Editor's Note: This report is based on survey data from April 2025 that was published in May 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)
US employers exceeded job forecasts by almost one-third, adding 177 thousand new entries to their payrolls last month, which was almost 40 thousand more than had been predicted.
Only 5 states saw a net increase in jobs, however, while the remaining states and Washington DC recorded no meaningful movement in net job figures.
Meanwhile, the national unemployment rate remained essentially unchanged through April at 4.2%.
Over the course of the month, however, 3 states plus Washington DC recorded an increase in statewide unemployment, while 2 states registered a decrease in unemployment rate and the remaining states saw no significant change.
16 states have seen an increase in net jobs throughout the last 12 months, while the remaining 34 plus Washington DC have recorded no net movement over the year.
Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary from the May 2025 report.
Washington DC was the ‘state’ with the highest unemployment rate last month at 5.8% overtaking Nevada which had been on a 5-month streak with the highest unemployment rate.
The unemployment rate in Washington DC climbed from 5.6% to 5.8% over the month, while Nevada’s unemployment rate continued its downward trajectory, decreasing from 5.7% to 5.6%.
Only 5 other states recorded an unemployment rate that was significantly above the national average in April - Michigan (5.5%), California (5.3%), Kentucky (5.2%), Ohio (4.9%), and Illinois (4.8%).
Besides Washington DC, there were only 3 states that recorded an increase in unemployment rate - Massachusetts (+0.2% unemployment, climbing from 4.4% to 4.6%), Iowa (+ 0.1%, rising from 3.4% to 3.5%), and Virginia (+0.1%, increasing from 3.2% to 3.3%).
Over the last 12 months, 27 states have recorded an increase in unemployment rate, led by Mississippi at plus 1.2% and Michigan at plus 1.1%.
South Dakota notched its 16th consecutive month as the state with the lowest unemployment rate, holding steady at 1.8% through April.
In total, 19 states recorded unemployment rates significantly below the national average of 4.2%. While South Dakota was the only state to show unemployment below 2%, there were 4 states with unemployment rates below 3% last month - Hawaii (2.9%), Montana (2.7%), Vermont (2.7%), and North Dakota (2.6%).
Over the last month, only 2 states recorded a drop in unemployment rate - Indiana (-0.2%, decreasing from 4.1% unemployment to 3.9% over the year), and Nevada (-0.1%, falling from 5.7% to 5.6%).
Over the last 12 months, only Montana posted a net decrease in unemployment rate at - 0.3%.
No state recorded significant net job losses over the last month or over the last year.
5 states saw a significant increase in net jobs over the course of April. Texas had the largest increase in raw state payroll count at almost 38 thousand, followed by Ohio at about 22 thousand, and North Carolina at about 18 thousand.
In terms of proportional job growth, Arizona, Connecticut, North Carolina, and Ohio all recorded a 0.4% increase, while Texas posted 0.3% growth.
From April 2024 through April 2025, 16 states recorded a net increase in job growth, with the largest raw figure increases occurring in Texas (plus about 216 thousand jobs), Florida (plus about 144 thousand jobs), and New York (plus about 114 thousand jobs).
The largest percentage increase in the state workforce over the last 12 months, however, was claimed by Hawaii (plus 2.7%), followed by South Carolina (plus 2.4%), and Idaho (2.3%).
This report represents the final data from Trump’s first 100 days in office during his second term, which is historically when presidents accomplish a disproportionate amount of their agendas.
That said, many of the workforce cuts in the federal government that have taken place since Trump repurposed the Department of Government Efficiency led by Elon Musk to the task have yet to impact the unemployment and jobs data due to how and when those job reductions are captured and measured.
Similarly, while the threat and implementation of tariffs may yet have a more significant impact on national employment, the vast majority of tariffs that Trump implemented are currently on pause for another 6 weeks, and while the uncertainty is likely affecting the labor market to some degree, the impacts thus far have been relatively minimal.
The continued strength of the labor market has significantly reduced the likelihood that the Fed will bring down interest rates when they meet again to discuss the matter next month. In fact, rate reductions at any point over the summer are looking less realistic at this point, although conditions can change very quickly, especially in the event that the tariff pause is not extended when it expires in early July.
Perhaps the most significant indicators of economic problems that may lay ahead are the interest rates attached to US Treasury bonds, which have been increasing as current investors (both foreign and domestic) unload their bond holdings to a buyer pool that is demanding increasingly higher returns.
Those bond interest rate increases reflect decreased confidence in both short and long term US economic health and increased concern in the ability of the US government to service its growing debt.
Further, these issues may become exacerbated should the Senate get on board with the House’s Big Beautiful Bill given the trillions of additional debt the plan will result in if ultimately enacted into law and if the US GDP growth is unable to offset the spending increases and tax cuts included in the bill.
The US recorded negative GDP growth in the first quarter of 2025 and if that trajectory holds or continues downward, the US economic conditions will be formally labeled as a recession as early as July as well, and while negative GDP growth in the current quarter is not a foregone conclusion, crossing that threshold would likely result in other negative economic feedback effects to pile on the situation.
In short, July may be a very meaningful month when it comes to both determining and assessing the US economic trajectory going forward.
Looking for more exclusive content? Check out the Mployer blog.
FOR IMMEDIATE RELEASE
Nashville, TN – May 22nd, 2025
Mployer, the nations’ leading employee benefit ratings platform, has partnered with Sun Life U.S. to bring expanded stop-loss analytics into its Mployer Insights platform — giving leading consultants, brokers and employers more powerful tools to navigate rising healthcare costs with clarity.
This partnership introduces Sun Life’s multi-year claims analytics, including detailed stop-loss patterns, trends in high-cost conditions and high cost drug utilization, directly into Mployer’s benchmarking and reporting features. With this addition, consultants and brokers can better anticipate risk patterns and deliver stronger, data-driven guidance to clients.
“Mployer and Sun Life are partnering on new ways to bring valuable stop-loss information and other cost-containment strategies into the hands of employers and leading brokers,” said Brian Freeman, CEO at Mployer. “We are excited to work with leading benefits advisors supporting their work in turning complex claims trends into smarter strategies for their clients.”
The new Sun Life-powered features are available now, with more updates and data expansions to follow later this year.
“This partnership strengthens our mission to provide clear, actionable insights that help brokers guide their clients through complex healthcare and benefit decisions,” said Brian Freeman, CEO at Mployer.
The updated Insights platform is available now, with additional data sources and enhancements planned throughout 2025. To access sample reports or request more detail, go to MployerAdvisor.com.
About Mployer
Mployer is redefining the industry standard for benefits analytics by empowering employers, employees, and benefits consultants to easily assess, rate, and communicate the value of employee benefits. Driven by rising employer costs and increasingly competitive hiring markets, Mployer brings transparency to an industry that affects the over 160 million Americans on employer-sponsored health plans.
About Sun Life
Sun Life is a leading international financial services organization providing asset management, wealth, insurance and health solutions to individual and institutional Clients. Sun Life has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of December 31, 2024, Sun Life had total assets under management of C$1.54 trillion. For more information, please visit www.sunlife.com.
Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.
Sun Life U.S. is one of the largest providers of employee and government benefits, helping approximately 50 million Americans access the care and coverage they need. Through employers, industry partners and government programs, Sun Life U.S. offers a portfolio of benefits and services, including dental, vision, disability, absence management, life, supplemental health, medical stop-loss insurance, and healthcare navigation. Sun Life employs more than 8,500 people in the U.S., including associates in our partner dental practices and affiliated companies in asset management. Group insurance policies are issued by Sun Life Assurance Company of Canada (Wellesley Hills, Mass.), except in New York, where policies are issued by Sun Life and Health Insurance Company (U.S.) (Lansing, Mich.). For more information visit our website and newsroom.
