Office Utilization Rises to 40%

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The New York Times recently published an article on the problems companies are facing in setting a return-to-office (RTO) date.

  • Building security firm, Kastle Systems, reported office occupancy rose in November to 40% from 33%.
  • Express Employment Professionals, with 300 employees in Oklahoma City, has remodeled its offices for a RTO on Jan. 15, 2022.

However, many companies are now deciding not to decide on a hard RTO date as employees need more certainty to plan ahead.

  • Apple, Ford, CNN and Google all announced postponements in their RTO Plans (Return To Office).
  • Qualtics, a Utah software company with 5,000 employees, planned a September 2021 RTO but has now joined the ranks of those deciding not to decide.
  • Lyft said the earliest workers would be required to return to the office is 2023.
  • A non-profit in New York City with 25,000 square feet in TriBeCa reopened but most employees stayed away. In March 2022 the non-profit will terminate its lease.

Will Employees Return to the Office?

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Will employees ever return to the office? No one knows for sure. But the office of 2022 will be different as hybrid working systems become the most common solution.

  • Property developers like SL Green Belt Realty outfitted the new 93-story skyscraper in Manhattan with a superior air filtration system, a 4,000 square foot terrace, included a high-end café. 90% of the tower’s 1.7 million square feet is leased after opening in September 2020.
  • New office designs avoid allocating space by department. Instead, areas have a focus and employees can choose between quiet spaces, rooms with advanced video conferencing technology or areas for team working.
  • Demand for newly designed office space is strong, but weak for traditional office space.

The stark reality is that many offices may be under-utilized for the foreseeable future.

  • New York law firm Greenberg Traurig has given up 25% of its space and opened 4 regional offices nearer where employees live. Despite this change, only 50% of workers are showing up.
  • Heidrick & Struggles signed a new lease for 35,000 square feet at the end of 2020, roughly 50% less space than it had before.
  • UiPath has signed a lease for 26,000 square feet in the new 93-story skyscraper in Manhattan but doesn’t plan to move in until Fall 2022.

Employers are meeting resistance from employees who have developed a taste for working-from-home. 30% of workers surveyed by Gallup would prefer never to come into the office.

  • Molson Coors has dropped plans for a 5-day-a-week, changed to 4-day-a-week and now is aiming for 3-day-a-week after meeting resistance from its 2,200 employees concerned about Covid, childcare, unexpected school closures and vaccinations. Molson Coors implemented a vaccine mandate to address employee safety concerns. Employees sharing conference rooms must wear masks. The UK office in England though has returned to 100% remote working under the UK’s latest work-from-home order.
  • Vacancy rates for office properties are at near record levels in US cities and rents may be depressed for years.

Extra Unemployment Pay Has Disappeared, So Why Haven’t the Workers Returned?

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Earlier this year, a change came: $300-a-week federal supplement for unemployed Americans was cut off. Many people, they argued, would then take the millions of jobs that employers were desperate to fill.

Yet three months after half the states began ending that federal payment, there’s been no significant influx of job seekers.

In states that cut the $300-a-week federal supplement, the workforce has risen no more than it has in the states that maintained the payment.

That federal aid, along with two jobless aid programs that served gig workers and the long-term unemployed, ended nationally Sept. 6.

Yet America’s overall workforce actually shrank that month. “Policymakers were pinning too many hopes on ending unemployment insurance as a labor market boost,” said Fiona Greig, managing director of the JPMorgan Chase Institute, which used JPMorgan bank account data to study the issue. “The work disincentive effects were clearly small.”

Labor shortages have persisted longer than many economists expected, deepening a mystery at the heart of the job market. Companies are eager to add workers and have posted a near-record number of available jobs. Unemployment remains elevated. The economy still has 5 million fewer people working than it did before the pandemic. Yet job growth slowed in August and September.

An analysis of state-by-state data by The Associated Press found that workforces in the 25 states that maintained the $300 payment actually grew slightly more from May through September, according to data released Friday, than they did in the 25 states that cut off the payment early, most of them in June. The $300-a-week federal check, on top of regular state jobless aid, meant that many of the unemployed received more in benefits than they earned at their old jobs.

An earlier study by Arindrajit Dube, an economist at University of Massachusetts, Amherst and several colleagues found that the states that cut off the $300 federal payment saw a small increase in the number of unemployed taking jobs. But it also found that it didn’t draw more people off the sidelines to look for work.

A range of factors are likely keeping millions of former recipients of federal jobless aid from returning to the workforce.

  • Many Americans in public-facing jobs still fear contracting COVID-19
  • Some families lack child care
  • Early retirement
  • 700,000+ Americans have died plus some who recovered have long term COVID related issues

Plus not all employers are doing the best possible job to attract the applicants who are out there

  • Some employers lack transition and training plans to entice applicants from “other” industries
  • As the recruiting market has got more competitive, employers with out-of-date hiring systems and job posting content are losing out to competitors with state-of-the-art systems

The pandemic appears to have caused a re-evaluation of priorities, with some people deciding to spend more time with family and others insistent on working remotely or gaining more flexible hours.

Some former recipients, especially older, more affluent ones, have decided to retire earlier than they had planned. With Americans’ overall home values and stock portfolios having surged since the pandemic struck, Fed officials estimate that up to 2 million more people have retired since then than otherwise would have.

