
States That Raise Minimum Wage May Counterbalance Inflation
With inflation near its highest rate, many states’ attempts to modify their minimum wage standards could lessen the sting of gas and food prices.
The Consumer Price Index for all urban consumers increased by 9.1 percent over the last 12 months ending in June, which marked the largest 12-month increase since the period ending in December 1981, according to the U.S. Bureau of Labor Statistics.
“Inflation is clearly on the minds of lawmakers in various states,” said Paul Piccigallo, an attorney with Littler in New York City. “Soaring inflation has caused lawmakers to reassess the minimum wage in their states and localities, with some calling to increase minimum wage to address rising inflation.”
“It has taken a while to gain traction, and inflation tends to be a delayed response to excessive government spending, but finally the trend toward increases in the minimum wage in some states is evident,” said John K. Skousen, an attorney with Fisher Phillips in Irvine, Calif. “Nearly two-
dozen states, counties and local jurisdictions increased minimum wage for workers in 2022.” Those increases may have been years in the making, with voters passing referenda to enact the changes years earlier when inflation wasn’t such a pressing issue. But today, the wage increases could counteract some of inflation’s effects.
“With the lack of traction in Washington to increase the federal minimum wage, we anticipate that more states and jurisdictions will pass measures to increase minimum wage at the local level. Hawaii was the most recent state to do this on June 23, increasing the state minimum wage to $18 by 2028,” Skousen added. “We are also seeing private companies pledge higher minimum wages for entry-level workers at an organizationwide level in response to some of these pressures.”
A higher minimum wage means higher payroll taxes for employers, as well. “The increase of the minimum wage has many effects that may be overlooked, including where the minimum wage is an element in the
calculation of other wages or benefits, such as sick pay, overtime exemption thresholds or other statutory entitlements,” Skousen explained.
“Sometimes, employers fail to take sufficient action to increase the minimum wage on all personal documents or compensation plans where minimum wage is an element of compensation. Even when such documents have been updated, payroll employees may overlook them or fail to consider the increased minimum wage as a factor in calculating other wages due,” he added.
The consequences for noncompliance are high, including civil lawsuits, administrative claims filed in state and federal agencies, audits conducted by state and federal agencies, back-pay orders, interest, penalties, attorneys’ fees, class-action lawsuits, and adverse publicity, Skousen noted.
HR professionals need to stay attuned to any changes in their state and the complexities of the law.
“Increasing minimum wage across the board for a potentially large set of employees, in multiple states, is not a simple process,” Piccigallo said. “For states and localities where the minimum wage is indexed to the Consumer Price Index, HR professionals must be especially careful because there is no uniformity across jurisdictions regarding how Consumer Price Index adjustments are calculated.”
Some employers generally aim to keep pay increases somewhat equal across different levels of the company. “There may be a ripple effect on midlevel employees who will expect to be paid higher rates as minimum wages continue to increase,” Skousen said.
Differences by State
Under an executive order from President Joe Biden, the minimum wage for federal civilian workers and federal contractors increased to $15 per hour starting in late January. State and local minimum wage standards vary widely.
Thirty states and Washington, D.C., have minimum wages above the federal minimum wage of $7.25 per hour, according to the National Council of State Legislatures, a Denver-based organization that represents state legislatures. Five states (Alabama, Louisiana, Mississippi, South Carolina and Tennessee) don’t have a state minimum wage. Georgia and Wyoming have a minimum wage below $7.25 per hour.
“There are currently 20 states that follow the federal minimum wage of $7.25 per hour, nearly all of which have a lower cost of living than the national average,” Skousen said. “Other states, or localities within states, with a progressive orientation push for higher benefits and wages often tied to political lines, for which demands come naturally by virtue of a higher cost of living in such areas.” “The trend is increasing for isolated urban areas having much higher local minimum wages than the state or federal minimum wage,” he added.
But the trend doesn’t always follow the expected partisan divide. “More traditionally moderate or conservative states like Montana and Ohio, both of which have laws that index minimum wage to inflation, recently increased their minimum wages as a result of rising inflation,” Piccigallo pointed out. Some business groups argue that raising the minimum wage means consumers will be forced to pay even higher prices for goods and services. Many small businesses are just getting back on their feet after pandemic-related shutdowns.