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Key Takeaways
Ask any employer if they offer competitive benefits, and you’ll likely get an awkwardly confident “yes.” But dig a little deeper—compared to who? Based on what? That’s where things break down immediately.
The reality is: employee benefits today are judged almost entirely based on perception, not proof.
Employees, on average, believe their benefits are worth about $11,200. In truth, employers are investing nearly $23,200 per employee per year per Mployer’s Insights+ 2025 study across companies representing over 1M employees. That’s a massive gap in perceived value—and one that significantly undermines retention, recruiting, and engagement.
When you can prove that your benefits are competitive—not just internally, but compared to your true market—you unlock a measurable strategic advantage:
But proving benefit competitiveness takes more than guesswork or gut feel. That’s why we built Insights+—a first-of-its-kind platform that turns perception into data-backed proof.
At Mployer, we’ve spent years building Insights+ in partnership with the top insurance brokerages in the country. It’s the most advanced, statistically accurate benchmarking system on the market, designed to give employers a true understanding of their benefits competitiveness.
Here’s how it works:
This isn’t a one-size-fits-all solution. It’s a proprietary methodology built on a 30,000+ employer dataset, kept current through direct employer uploads, broker partnerships, and more.
Competitive benefits can’t be measured by a single number like "how much you spend" or whether you offer a 401(k). It takes a holistic view—and that’s what our four-pillar scoring system does.
These are the four foundational categories we use to assess the true competitiveness of a plan:
This includes everything from your monthly premiums to deductible levels, plan options, and employer contribution percentages. It’s typically the most expensive part of your benefits package—and the most scrutinized by employees. We evaluate depth of coverage, choice, affordability, and access and compare your plan to your cohort.
Dental, vision, disability, life and voluntary insurance fall here. Our methodology weighs plan richness, employer contribution for each individual line item. While often considered secondary, ancillary benefits play a big role in perceived value—and they’re a low-cost lever for improvement.
PTO, holidays, parental leave, and—critically—flexibility (remote, hybrid, compressed schedules). We evaluate not just what's offered, but how it compares to market expectations within your peer group. Leave policies are increasingly make-or-break in competitive industries.
401(k), 403(b), ESOPs, and other savings mechanisms. We assess both participation structures (e.g., automatic enrollment, matching formulas) and actual dollar contributions compared to peers.
Our scoring system blends employee perception, plan design, cost, and participation data to generate a truly holistic and market-relevant evaluation.
No other system in the industry brings this level of depth, customization, and credibility. Want to see how you compare? Let us know.
Forget comparing yourself to national averages or sample data from a survey two years ago. With Mployer, you benchmark against a precisely matched peer group.
We offer the largest and most granular dataset in the industry, covering over 30,000 employers and growing. This enables you to compare your benefits offerings against statistically valid cohorts based on:
Only with us can you create a peer group so tailored that it mirrors your recruiting market, reflecting what companies like yours—and hiring for the same roles—are doing.
Whether you’re a manufacturing firm in Ohio or a startup in Austin, your competitive landscape looks different. We ensure your comparison group matches reality, not abstraction.
We say it often because it’s true: benefits are more than a cost center—they’re a strategic asset.
When your benefits are perceived as strong, you get:
But all of that starts with knowing how you compare—and having the data to back it up.
Insights+ doesn’t just show you where you stand. It gives you the tools to improve, the proof to showcase what you already do well, and the recognition materials to ensure your benefits investment is seen and appreciated by the people who matter.
If you’re ready to move beyond guesswork and prove that your benefits are truly competitive, Insights+ is your next step.
You’ll get:
Best of all? It’s free for employers to get started.
Let us show you what great benefits really look like—on paper, in practice, and in perception.
FREE Insights+ Reports For Qualifying Employers
Editor's Note: This report is based on survey data from April 2025 that was published in May 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)
The job market once again proved to be more resilient than economists were predicting, with US employers adding 177 thousand jobs over the course of April as the unemployment rate held steady at 4.2%.
That figure of 177 thousand new jobs significantly exceeds the approximate 135 thousand new jobs that economists had forecast and is on par with the prior month’s ultimate report of 185 thousand new jobs (revised down from an initially-reported and headline-grabbing 228 thousand new jobs).
The number of long-term unemployed people rose by about 180 thousand to reach 1.7 million people, which is an increase of almost 12%. Long-term unemployed people - those who have been out of work but seeking it for 27 weeks or more - account for almost one-quarter of all unemployed people. Long term unemployment has increased by more than one-third over the last 12 months, up from about 1.25 million in April of 2024.
There was little change across most other metrics over the course of the month, however, with the employment population ratio (60%), labor force participation rate (62.6%), the number of people working part time for economic reasons (4.7 million), and the number of people who want a job (5.7 million) all essentially holding steady over the month.
Of the 177 thousand net jobs added last month, the healthcare industry was responsible for the largest proportion, adding 51 thousand jobs over the course of April, which is just below the 52 thousand net new payroll entries averaged each month over the last 12.
The transportation & warehousing industry had the next largest net job increase in April, increasing its ranks by abou 29 thousand, with the financial activities industry and the social services industry claiming the addition of 14 thousand net employees and 8 thousand net employees, respectively, as well.
While there was no significant change over the month in most other industries, federal government employment did register a noteworthy drop of 9 thousand employees, bringing the total number of net federal jobs lost in 2025 to 26 thousand, although that figure does not represent the entirety of the situation - more on that to come.
Average hourly pay rose by about 6 cents to an even $36.06 per hour (an increase of 0.2%) over the month while the increase was about 3.8% over the last year - up from $34.67 per hour for privately employed, non-farm workers.
The length of the average workweek grew slightly over the month to 34.3 hours per week.
The headline story from the jobs report is the continued strength of the labor market even in the face of economic forces like the threat and/or implementation of sweeping global tariffs, but the labor market alone does not tell the entire story of the economic moment.
For one, the federal workforce reductions instituted by Elon Musk’s Department of Government Efficiency may be 10 times larger than the 26 thousand jobs that have so far registered in this data, but those numbers won’t show up until those employees severance/leave pay has expired.
Even more importantly, the GDP dropped by .03% through the first 3 months of 2025, which is the first contraction of GDP in 3 years, and while looming tariffs and federal firings were certainly contributors, those factors are more likely to have an increasing influence over the economy as a whole in the coming months than a decreasing influence.
Still, despite the lag in capturing federal employees whose jobs were recently terminated in these data sets and despite the uncertainty surrounding both the tariffs and their impact, this jobs report indicates that employers are still carrying on hiring, which itself is a kind of vote of confidence for the continued resilience of the US economy.
Further, inflation is up only 2.3% from last year and the rate of increase is trending downward, which is another positive sign, yet many economists (and employers) remain pessimistic about our chances for avoiding economic downturn in the months ahead.
The Federal Reserve will soon be facing the decision again about what to do with interest rates, and although inflation is nearing the Fed’s stated target of 2% annualized inflation, in light of the potential inflationary pressure that tariffs are capable of producing, the Fed may be less eager to lower interest rates now than they otherwise may have been given the current inflation levels.
We’ll know more about the Fed’s short term plan for interest rates in just a couple days, but we are still a ways off from knowing the ultimate impact of tariffs and federal workforce restructuring.
In light of the first quarter economic contraction, however, and in light of the fact that economic recession can be defined as two consecutive quarters of negative GDP growth, it’s entirely possible that the current economic conditions are retroactively labeled as a recession as soon as July, even with the labor market still humming along.
Check out the Mployer blog here.
Each month, Mployer collects and presents some of the most relevant and most pressing recent changes in law, compliance, and policy in areas related to employee benefits, health care, and human resources.