And after having received three stimulus checks in 18 months, plus federal jobless aid in some cases, most households have larger cash cushions than they did before the pandemic. Greig and her colleagues at JPMorgan found in a study that the median bank balance for the poorest one-quarter of households has jumped 70% since COVID hit. A result is that some people are taking time to consider their options before rushing back into the job market.

Nationally, the proportion of women who were either working or looking for work in September fell for a second straight month, evidence that many parents — mostly mothers — are still unable to manage their childcare duties to return to work. Staffing at childcare centers has fallen, reducing the care that is available. And while schools have reopened for in-person learning, frequent closings because of COVID outbreaks have been disruptive for some working parents.

Exacerbating the labor shortfall, a record number of people quit their jobs in August, in some cases spurred by the prospect of higher pay elsewhere.

Learn how to boost your hiring, and increase your chances of finding qualified applicants with myApplicants. Download the fact sheet to learn more.

Employees Enjoy Pay On Demand

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700 employees at an organization based in Nebraska are enjoying using Pay On Demand with MITC Time and Attendance. Pay On Demand was implemented in March 2019.

Since then, 56% of employees have enrolled (no fee to enroll), and 149 employees used Pay On Demand in the last pay period (21% of all employees).

There were over 350 transactions in the last pay period (small fee paid by employee), meaning in total about $50,000 was advanced to employees and then automatically deducted from their regular payroll check

Employees have responded positively to Pay On Demand, even though they pay a small transaction fee for using it. Employees mainly rely on Pay On Demand to pay for unexpected bills.

The customer thinks Pay On Demand helps with retention, although with Covid-19 in 2020 it is hard to measure the difference as retention improved for other reasons as well.

MITC Time and Attendance automatically updates the Pay On Demand service daily with completed hours. To learn more, download our daily pay ebook.

2020 Brings Minimum Pay Increases

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More than 20 states will see updated rates as the calendar turns to 2020.

The following state changes will go into effect either Dec. 31 or Jan. 1, 2020. (Note: This information does not take into account city and county minimum wage rates, which may take precedence depending on the jurisdiction.)

Alaska

State law requires a minimum wage adjustment each year based on the Consumer Price Index (CPI). State officials have announced the new rate for next year: $10.19

Arizona

Arizona’s next increase is scheduled. Next year, the new rates will be: $12

Arkansas

In 2018, voters passed Issue 5 to increase the state minimum wage, with the 2020 rate going to $10.

California

California has different rates for small and large employers. Small is defined as having 25 employees or fewer; large means 26 or more. One of the most progressive states in the nation, California will have a $15 minimum wage in 2022.

The new 2020 rates are $12 for small employers, $13 for large employers.

Colorado

Come 2020, the new rates will be: $12

(Also of note for employers: Colorado recently gave cities the power to set their own rates.)

Florida

Effective Jan. 1, 2019, Florida tied its minimum wage to an annual indexed rate. Starting in 2020, the new rates will be: $8.56.

Illinois

In February 2019, Gov. J.B. Pritzker signed into law the first minimum wage increase in Illinois since 2010. It will reach $15 in 2025. Meanwhile, starting Jan. 1, 2020, the minimum wage will be $9.25.

Maine

Maine has a planned increase for its minimum wage: $12

Maryland

Minimum wage will increase by 90 cents to $11 an hour. Note that starting in January 2021 the state will have different rates for large and small employers. (Large being 15 or more workers and small defined as 14 or fewer.)

Massachusetts

In 2018, Massachusetts passed legislation to increase minimum wage to $15 by 2023. In the meantime, the new rates for 2020 will be: $12.75

Michigan

Increase its minimum wage, but only slightly. The 2020 rates will be: $9.65.

Minnesota

Different rates for large and small employers. But the definition of large or small isn’t tied to the number of employees. Instead, Minnesota uses gross receipts — more than $500,000 is considered large, less than $500,000 is considered small. (The state has no separate rate for employees who receive tips.)

New rates in 2020: $10 for large employers, $8.15 for small employers.

Missouri

New law: While the rate won’t hit $12 until 2023, annual increases of 85 cents are in place.

In 2020, meanwhile, the rates will increase to: $9.45

After 2023, the rate will be increased according to the CPI.

Montana

Minimum wage workers will see a small increase next year, with the rate going to $8.65. The rate is tied to changes in the CPI for Urban Consumers.

New Jersey

Enacted a new law which resulted in increases in July. Moving forward, the rate will increase based on the CPI or at least $1, whichever is greater. (The rate will hit $15 for most employers in 2024.)

Also note that rates differ depending on employer type. In 2020, the minimum wage will be:

  • $11 for most employers
  • $10.30 for seasonal and small employers (fewer than six workers)
  • $10.30 for agricultural employers

New Mexico

Passed a new law in 2019. The initial increase is a big one, too, up $1.50 from the current rate.

In 2020, minimum wage will be: $9 The rate will top out at $12 in 2023.

New York

The 2020 the rate is going up to $11.80.

Ohio

Minimum wage in Ohio is tied to a company’s gross receipts, with $319,000 as the threshold defining a “large” employer.

Come 2020, the new rates will be: $8.70 for large employers. $7.25 for small employers (the federal rate).

South Dakota

The minimum wage is adjusted annually via the CPI (though the rate can’t be decreased). In 2020, the new rates will be: $9.30

Vermont

Began indexed increases in 2019. Minimum wage workers will see modest bumps in 2020: $10.96

Washington

Passed a minimum wage ballot initiative in 2016. The new rate in 2020 will be $13.50.