HR Intel: The New Economic Normal

Bad economic news headlinesAs the future of the US continues to take shape, daily developments tend to raise more questions than they answer. Historically, economists say that uncertainty is bad for the economy, but uber-successful investors like Warren Buffett say that fear and uncertainty present huge opportunities for investors. The truth is probably somewhere in between.

For HR, the story is similar. Economic uncertainty can be both good and bad, depending on your perspective and your situation. But regardless of where you sit or how you view the world, there is an economic tug-of-war playing out as we speak, with the fortunes and livelihoods of millions of Americans at stake.

Recently, President-elect Trump made headlines by influencing Carrier, a manufacturer of HVAC equipment, to keep about 1,000 jobs in Indiana. Carrier will still send 1,300 of its assembly line jobs to Mexico, but Trump’s influence meant that the company would not close up shop in Indiana entirely. In exchange, Indiana officials are giving United Technologies Corporation (Carrier’s parent corporation) $7 million worth of tax breaks. But wait, there’s more.

In order to offset the loss of those 1,300 jobs, UTC is making a $16 million investment in automation at the Indiana plant, which means fewer jobs for humans on assembly lines in the future. And almost half of that investment is offset itself by the tax break provided by Indiana taxpayers, who themselves would be the victim of future automation reducing the number of available jobs. And just to rub salt in the wound, UTC has announced that it is raising the prices on its HVAC equipment by 5% starting in January.

For companies other than Carrier, Mexico still beckons. Chuck Jones, the president of the Indiana United Steelworkers Union says that American employers simply can’t compete with $3 per hour wages, indicating that outsourcing will get worse before it gets better. To that end, UTC, Rexnord (maker of ball bearings), Manitowoc Foodservice, GE, Paoli Furniture and CPX (manufacturer of moldings) are all either closing their Indiana factories or closing up shop altogether.

Then there’s the impending euthanizing of the DOL’s “final” rule on overtime, which was dealt a body blow by Judge Amos Mazzant III of a federal district court in Texas two weeks ago (more on this below). If the rule had gone into effect, about 87,000 workers in Indiana alone would have seen their salaries rise to $47,476. And even if Judge Mazzant hadn’t stopped the rule in its tracks, all indications suggest that the next administration would not have been friendly to the rule.

While these struggles play out, the economy is chugging along, suggesting that it may not be so broken or in need of an overhaul after all. Employers added 180,000 jobs in November and unemployment is down to 4.6%, though with historically low (proportionately) numbers of individuals in or looking to be in the workforce. GDP was 3.2% in the third quarter of 2016, the highest it’s been since mid-2014. When the new administration takes over, it will undoubtedly have some momentum to work with, but the drastic change in direction is sure to shock the system. Whether that shock is good or bad, remains to be seen.

If you’re in HR, the pendulum swing in regulatory environments can be both disheartening and exciting. We are ending an eight-year period during which many new regulations were put into place, with lots of administration, education and training necessary to get companies up to speed. Economic performance suggests that the country fared well despite the heightened regulatory environment, so snapping back the other way is sure to have a seismic impact on the economy and your workforce.

  • How will you train your employees in the absence of requirements that they be trained?
  • Will you still keep economic promises to employees that were made on the assumption of new laws going into effect?
  • Will you declare politics verboten in the office or encourage your employees to engage with one another and work out their differences?
  • Will you need to bring your overseas employees back home?
  • Will your foreign employees working in the U.S. no longer be welcome here?
  • Are we on the verge of a second industrial revolution, and if so, who stands to gain from that?

Any and all of these questions may be relevant for you going forward, meaning next year is sure to be interesting, at the very least.

Continued Political Fallout for HR

Regarding the aforementioned overtime rule, its future is looking quite grim, but to be fair, it’s not over yet. The DOL has appealed Judge Mazzant’s decision to the 5th Circuit and has also petitioned for an expedited briefing and oral arguments, in an attempt to gain clarity on the status of the rule before the changing of the guard. The 5th Circuit rarely overturns such injunctions, however, and again, even if it were to do so, the rule faces an extremely unfriendly Congress in 2017.