US Citizenship and Immigration Services released a new I-9 form on April 2, 2025. Some of the updates include replacing the word “non-citizen” with “alien” and the word “sex” has replaced “gender.”
The previous I-9 forms - released on August 1, 2023 - remain valid until their listed expiration dates, in 2026 and 2027, respectively.
You can find the new forms here.
Tennessee: As of April 11, 2025, employers in Tennessee are required to pay out all owed earnings in the event of an employee’s death. Previously, Tennessee employers could cap those payments at $10,000. You can read more here.
Washington: Beginning June 27, 2025, employees in Washington state will be permitted to use sick leave in order to address immigration-related issues. You can read more here.
The Washington state legislature has also updated several laws governing when minors are allowed to work, employee protections, health care worker rest breaks, and workplace safety measures in certain industries. You can find those bills here, here, here, and here, respectively.
Beginning July 27, 2025, Washington employers will no longer be able to require that employees have driver’s licenses unless driving is part of the job function and/or central to a legitimate business purpose. You can read more here.
As of May 1, 2025, minimum wage in the city of Bellingham, Washington increased to $18.66 per hour. You can read more here.
Wisconsin: The Wisconsin Supreme Court ruled that state laws that protect job candidates and workers from arrest-record discrimination also apply to non-criminal offenses like civil violations. You can read more here.
Colorado: Beginning July 1, 2025, Colorado employers that collect biometric data (e.g. fingerprints, retina scans, etc.) from employees and/or job candidates must follow the expanded guidelines laid out in the Colorado Privacy Act, which include implementing a written policy addressing biometric collection protocol and obtaining consent for the collection of biometric data. You can read more here.
Beginning February 1, 2026 Colorado employers that use artificial intelligence to evaluate employees and job applicants will be required to take proactive measures to ensure that those platforms are not enabling discriminatory practices. You can read more here.
Massachusetts: Employers with more than 50 employees must post the new veterans services poster that was just released by the Massachusett Executive Office of Labor and Workforce Development. The poster must be conspicuously displayed in an area that is accessible to all employees. You can find the poster here.
New York: As of March 2, 2025, all New York employers are prohibited from requiring job applicants to provide a copy of their criminal history record, which closes a loophole employers had been exploiting to obtain such records despite restrictions regulating their access to those records.
As of March 22, 2025, all New York employers regardless of size are prohibited from requiring job applicants or employees from providing a copy of their criminal history report that was obtained via the New York State Division of Criminal Justice Services.
Beginning May 8, 2025, NY employers with more than 3 employees must conspicuously post their lactation room accommodation policies and guidelines as well as the relevant state requirements both somewhere accessible by all employees and on the organization's intranet if applicable.
Beginning June 2, 2025, employers with 10 or more retail employees must have in place a written policy and training program for violence prevention measures and retail employers with 500 or more employees must install and/or maintain silent response buttons to alert authorities about emergencies. This legislation was originally slated to take effect March 4, 2025, But was amended to clarify employer responsibilities.
Further, as of January 1, 2025, New York employers are required to provide 20 hours of paid prenatal leave during a 52 week period. Also, as of the new year, the characteristics to which equal protection was extended via the New York State Human Rights Law and the resulting protections are formally enshrined in the New York State Constitution. Those characteristics include: age, disability, ethnicity, gender identity, gender expression, national origin, pregnancy, and anything else related to reproductive healthcare.
Oregon: As of January 1, 2025, Paid Leave Oregon provides leave for employees completing necessary legal steps associated with adopting and/or fostering children.
On March 14, President Trump rescinded Executive Order 14026 - which Biden signed in 2021 and raised the minimum wage for federal contractors from $10.10 per hour to $15 per hour with mechanisms contained within the order to continue increasing this wage minimum over time.
On January 1, 2025, in accordance with EO 14026, the minimum wage for federal contractors increased to $17.75 per hour, but now that Trump has rescinded EO 14026, it is unclear what the current minimum wage for federal contractors is.
You can read more here.
If your organization is using the alternative method for distributing 1095-B and 1095-C forms in accordance with the Paperwork Burden Reduction Act, your website must be in compliance from the first business day of March through at least October 15th. You can find guidance from the IRS about how to properly follow compliance protocols here.
On February 21, 2025, a federal judge put a stay on Trump’s Executive Order limiting the ability of federal agencies and federal contractors to operate Diversity Equity and Inclusion programs. The court questioned whether the order violated free speech rights and potentially illegally restricted otherwise legal actions taken by private entities. You can find the decision here.
From February 1st to April 30th, non-exempt (low hazard) employers who had at least 11 employees at some point in 2024 must post in a conspicuous place a copy of OSHA Form 300A, Summary of Work-Related Illness and Injury, certified by a company executive.
For non-exempt employers that had 250 or more employees at some point last year and employers with 20 or more employees in specified high risk industries, OSHA requires electronic submissions, which are due by March 2nd, 2025.
You can find the electronic submission platform here.
In his first days since returning to office, President Trump signed a series of executive orders dealing with labor and employment issues for federal employees and federal contractors, with more expected still to come.
While thus far these orders don’t apply to private employers in general - with the exception of those that accept federal funds and/or are federal contractors - these orders will not only affect a sizeable portion of the workforce directly, but they will also likely inspire some private employers to modify their practices and follow the example set by the executive branch.
The new rule that will most likely have the largest impact beyond the sphere of federal employees is Executive Order 11246, which makes it so that federal contractors no longer have to practice affirmative action in the hiring process for most protected classes. The only protected classes excepted from the order are veterans and individuals with disabilities, for whom affirmative action standards still apply.
Although federal contractors will no longer be required to maintain affirmative action programs, Title VII of the Civil Rights Act remains in effect to prevent discrimination against protected classes like race, gender, sexual orientation, and national identity.
You can read more here
A Federal District Court Judge in Northern Texas ruled that American Airlines had breached its fiduciary duty by working with an investment manager that promoted ESG practices in a way that ran counter to the economic interests of the employee retirement fund beneficiaries.
The repercussions of this ruling could be industry-reshaping if upheld, although there were many additional conflicts of interest between American Airlines and their investment fund manager that may limit how broadly applicable the ruling will ultimately prove to be.
The judge has already found American Airlines in breach of their fiduciary duty, but he has yet to assess damages, which will influence the probability of appeal and the likelihood of copycat cases.
You can read more about this case here.
As of January 13, 2025, the extension period for certain renewal Employee Authorization Document (EAD) applications filed on May 4, 2022 or later has been formalized at 540 days.
You can read more here.
As of January 1, 2025, the IRS mileage reimbursement rate for road miles driven for business purposes increased by 3 cents per mile from 67 to 70 cents per mile driven.
The IRS released a statement announcing a 25-cent increase in Patient-Centered Outcomes Research Institute fees for covered plan years ending on or after October 1, 2024, and before October 1, 2025.
The new fee is $3.47 per covered life.
You can read more here.
In response to a Federal Court of Appeals Decision that vacated the so-called 80/20/30 rule that was instituted in 2021, the Department of Labor officially reverted to the previous tip credit rule.
You can read more here.
In the final days before Christmas a few weeks ago, the Employer Reporting Improvement Act both became law.
As of January 1, 2025, the threshold for what qualifies as affordable coverage is now 9.02%, which means that an employee’s required contribution to the plan can be no more than 9.02% of their salary in order for the plan to be considered affordable and to avoid potentially paying the penalty.
You can read more about the affordability threshold here.
A federal court in Texas determined that the Department of Labor exceeded its authority last summer by increasing the minimum pay thresholds for employees to qualify under the executive, administrative, and professional and highly-compensated employee exceptions to minimum wage and overtime protections.
