More Costs, Fewer Applicants, More Stress

More Costs, Fewer Applicants, More Stress

Rising health care costs, a tight labor market and expensive housing are issues facing the Gulf Coast HR industry. Companies must innovate.

HUMAN RESOURCES by Janet Leiser | Senior Editor

Like other Naples employers, NCH Healthcare System struggles to find new employees who can afford housing in an area where the median home price is $451,500 - the highest in Florida.

But the company, with 4,000 employees, has taken an unusual step to solve the problem. It offers mortgage assistance and it rents 200 apartments to employees at below-market rates. Plus, it plans to add another 150 units within the next few years.

"Our community suffers from one of the more acute housing shortages for workers in the United States," says Ed Morton, chief executive of NCH Healthcare System. "It's our obligation to help the employees. If we don't, we aren't going to have the nurses and health care employees necessary to properly take care of the community."

Nationally, rising health insurance costs is the No. 1 problem for companies. But affordable housing and a tight labor market are two other key issues facing Gulf Coast HR professionals.

In addition to Naples, the Gulf Coast cities of Sarasota and Punta Gorda are among the country's 20 most over-valued markets, according to National City Corp., a Cleveland-based bank. Other Florida cities on the list are Miami, West Palm Beach and Fort Pierce.

Martha Bryson, president of HRM of Southwest Florida, an association for human resource professionals in Fort Myers, says employers there complain about housing costs, even though the median price in Lee was $268,000, considerably lower than Naples to the south.

"It's the biggest issue facing HR professionals here," Bryson says. "It's hard to recruit new employees who don't already own a home here now. Wages are far lower than the cost of housing."

In Sarasota, where the median home price was $326,800 in June, employers are have difficulty recruiting from outside the area, says Jennifer LaHurd, president of the Sarasota-Manatee Human Resources Association.

The group plans to hold a workshop on workplace issues in the near future to try to come up with solutions to the housing crunch and tight labor market.

In the Tampa Bay area, where the median home price was $239,600 in June, housing costs are becoming a problem, says Jeremy Dixon, former president of HR Tampa and a vice president with A1 Temps.

"Housing costs are definitely going to affect things sooner or later," Dixon says.

The Tampa Bay area job market is so tight, Dixon says, that many companies are unable to fill positions. To cope, some employers have lowered standards to hire people they wouldn't have considered in the past, such as those with misdemeanor arrest records or frequent job jumpers.

In addition, Dixon says he now advises clients to counsel employees with minor problems, rather than fire them.

Hourly rates are rising, he says, and employers are often surprised to see how much more they must pay new hires. In some cases, employers have to up the hourly rate by $5.

Nationally, the labor market is expected to tighten even more as the Baby Boomers, born between 1945 and 1964, retire.

LaHurd says: "That's really big on people's list: how are we going to recruit people to fill our needs with the housing costs?"

Rising health care costs

The most severe problem for many companies and HR professionals on the local and national level, though, is the rising cost of medical insurance for employees. U.S. health care costs are the highest in the world, with most of the costs carried by the employer, according to the Society for Human Resource Management.

"Benefits are top of mind to just about everybody these days," says Dixon of A1 Temps. "It's becoming exorbitantly expensive for companies to subsidize and for employees to pay. It's almost creating an issue between the employer and employee."

A Towers Perrin Health Care Cost Survey shows the estimated average cost of health care per employee this year is $8,400. The Business Roundtable's 2005 CEO Economic Outlook Survey cites health care as the greatest cost pressure for companies (see chart).

"Perhaps the most critical area for HR professionals will continue to be managing the cost of health care and finding ways to boost productivity in order to offset rising health care costs," states the 2006 Workplace Forecast by the Society for Human Resource Management.

The cost of benefits is cited as another reason why more and more companies are choosing to outsource in developing countries where labor is cheap. It's also why more companies are offering health savings accounts.

As costs are passed onto employees, more people are choosing to do without health insurance.

"It seems like the insurance companies have created an environment where only those who don't need the insurance can get it," Dixon says.

Between the rising costs of health insurance and fuel, business leaders are feeling quite a bit of stress, Dixon says, adding, "It's worse this year than ever."

Bryson of Fort Myers says employers are offering more recognition and flex time to employees to help in recruiting and retention.

"You have to be creative in making sure the benefits you're providing are truly the benefits they're looking for and they're going to see value in it," she says. "You can have a wonderful benefits package, but if it's not something that's going to be used or valued by the employee it has no benefit to them."

For instance, a young workforce doesn't see the value of disability insurance and a mostly single or older workforce wouldn't value childcare reimbursement.

Forecast

TRENDS EXPECTED TO IMPACT WORKPLACE

DEMOGRAPHIC

1. Aging population drives up health care costs

2. Aging of the workforce

3. Demographic shifts lead to shortage of skilled workers

4. Retirement of large number of Baby Boomers (1945-1964) at about same time

5. Growth of "Sandwich Generation," which is responsible for eldercare and childcare at same time

ECONOMIC

1. Threat of increased medical care/health costs on U.S. economic competitiveness

2. Rising cost of retiree benefits

3. Continued expansion of global business and increased interdependence of countries and cultures

4. Labor shortage at all skill levels

5. Changes in corporate governance as a result of scandals

EMPLOYMENT

1. Retention strategies for current/future workforce

2. Rising health care costs

3. Employee security concerns

4. Employee backlash against rising cost of benefits

5. Work intensification as employers try to increase productivity with fewer employees

POLITICAL

1. Federal health care legislation

2. State health care legislation

3. Focus on global security

4. Proposed immigration laws: H1-B visas, temporary work programs, etc.

5. Retirement benefits portability

HR TECHNOLOGY

1. Rapid growth in use of mobile devices with wireless applications by employees in workplace

2. Heightened awareness of HR data privacy and security

3. Expanded use of Web for delivery and use of HR applications on a service basis

4. Evolution of Web-based employee and manager self-service applications from basic data updating to sophisticated strategic applications and work flows

5. Growth in use of e-learning

SOCIETAL

1. Decline in traditional communications, increase in cyber communications

2. Increased demand for work and family life balance

3. Higher levels of stress as employees and families cope with multiple responsibilities

4. New attitudes toward aging and retirement as Baby Boomers age

5. Increase in identity theft

6. Increase in chronic health conditions such as diabetes, heart disease, etc.

7. Broadening diversity: religion, ethnicity and cultural

8. Changing definition of family - children living with grandparents; same-sex couples; unmarried cohabitating, etc.

9. Rise in individuals and families without health insurance

10. Increase in age-discrimination litigation

Source: SHRM 2006 Workplace Forecast