Speaking of bleak futures, President Obama’s Executive Orders affecting employers are not long for this world. In particular, the blacklisting rule, minimum wage for federal contractors, LGBT protections, prohibition on retaliation against federal contractors who discuss their wages and paid sick leave for federal contractors are all candidates for revision or outright destruction. They were fun while they lasted.

On the other hand, OSHA’s new reasonable reporting rule – requiring employers to publicly disclose employee injuries – is still proceeding as planned, meaning enforcement began as of December 1. Unlike the overtime rule, this rule actually survived a federal court challenge in Texas, though the judge’s dismissal of the petition was based on procedural reasons.

The NLRB is also proceeding as planned, with upcoming hearings scheduled regarding McDonald’s and whether the bastion of burgers should be labeled a “joint employer” of their several-thousand fast food stores. If the hearings and the case linger too long, however, the NLRB could see its mandate change completely under the next administration. There are two seats currently open on the five-seat National Labor Relations Board. What’s more, President-elect Trump is thinking of naming Andrew Puzder as his new labor secretary. Who is Puzder, you ask? Just the CEO of Carl’s Jr. Suffice to say that fast food companies are watching current events pretty closely.

Doubting Data Security

XpertHR recently conducted a survey of existing clients and the broader HR community and one of the key themes from the results was concern over data security going forward. Not surprisingly, lots of HR bloggers – myself included – have written in detail about data security and some of the creative solutions available to employers. The past two weeks have been no exception.

Blogging4jobs wonders whether employers should hire hackers to protect their HR departments. That may not always be practical for small businesses, however, who are increasingly the target of cybercriminal activity, but it’s interesting to see that we’ve already come to the point where hackers might be our best defense against unwanted prying into private corporate data.

The National Association of Federal Credit Unions (NAFCU) says the time has come for a national data security standard, particularly in light of the record number of data breaches against retailers in the past year, many of which occur during the critical Black Friday/Cyber Monday weekend. As of the end of November, there were over 900 data breaches against employers in the US this year – a 15% year-over-year increase – with the majority of those occurring in the retail sector.

The HR Bartender wonders whether technology is a cause of or a solution to employee burnout. Part of the way to prevent employees from getting burnt out on technology is to ensure they know how to use it properly. Creating future data security problems with today’s shortcuts is akin to kicking the virtual can down the road. Alternatively, the technology training you do today will pay dividends tomorrow both in terms of data security and employee productivity.

HR Holiday Spirit

It’s that time of year again. Holiday parties are a great opportunity to let loose with colleagues, but they always produce some great stories and, in some cases, viral news items that you don’t want to be a part of. Here are 18 of the funniest office holiday party stories (slideshow alert). My personal favorite is the one where a boss challenged a worker to a “shot contest.” The worker blacked out during the contest, but found out upon returning to work, that his new nickname was “steak pants.” He never asked how he got the nickname, as he simply didn’t want to know. And really, who could blame him?

How is this song related to HR?

In the last edition of HR Intel, we asked you how “Come Together” by The Beatles is relevant to HR. Ironic that John Lennon performed this edition of Come Together in 1972 – two years after the Beatles broke up. You’d think this is a song about… coming together, but apparently The Beatles didn’t get their own purported message.

Turns out, the song was written when Timothy Leary (of Electric Kool Aid Acid Test fame) ran for governor of California against Ronald Reagan. Leary had apparently asked Lennon to come up with a campaign song for him and Come Together was what he produced. The lyrics are “gobbledygook” according to Lennon, who explained that he was attempting to riff creatively on the idea of creating political and ideological unity. Good luck with that.

We leave you with “Only the Good Die Young” by Billy Joel.

Tell us how you think this song is related to HR in the comments section below.

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