Those minimum pay thresholds have reverted to their prior levels - back to $684 per week for the EAP exemption (down from $844 per week under the now defunct rule), and back to $107,432 per year for the HCE exemption (down from $132,964 per year under the now defunct rule).
The National Labor Relations Board has issued a decision prohibiting employers from forcing employees under threat of punishment to attend meetings during which the employer will share views on unionization or its impacts.
Employers are allowed, however, to convene employees and share their views on unionization and potential impacts so long as employees are not disciplined or adversely affected in any way for not attending (or leaving early). Employers should not even keep or maintain such attendance records.
You can read more here.
You can read more here.
You can find the complete IRS 2025 benefit contribution limit list here.
You can find guidance for ERISA 403(b) plan eligibility requirements for long-term, part-time employees according to the updated standards from the Secure ACT 2.0 here.
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Key Takeaways
ARTICLE I Employers’ Guide to Controlling High-Cost Healthcare Treatments & Conditions
Rising costs have been a chronic condition of the US healthcare system for decades, with out-of-pocket expenses adjusted for inflation approximately doubling over the last 50 years.
Given that employers have largely been bearing the brunt of these increases while covering between about 67% and 85% of employee and employee family healthcare costs depending on the plan, it is especially understandable why many employers have been expressing an increasing urgency to get these costs under control.
As is often the case, however, better controlling healthcare costs is a task much more easily said than done, but one often overlooked place to find savings is improved management of particularly high-cost conditions, procedures, and pharmaceuticals, which are eating up an increasing proportion of employer healthcare budgets but also provide an opportunity for employers to make small changes that can have big, positive impacts on their bottom line.
While there is no set definition of where to draw the line between regular health insurance claims and high-cost claims, just about half of surveyed employers (44%) define high-cost claims as those that cost $100 thousand or more.
According to data from Sun Life, between 2019 and 2022 there was an 87% chance that an employer would encounter a claim so expensive that it exceeded the threshold triggering stop-loss insurance in any given year.
An even greater proportion of employers (94%) expect to see an increase in high-cost claims over the next 3 years and 84% view high-cost treatments as a threat to their business, which are reasonable forecasts given that the number of health plan claims of $3 million or more than doubled between 2016 and 2020, and that was before the healthcare system absorbed the COVID shock and the associated spike in inflation.
According to the National Alliance of Healthcare Purchaser Coalitions, the cost of high-cost treatments was up 4.4% over the year in 2024, climbing to an average expense of about $421 thousand - an average that is in part inflated by extremely high-cost new treatments/technologies (i.e. ~$7 million gene therapy) as well as the longevity-increasing impacts of improved treatments/technologies that can abate chronic conditions over longer periods of time (e.g. $60 thousand per month cancer drugs).
Perhaps most concerning, high-cost claims are on the rise among the younger demographics which employers and insurers rely upon to pay more into the system than they take out in order for the system to remain solvent.
Historically, only 1.2% of plan members are high-cost claimants, but they cost about 29 times more than the average plan member, amounting to an average annual expense per high-cost claimant of about $122 thousand.
FREE Insights+ Reports For Qualifying Employers
Over the last 4 years, the conditions that have resulted in the greatest number of high-cost claims include malignant neoplasm, cardiovascular system issues, cancer, prenatal/neonatal care, musculoskeletal problems, respiratory issues, sepsis, gastrointestinal conditions, neurological problems, and urinary/kidney diseases.
The list grows even smaller when looking at the types of conditions/treatments responsible for the largest number of $1 million plus claims, such as sepsis, cancer, prenatal/neonatal, and cardiovascular disease.
FREE Insights+ Reports For Qualifying Employers
There is little doubt among either experts or casual observers that there are systemic issues within the US healthcare system that will require system-wide solutions.
Individual employers - even those of substantial size - only have so much influence over rising healthcare costs that often seem more akin to a runaway train car than a properly functioning public and private health network.
Too often, however, employers misconstrued this limited control as though it were no control, which is when the train really starts picking up enough speed to jump the tracks.
In reality, there are many things that employers can be doing to exercise greater cost controls over their healthcare expenditures - and that is especially true for the highest-cost ticket items.
While employers historically have depended on the assistance of third-party administrators and pharmacy benefit managers to handle claims above a certain threshold, with these costs continuing to climb and no systemic relief currently in sight, forward-looking employers might be wise to take a more proactive approach in holding service providers to account and exploring cost-sharing approaches that don’t compromise quality of care.
There is no one solution to the high-cost claim issue, nor is there a one-size-fits-all solution that can be replicated and reapplied from one high-cost claim to the next, but there are many solutions - often starting with better data collection - that together can be form-fitted to cover the high-cost claim exposure of any given employer that recognizes the value of doing so, which will be an increasing number of employers as net costs for high-cost treatments keep rising.
Editor's Note: This report is based on survey data from March 2025 that was published in April 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)
US employers added 228 thousand jobs last month, far outpacing economic forecasts that predicted about 140 thousand new jobs.
At the same time, the national unemployment rate ticked up to 4.2% - an increase of 0.1% - which is a minor lift, although 4.2% matches the highest the US unemployment rate has been since October 2021 when the US was still recovering from the pandemic-induced unemployment spike.
Since November 2021, this report represents only the third time that US unemployment has hit 4.2%, the first of which was July 2024 followed by November 2024.
The labor force participation rate rose by one-tenth of a point from 62.4% to 62.5%, while the employment population ratio held steady at 59.9%, which is the third time this figure has been below 60% since November 2022.
After an 11% spike last month in the number of people employed part-time for economic reasons, that figure has come down significantly from about 4.94 million to 4.78 million, representing a reduction of about 160 thousand people - although this subset of the population has seen substantial growth over the last 12 months, increasing by about 11% in total.
The 228 thousand jobs added last month amount to an increase of almost 45% over the 155 thousand jobs added in the US on average in each of the last 12 months, further underscoring the resilience of the labor market even as it has cooled over the past year.
The healthcare industry added the largest number of new payroll entries last month with about 54 thousand jobs - just over the 52 thousand monthly average healthcare job additions over the last year.
The social assistance industry also had a strong month, adding 24 thousand jobs for an increase of more than 26% over the 19% monthly average recorded over the previous 12 months.
Further, retailers added 24 thousand jobs last month, in part due to more than 20 thousand food and beverage workers returning to the job post labor strike, and the warehousing and transportation industry added a comparable 23 thousand jobs as well, which is almost a 92% increase.
The only industry to see a workforce reduction over the last month is the government, which fell by about 4 thousand workers, driven by a decrease of 11 thousand federal workers - although the loss of federal workers substantially undercounts the number of recent terminations conducted by the Department of Government Efficiency under Elon Musk that have not yet been captured by these surveys.
Average hourly pay rose by about 9 cents to an even $36 per hour (an increase of 0.3%) over the month while the increase was about 3.8% over the last year - up from $34.67 per hour for privately employed, non-farm workers.
The length of the average workweek saw no significant movement over the month at 34.2 hours per week.
This report represents only the second set of complete monthly data collected under the second Trump administration.
With most incoming administrations, the first 100 days often moves at a frenetic pace as the new office-holder implements a number of policy changes that depart from those of their predecessor, and Trump’s latest stretch occupying the White House has been no different in that regard.
While many of the early actions undertaken since Trump was re-sworn in were focused on deregulation, deportation, and decreasing the size of the federal workforce, with just a few weeks left in the first 100 days of his second term, Trump focused his attention on tariffs and used executive orders and emergency powers in order to impose import taxes on goods arriving from nearly every international trading partner the US has.
As we noted in the wake of last month’s employment situation report, many of the impacts of Trump’s early actions have yet to become overtly apparent in the labor market or economy at large as experienced by most Americans.