“Opponents of raising the minimum wage, often from the business community, have cited business struggles in the wake of the COVID-19 [pandemic], and have argued that businesses cannot afford the increased labor costs that a higher minimum wage would require,” Piccigallo said. “Interestingly, lawmakers in some localities have sought to rein back inflation-tied minimum wage increases,” he added. “Lawmakers cited the need to help struggling businesses stay afloat, guard against inflation and provide long-term budget stability.”
Why Sponsorship — Not Mentorship — May be The Key to Helping Women Advance Their Careers
Despite more companies presenting diversity and equity at the forefront of their values, women still find themselves underrepresented at the executive level, and are missing out on the compensation and influence that comes with it. Less than 11% of senior executives are women among the world’s largest Fortune 500 companies, according to data from marketing communications firm Weber Schandwick — and that trend isn’t likely to change anytime soon. Fewer women held senior and even junior level positions in 2021 than they did in 2019, according to a study by IBM. To make matters worse, IBM also found that only 30% of junior women managers reported having sponsors or mentors, which can prove essential to career advancement.
Yet mentorship alone won’t make a big enough difference, says Solange Charas, founder and CEO of human capital analytics company HCMoneyball and adjunct professor at Columbia University. Instead, women need to seek out sponsorship, where the sponsor takes responsibility for helping their sponsee get promoted to higher-Level positions. Charas has researched why women are underrepresented in senior-level leadership in the U.S., along with Rubina F. Malik, a senior assistant professor of business administration at Morehouse College and learning and development advisor at Malik Global Solutions, and Lauren
Ledbetter Griffeth, a leadership specialist for the College of Agricultural and Environmental Sciences at the University of Georgia.
EBN spoke with Charas, Malik and Griffeth to explore why women may be subconsciously holding themselves back from advancement and success, and how sponsorship can open doors in a professional world that is created for men, by men.
What is the difference between mentorship and sponsorship?
Malik: Coaching is about development. Mentoring is about guidance. Sponsorship is about pulling someone up and advocating for them.
Charas: It’s passive versus active. A sponsor will
introduce you to others and promote you. People that are sponsored usually go farther than people that are simply mentored. But people who are mentors to others don’t expect anything in return, whereas people who sponsor expect something in return. It seems men not only implicitly understand that quid pro quo, but they verbalize it. Women may not recognize that there has to be a quid pro quo and they don’t offer it to get a sponsor.
Griffeth: For example, imagine sitting around the table when the candidate walks out of the room of a job interview. The person who is interviewed has someone at that table who is their sponsor. The sponsor would say, ‘You need to hire this person. They’re awesome. I have a relationship with them. I’ve seen their work.’
How does gender play a role in the way women approach career advancements?
Charas: Women tend to skew more towards being focused on the benefit of the collective. You can think about it as the hunter-gatherer difference. Women work in teams, while men remain individually focused even while part of a team. Speaking in broad generalizations is always dangerous, but this is the world we live in.
Griffeth: What I’ve noticed is how all these women, who were my peers, have entry-level positions and mid-level positions, but not executive-level positions. A woman who I knew was exceptionally talented, lost a higher-level position because they gave it to a guy who had relationships she didn’t have. When it comes to sponsorship and mentorship, these women were getting mentored to be trained to be in this role, when they really just needed somebody to advocate for them.
Malik: Women tend to work hard so they can be seen and rewarded, versus asking to be rewarded. I have a friend and peer, and he applied to be a CEO. I thought to myself, ‘But he doesn’t even have CEO experience.’ I say this to him, and he just says, ‘Well, they can say no to me.’ Meanwhile, if I don’t have one little thing, I won’t apply.
What is your advice to women as they work to accelerate their careers?
Charas: We are trying to signal to women that you may have to behave differently in the world until we get more women in senior leadership roles where women can help women — and not because they want something in return. But we can’t change the system from the outside.Personally, I don’t think I ever had a sponsor because it’s not in my nature to promise something that I don’t know for sure that I can deliver. I’ve always come to relationships asking if this is the right thing to do for everybody involved. But that’s not the same game men are playing. Women need to know how to play the game so that there are enough women that get promoted so that we can change the system.
Malik: We’re in a world where there aren’t many women here to pull somebody up. Old white men reach down and pull people from in their community and from people who look like them. More CEOs and higher-ups need to be allies for women.
Charas: When women are elevated, society is elevated, which means men benefit as well. We need to do this as a partnership and we need men to be our allies. We’re not fighting against them. We are fighting for parity.
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- On July 20, 2022
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