Those delayed effects are especially true for Federal layoffs which may exceed a quarter million workers based on some estimates, very few of which have shown up in the labor market data yet due to how these figures are counted and when.
Also, the Trump administration has been rehiring some inadvertently terminated personnel who work in sensitive areas like nuclear safety and infectious disease prevention, so the total number of federal employees who have lost their jobs in the last couple of months may still decrease.
That said, there are tens if not hundred of thousands of federal workers who are already or will soon be out of a job, and those results will certainly have an impact on the labor market, potentially increasing the number of unemployed people in the US by more than 3%, and that doesn’t account for all the complementary support jobs in the private sector that will be eliminated due to the smaller federal workforce.
It remains to be seen, of course, just how many jobs will be lost due to these cuts or what the broader economic and other impacts may be, and that will likely continue to be true for many months if not years to come.
All that to say, the delay and uncertainty surrounding the early actions of the second Trump administration will take some time to play out before the final outcomes can be known, and that is largely true for the latest tariff actions, as well - but the scale of the potential tariff-related repercussions may be much bigger, although, to be clear, those impacts are very much still in flux and subject to change as countries come to the negotiating table, reevaluate existing trade partnerships, and/or forge new ones.
After what Goldman Sachs described as the largest equity selloff in 15 years in just the first days since Trump announced and implemented this latest round of sweeping, global tariffs, the short-term economic impacts are likely to be considerably more pronounced than the short-term economic impacts caused by shrinking the federal workforce or disrupting the agricultural supply chain have been.
While the long-term impacts of these actions - especially the tariffs - will likely remain a subject of debate for years, there is much more agreement about the probable short-term impacts, which both supporters and opponents of the Trump administration believe will result in additional stress and strain on the US economy, leading to economic pain - the main questions are how severe it will be and for how long.
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Each month, Mployer collects and presents some of the most relevant and most pressing recent changes in law, compliance, and policy in areas related to employee benefits, health care, and human resources.
On March 14, President Trump rescinded Executive Order 14026 - which Biden signed in 2021 and raised the minimum wage for federal contractors from $10.10 per hour to $15 per hour with mechanisms contained within the order to continue increasing this wage minimum over time.
On January 1st of 2025, in accordance with EO 14026, the minimum wage for federal contractors increased to $17.75 per hour, but now that Trump has rescinded EO 14026, it is unclear what the current minimum wage for federal contractors is.
You can read more here.
If your organization is using the alternative method for distributing 1095-B and 1095-C forms in accordance with the Paperwork Burden Reduction Act, your website must be in compliance from the first business day of March through at least October 15th.
You can find guidance from the IRS about how to properly follow compliance protocols here.
On February 21, 2025, a federal judge put a stay on Trump’s Executive Order limiting the ability of federal agencies and federal contractors to operate Diversity Equity and Inclusion programs. The court questioned whether the order violated free speech rights and potentially illegally restricted otherwise legal actions taken by private entities.
You can find the decision here.
From February 1st to April 30th, non-exempt (low hazard) employers who had at least 11 employees at some point in 2024 must post in a conspicuous place a copy of OSHA Form 300A, Summary of Work-Related Illness and Injury, certified by a company executive.
For non-exempt employers that had 250 or more employees at some point last year and employers with 20 or more employees in specified high risk industries, OSHA requires electronic submissions, which were due by March 2nd, 2025.
You can find the electronic submission platform here.
In his first days since returning to office, President Trump signed a series of executive orders dealing with labor and employment issues for federal employees and federal contractors, with more expected still to come.
While thus far these orders don’t apply to private employers in general - with the exception of those that accept federal funds and/or are federal contractors - these orders will not only affect a sizeable portion of the workforce directly, but they will also likely inspire some private employers to modify their practices and follow the example set by the executive branch.
The new rule that will most likely have the largest impact beyond the sphere of federal employees is Executive Order 11246, which makes it so that federal contractors no longer have to practice affirmative action in the hiring process for most protected classes. The only protected classes excepted from the order are veterans and individuals with disabilities, for whom affirmative action standards still apply.
Although federal contractors will no longer be required to maintain affirmative action programs, Title VII of the Civil Rights Act remains in effect to prevent discrimination against protected classes like race, gender, sexual orientation, and national identity.
You can read more here
A Federal District Court Judge in Northern Texas ruled that American Airlines had breached its fiduciary duty by working with an investment manager that promoted ESG practices in a way that ran counter to the economic interests of the employee retirement fund beneficiaries.
The repercussions of this ruling could be industry-reshaping if upheld, although there were many additional conflicts of interest between American Airlines and their investment fund manager that may limit how broadly applicable the ruling will ultimately prove to be.
The judge has already found American Airlines in breach of their fiduciary duty, but he has yet to assess damages, which will influence the probability of appeal and the likelihood of copycat cases.
You can read more about this case here.
As of January 13, 2025, the extension period for certain renewal Employee Authorization Document (EAD) applications filed on May 4, 2022 or later has been formalized at 540 days.
You can read more here.
As of January 1, 2025, the IRS mileage reimbursement rate for road miles driven for business purposes increased by 3 cents per mile from 67 to 70 cents per mile driven.
The IRS released a statement announcing a 25-cent increase in Patient-Centered Outcomes Research Institute fees for covered plan years ending on or after October 1, 2024, and before October 1, 2025.
The new fee is $3.47 per covered life.
You can read more here.
In the final days before Christmas a few weeks ago, the Employer Reporting Improvement Act both became law.
As of January 1, 2025, the threshold for what qualifies as affordable coverage is now 9.02%, which means that an employee’s required contribution to the plan can be no more than 9.02% of their salary in order for the plan to be considered affordable and to avoid potentially paying the penalty.
You can read more about the affordability threshold here.
A federal court in Texas determined that the Department of Labor exceeded its authority last summer by increasing the minimum pay thresholds for employees to qualify under the executive, administrative, and professional and highly-compensated employee exceptions to minimum wage and overtime protections.
Those minimum pay thresholds have reverted to their prior levels - back to $684 per week for the EAP exemption (down from $844 per week under the now defunct rule), and back to $107,432 per year for the HCE exemption (down from $132,964 per year under the now defunct rule).
The National Labor Relations Board has issued a decision prohibiting employers from forcing employees under threat of punishment to attend meetings during which the employer will share views on unionization or its impacts.
Employers are allowed, however, to convene employees and share their views on unionization and potential impacts so long as employees are not disciplined or adversely affected in any way for not attending (or leaving early). Employers should not even keep or maintain such attendance records.
You can read more here.
You can read more here.
You can find the complete IRS 2025 benefit contribution limit list here.
You can find guidance for ERISA 403(b) plan eligibility requirements for long-term, part-time employees according to the updated standards from the Secure ACT 2.0 here.
Colorado: On February 1, 2026 Colorado employers that use artificial intelligence to evaluate employees and job applicants will be required to take proactive measures to ensure that those platforms are not enabling discriminatory practices. You can read more here.
Massachusetts: Employers with more than 50 employees must post the new veterans services poster that was just released by the Massachusett Executive Office of Labor and Workforce Development. The poster must be conspicuously displayed in an area that is accessible to all employees. You can find the poster here.
New York: As of March 2, 2025, all New York employers are prohibited from requiring job applicants to provide a copy of their criminal history record, which closes a loophole employers had been exploiting to obtain such records despite restrictions regulating their access to those records.
As of May 8, 2025, NY employers with more than 3 employees must conspicuously post their lactation room accommodation policies and guidelines as well as the relevant state requirements both somewhere accessible by all employees and on the organization's intranet if applicable.
Beginning June 2, 2025, employers with 10 or more retail employees must have in place a written policy and training program for violence prevention measures and retail employers with 500 or more employees must install and/or maintain silent response buttons to alert authorities about emergencies. This legislation was originally slated to take effect March 4, 2025, But was amended to clarify employer responsibilities.
Further, as of January 1, 2025, New York employers are required to provide 20 hours of paid prenatal leave during a 52 week period. Also, as of the new year, the characteristics to which equal protection was extended via the New York State Human Rights Law and the resulting protections are formally enshrined in the New York State Constitution. Those characteristics include: age, disability, ethnicity, gender identity, gender expression, national origin, pregnancy, and anything else related to reproductive healthcare.
New York employers that receive criminal history records for applicants and employees must also now provide those applicants and employees with a copy of those records and a copy of the applicable New York corrections law as well as an opportunity to correct any inaccurate information that may be contained in those records.
Oregon: As of January 1, 2025, Paid Leave Oregon provides leave for employees completing necessary legal steps associated with adopting and/or fostering children.
Editor's Note: This report is based on survey data from February 2025 that was published in March 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)
For two straight months now, US employers have added about 150 thousand new jobs according to initial reports, which is down slightly from the approximate 170 thousand new jobs added monthly over the past year, but not too far off track.
Despite those new payroll entries - only 3 states experienced net growth in total in-state jobs over the month, while the remaining 47 and Washington DC saw no significant change in payroll size.
The national unemployment rate ticked up one-tenth of a percentage point to 4.1%, but Florida was the only state that individually recorded a significant change in unemployment, climbing from 4.5% to 4.6% over the month.
Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary from the March 2025 report.
Nevada had the highest unemployment rate for the 4th month in a row, holding steady over the month at 5.8%.
California, Michigan, and Washington DC had the next highest unemployment rates at 5.4% each, followed by Kentucky at 5.3%, with Illinois at 4.8% rounding out the only 6 states with unemployment rates above the national average of 4.1%.
Florida was the only state to see an increase in unemployment rate over the last month, but over the course of the last 12 months, 30 months have seen unemployment rise, with the largest increases recorded by Michigan (plus 1.4%), Mississippi (plus 1.0%), and Colorado (plus 0.8%).
South Dakota - holding steady over the month at 1.9% unemployment - continued its streak of claiming the lowest unemployment rate in the country, which now stretches to 14 months.
North Dakota and Vermont shared the next lowest unemployment rate - both holding steady over the month at 2.6% - followed by Nebrask, New Hampshire, and Hawaii at 3%.
In total last month, 18 states had unemployment rates meaningfully lower than the US average of 4.1%.
Over the last 12 months, 30 states have recorded an increase in unemployment.
No state recorded significant net job losses over the last month or over the last year.
Missouri, New Jersey, and Ohio were the only states that recorded a net increase in payroll figures last month, growing by 0.4% each, amounting to increases of about 13 thousand, 19 thousand, and 23 thousand jobs, respectively.
Over the last 12 months, 17 states in total have recorded net job additions. The largest proportional gain was recorded in Idaho, which increased its workforce by 2.7% over that time frame, followed by South Carolina and Utah at plus 2% each.
Texas, Florida, and New York had the largest raw number of job gains over the past year at about 14 million, 10 million, and 10 million, respectively.
This market summary represents a positive improvement over last month’s market summary which showed month-to-month net job losses across several states.
That said, while this data comes from the first full month of the second Trump administration, the economic impacts that will result from the policy changes that accompanied the transfer of power have not yet become apparent in these labor market reports.
It is difficult to pinpoint exactly how many federal workers have been laid off, which some observers claim added up to more than 60 thousand in February alone while the Department of Government Efficiency itself claims that figure is much smaller when voluntary retirements and resignations are taken into account.
Even less clear are the number of tangential private sector workers whose work is supported by federal employees and/or federal funding that may now be less available and/or less effective than it was in the past, so the secondary effects of federal workforce funding cuts are even further from having worked down the pipeline.
As a result, the holding pattern continues, and will likely continue for at least another couple of months as Trump wraps up the first 100 days of his second term in April - the period during which president’s are often most productive in executing their agendas.
Of course, there is no set deadline at which point the outcomes of these actions will be ultimately evaluated, and the effectiveness of some of those actions may well be a point of differing opinion well into the future.
But the early signs and indications about some of the near-term effects we can reasonably expect from the policy changes that have already been implemented may start to appear in the data as early as next month.
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Editor's Note: This report is based on survey data from January 2025 that was published in March 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)
Nearly 150 thousand jobs were added by US employers in February - the month when this data was collected - and the national unemployment rate fell by one-tenth of a point to 4%.
Looking at the state data, however, there was very little movement of significance in state unemployment levels, with the exception of Pennsylvania which recorded a 0.1% increase in state unemployment, rising from 3.7% to 3.8%.
Similarly, despite the net job additions, no state recorded a significant increase in payroll figures, but 4 states actually saw a reduction in in-state employment: Georgia, Missouri, and West Virginia, which all recorded a 0.6% decrease in employment, and Indiana, which recorded a 0.4% decrease.
Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary for February 2025.
For the third month in a row, Nevada had the highest unemployment rate, which is up slightly at 5.8%, followed by California at 5.4%, which is down from 5.5% the month before.
Washington DC, Kentucky, and Michigan all came in at 5.3% unemployment, but Washington DC is dropping while Kentucky and Michigan are seeing unemployment climb.
Illinois - at 4.9% unemployment - was the only other state above the national average of 4% during February.
Over the last year, 32 states have recorded an increase in unemployment, the largest of which was reported in Michigan, which saw its level of unemployment rise from 4.0% to 5.3% between January 2024 and January 2025.
Colorado and South Carolina also saw a significant increase in unemployment over the course of the last 12 months when both saw a 0.9% increase, while Mississippi and Wyoming fared nearly as poorly at plus 0.8% unemployment.
As we entered the new year, South Dakota held steady at 1.9% unemployment and continued its streak of maintaining the lowest unemployment rate in the country, which stretches for 13 consecutive months now.
North Dakota and Vermont had the next lowest unemployment levels at 2.6%, followed by Montana at 2.8% and Nebraska and New Hampshire at 2.9%.
17 states in total had unemployment rates below the national average.
Over the last 12 months, only Montana and Washington state have registered decreases in unemployment at 0.2% and 0.3%, respectively.
Georgia had the largest net loss in jobs, recording a net decrease in its workforce of more than 28 thousand over the course of the month, which represents a 0.6% decrease.
Missouri and West Virginia each recorded workforce reductions of 0.6% as well, though the net job losses at minus 17 thousand and about minus 4 thousand, respectively, were much smaller than in Georgia due to their relatively smaller populations.
Indiana also saw a reduction in its workforce, which amounted to a drop of about 0.4% and amounted to a little less than 13 thousand jobs.
No state saw statistically significant job gains over the month, although 17 states did record net increases in jobs over the last year.
Alaska and Idaho had the largest percentage gains in workforce size at plus 2.8% over the year, followed by Texas at 2.4% and Utah at 2.1%.
Texas, Florida, and New York saw the largest number of net new jobs over the last 12 months at about plus 14 thousand, 10 thousand, and 10 thousand respectively.
Due to the timing of the latest state release from the Bureau of Labor Statistics, this report came out much later than usual relative to the collection of the data that the report is based on, and we’ll actually be getting updated data from the states by the end of the week at this point.
In fact, we’ve already seen follow-up data on the employment situation nationally, which showed the unemployment rate tick up by a tenth of a point despite the addition of another 150 thousand jobs to US payrolls.
On Friday when we get new state employment data again, it will likely look very similar to this set, although it will be interesting and informative to see which additional states start to see their unemployment rates moving in the wrong direction.
But in terms of the bigger picture, our analysis and the economy itself in many ways are in a holding pattern in the short term as the policy changes overseen by the new administration begin to manifest and the real-world impacts become more clear.
We’ll check in after the new data is made available later this week, and it’s possible there will be additional noteworthy developments between now and then - potentially including additional stock market volatility and/or new policy announcements - but barring major unforeseen developments, the next report will closely resemble this one.
It will take a bit more time before the full momentum and trajectory of the US economy can fully respond to policy changes that have already occurred - not to mention whatever additional changes may be in store - but we’ll be keeping an eye out in the meantime for noteworthy markers pointing toward what’s to come as they start to appear.
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Key Takeaways
Target and The Future of DEI
Diversity, Equity and Inclusion (DEI) programs experienced a rapid increase in stature followed by a near equally rapid rise in pushback over the last 5 years. Perhaps no company has felt that whiplash more than multi-category retail giant Target, whose experience provides an excellent case study to understand what has been happening with DEI policy as well as what will happen next.
Over the course of February 2025, Target found itself on the receiving end of a class action lawsuit brought by shareholders who claim Target’s pro-DEI policies led to significant losses of stock value, while at the same time, facing a targeted boycott led by pro-DEI supporters who aim to punish Target for rolling back some of those very same DEI policies that led to the class action suit.
If they were aiming to find themselves between a rock and a hard place, it looks like Target may have hit the bullseye.
While the momentum certainly appears to have shifted against DEI policies over the last couple of years, the coming months and years will likely be even more instrumental in determining the ultimate fate of the DEI movement and whether the accompanying programs will be retired, resurrected, or if they will simply be reorganized to continue the mission of promoting the principles of diversity, equity and inclusion under a different acronym.
The roots of modern DEI programs date back to the summer of 2020 when George Floyd was killed less than 10 minutes from Target’s headquarters in Minneapolis, and that proximity was a significant factor in inspiring Target to lead the way in mainstream corporate DEI adoption.
In response to that incident and the resulting movement which turned the spotlight around on systemic racism and other prejudice, Target pledged to establish a Racial Equity Action and Change committee, increase its proportion of black employees by 20%, and spend more than $2 billion dollars with black-owned businesses.
Of course, Target was not alone in joining the DEI bandwagon, with one McKinsey study estimating that companies worldwide spent about $7.5 billion on DEI-related expenditures in 2020, and as recently as early 2023 that figure was projected to double to $15.4 billion by 2026.
Over the course of 2023, however, DEI program adoption seemed to have hit a peak according to a study from Paradigm, which estimated that 54% of US companies budgeted for DEI program expenditures in 2023, which was down from 58% who had done so in 2022.
While the percentage of companies that had a specific DEI strategy fell by an even greater margin between 2022 and 2023 (minus 9%), 2023 wasn’t all bad news for DEI programs given that the percentage of US firms with senior DEI leadership roles increased by 6% over the year, and an additional 3% began tracking race representation in the lines of business of each of their executives.
2023 also happens to be the year in which most of the DEI-related activities and relevant events alleged in the class action suit against Target took place.
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On the last day of January 2025, the police pension fund for the city of Riviera Beach, Florida initiated a class action suit in federal court against Target claiming that Target’s DEI-related activities were a violation of the Securities Exchange Act.
According to the complaint, Target defrauded shareholders by failing to disclose the risks associated with their DEI (and ESG) mandates, which made Target’s share price artificially high as a result, so that anyone who purchased Target stock during the period of artificial inflation should be due compensation (August 26, 2022, through November 19, 2024).
The lawsuit alleges that those theoretical DEI risks became real losses in May 2023 when a boycott was staged against Target due to its Pride campaign, which resulted in a drop in stock price of almost 25% from the middle of May 2023 to the Middle of June 2023, as well as a 5% drop in sales during the second quarter of 2023, which caused another 15% stock price reduction when those sales figures were released in mid-August 2023.
Proceedings will continue in April 2025 after the notice period for potential lead plaintiffs to come forward has concluded.
Exactly one week before the Riviera Beach police pension fund initiated its civil complaint in federal court, Target announced that it would be concluding its 3-year diversity equity and inclusion goals and would not be renewing its Racial Equity Action and Change initiatives.
The seemingly abrupt end of those programs was quickly followed by calls for a new boycott of Target, this time led by pro-DEI groups like the Racial Justice Network and churches, which has resulted in Target’s inclusion among a group of US companies that were subject to a 1-day blackout boycott on the last day of February 2025 and calls for an additional boycott of Target over the Lent holiday from March 5 through April 17, 2025.
In short, Target is still in the middle of the storm - the stock price has fallen by more than 18% in the time since the announced closure of these DEI programs and this writing (March 11, 2025), 15% of which occurred before the major market corrections of the past week - and the accompanying loss of sales won’t be reported until June when the stock price is likely to take another substantial hit depending on how effective, widespread, and lasting/repeated the boycotts are.
And Target is not the only company facing these boycotts and/or threats of boycotts, nor is it the only one backing away from previous DEI positions and commitments.
Forbes constructed a timeline that documents how US companies have been responding to the changing DEI environment, which taken as a whole highlights just how quickly the momentum against DEI initiatives has developed.
In the spring of 2024, Harley Davidson ended some of its DEI-related activities. A few months later in mid-summer of 2024, John Deere announced that it would remove from company materials any messages that were socially motivated, and it would no longer support certain cultural awareness events like pride parades.
Over the next several months leading up to the 2024 election, several major corporations - including Lowes, Boeing, Coors, Ford, and Jack Daniels manufacturer Brown-Forman - followed suit and rolled back DEI initiatives in one way or another, ranging from no longer participating in diversity surveys to removing DEI-related goals, either as benchmarks for internal incentives or external suppliers.
In the months following the election in November 2024 and especially over the course of February 2025, however, the corporate DEI revision/excision began gaining significant steam, with Walmart altering its DEI commitments, McDonald’s adjusting diversity-related goals, Meta abandoning some diversity initiatives and pro-inclusivity training, and Amazon stating in an internal memo that they would be moving on some outdated practices and language, which some people interpreted to reference DEI practices.
When President Trump took office and began releasing executive orders - including a now-on-hold order that limited the use of DEI initiatives by federal employers and federal contractors - the number of US employers who began backtracking from previously imposed programs and policies that promoted diversity and inclusion grew substantially, with Target obviously, as well as Google, Amtrak, Accenture, Chipotle, Coca-Cola, Pepsi, GM, GE, Intel, Paypal, Deloitte, Goldman Sachs, JPMorgan Chase, Citigroup, BlackRock, Bank of America, Paramount, Comcast, Warner Brothers, Disney, and PBS all joining the ranks of companies that made changes to their DEI policies and practices just in the final week of January through the beginning of March 2025.
Some of those employers are federal contractors and are taking proactive steps to comply with the new regulations, while others aren’t necessarily required to reduce DEI but are choosing to do so nonetheless.
At the same time, however, some organizations - whether subject to the new DEI-limiting orders or not - may be making superficial changes to their DEI language in compliance with new standards while maintaining a commitment to the principles of diversity, equity, and inclusion, and it remains to be seen how this strategy will play out in practice.
Target’s situation perfectly encapsulates some of the pitfalls that come with serving a broad consumer base during polarized times, and it has apparently disappointed parties situated on both sides of the line in the sand as a result.
One potential takeaway from Target’s situation is that supporting any issue - even one that may seem to garner broad public support - ultimately may have the potential to cause a negative counteraction among a substantial portion of your consumer base nonetheless.
In that light, the Target story may look like a cautionary tale about the difficulty of knowing when to hold on and when to let go as the social pendulum is swinging.
Target clearly didn’t ‘time the market’ right in terms of minimizing backlash to its adoption/scaling-back of DEI work, but it is not at all clear yet that the flurry of companies that have abandoned DEI initiatives over the past couple of months have ‘timed the market’ any better. If predicting social trends were easy, these companies wouldn’t have to be backtracking on their DEI programs in the first place.
Although the DEI brand has clearly suffered over the past couple of years, the bigger story of building diversity, equity, and inclusion in the workplace dates back to long before 2020, and while it is not yet clear whether “DEI” as a department/buzzword/scapegoat is becoming obsolete, the principles that DEI represents are certainly not.
McDonald’s changed the name of its Global DEI Center of Excellence to the Global Inclusion team a couple of months ago to distance itself from the DEI label, similar to Walmart renaming its Chief Diversity Officer to its Chief Belonging Officer a couple of years ago.
That said, Target similarly renamed its supplier diversity team (which became its supplier engagement team) when it announced the conclusion of its DEI initiatives, but given the subsequent backlash and boycotts from pro-DEI groups, however, Target may have been better off not going out of its way to so openly distance the company from the word diversity as the other DEI initiatives concluded - which further underscores the difficulty of timing the pendulum swing. It is a very hard target to hit.
Editor's Note: This report is based on survey data from February 2025 that was published in March 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)
US employers added 151 thousand jobs last month, which was just short of the predicted 160 to 170 thousand and just over the 143 thousand jobs initially reported last month, while there was very little movement in the unemployment rate, rising by less than one-tenth of a point to 4.1%.
There was very little movement in most of the employment metrics, although the employment-population ratio fell by two-tenths of a point to 59.9% - which is only the second time this figure has fallen below 60% since November of 2022 (this ratio was 59.8% in November 2024).
The biggest changes occurred in the number of people who were employed part-time for economic reasons, which grew by almost 11% from under 4.5 million to over 4.9 million, and the number of people who are unemployed but want a job rose buy more than 7.5% to 5.9 million, which may be the strongest indications of a softening labor market in an otherwise largely stable report.
The healthcare industry added the largest number of jobs at 52 thousand, which is right in line with the 54 thousand jobs the healthcare industry has added on average each of the previous 12 months.
The financial services industry added the next largest number of jobs at 21 thousand, which is more than 4 times greater than the 5 thousand job additions the industry had added on average over the last year, while the transportation & warehousing industry added about 18 thousand jobs, well above the current 13 thousand monthly average, and the social assistance industry added about 11 thousand jobs, which is a little less than half of the running monthly average.
The leisure and hospitality industry recorded a net loss of about 16 thousand jobs, while the retail industry saw a decrease of 6 thousand jobs, and there were about 10 thousand net government jobs lost over the course of the month.
Average hourly pay rose by about 10 cents to $35.93 per hour (an increase of 0.3%), while the length of the average workweek held steady at 34.1 hours per week.
This report represents the first set of employment situation data collected exclusively under the second Trump administration, but the next few months are when we’ll begin really seeing more direct impacts from the resulting changes in policies, and it will take another several months beyond that before many of the tangential effects become more apparent.
In the meantime, the Chairman of the Federal Reserve says the economy is in good shape, and reiterated the Fed’s wait-and-see approach with interest rate cuts. While the Fed cut rates by a quarter percentage point 3 times next year, and analysts and investors are still predicting another 2 or 3 comparable rate cuts in 2025, the Fed has indicated it is in no hurry to continue cutting rates, especially in light of the 4% annual wage growth over the trailing twelve months.
The assumed interest rate cuts may be in part based on the increasing likelihood of economic downturn if not recession on the horizon, which more economists are predicting within the next year than were doing so just a couple of months ago. Should such a downturn materialize, it will likely inspire the Fed to act quickly in bringing down rates.
While some of the new administration’s federal workforce cuts may be reflected in the data of this latest report, most of the cuts made so far and the impact of those cuts, as well as the complementary private job losses, won’t begin showing up in this report until next month.
Those disruptions to the labor market combined with uncertainty about consumer goods prices and international trade in part due to tariffs and tariff posturing, have led to predictions of significant GDP contraction of almost 2.5% in the first quarter of 2025 by at least one Federal Reserve Bank.
There are a lot of moving parts that will ultimately shape the short-term economic future, and those kinds of dynamic systems are difficult to predict even without so many potential variables in flux both domestically and internationally.
That said, as more economic analysts are becoming more pessimistic in their predictions, it is worth considering that trend as a data point worth taking into account in its own right, and we'll continue updating the outlook as more data comes in in the coming months.
Check out the Mployer blog here.
Each month, Mployer collects and presents some of the most relevant and most pressing recent changes in law, compliance, and policy in areas related to employee benefits, health care, and human resources.
If your organization is using the alternative method for distributing 1095-B and 1095-C forms in accordance with the Paperwork Burden Reduction Act, your website must be in compliance from the first business day of March through at least October 15th. You can find guidance from the IRS about how to properly follow compliance protocols here.
On February 21, 2025, a federal judge put a stay on Trump’s Executive Order limiting the ability of federal agencies and federal contractors to operate Diversity Equity and Inclusion programs. The court questioned whether the order violated free speech rights and potentially illegally restricted otherwise legal actions taken by private entities. You can find the decision here.
From February 1st to April 30th, non-exempt (low-hazard) employers who had at least 11 employees at some point in 2024 must post in a conspicuous place a copy of OSHA Form 300A, Summary of Work-Related Illness and Injury, certified by a company executive.
For non-exempt employers that had 250 or more employees at some point last year and employers with 20 or more employees in specified high-risk industries, OSHA requires electronic submissions, which are due by March 2nd, 2025.
You can find the electronic submission platform here.
In his first days since returning to office, President Trump has signed a series of executive orders dealing with labor and employment issues for federal employees and federal contractors, with more expected still to come.
While thus far these orders don’t apply to private employers in general - with the exception of those that accept federal funds and/or are federal contractors - these orders will not only affect a sizable portion of the workforce directly, but they will also likely inspire some private employers to modify their practices and follow the example set by the executive branch.
The new rule that will most likely have the largest impact beyond the sphere of federal employees is Executive Order 11246, which makes it so that federal contractors no longer have to practice affirmative action in the hiring process for most protected classes. The only protected classes excepted from the order are veterans and individuals with disabilities, for whom affirmative action standards still apply.
Although federal contractors will no longer be required to maintain affirmative action programs, Title VII of the Civil Rights Act remains in effect to prevent discrimination against protected classes like race, gender, sexual orientation, and national identity.
You can read more here
A Federal District Court Judge in Northern Texas ruled that American Airlines had breached its fiduciary duty by working with an investment manager that promoted ESG practices in a way that ran counter to the economic interests of the employee retirement fund beneficiaries.
The repercussions of this ruling could be industry-reshaping if upheld, although there were many additional conflicts of interest between American Airlines and their investment fund manager that may limit how broadly applicable the ruling will ultimately prove to be.
The judge has already found American Airlines in breach of their fiduciary duty, but he has yet to assess damages, which will influence the probability of appeal and the likelihood of copycat cases.
You can read more about this case here.
As of January 13, 2025, the extension period for certain renewal Employee Authorization Document (EAD) applications filed on May 4, 2022 or later has been formalized at 540 days.
You can read more here.
As of January 1, 2025, the IRS mileage reimbursement rate for road miles driven for business purposes increased by 3 cents per mile from 67 to 70 cents per mile driven.
The IRS released a statement announcing a 25-cent increase in Patient-Centered Outcomes Research Institute fees for covered plan years ending on or after October 1, 2024, and before October 1, 2025.
The new fee is $3.47 per covered life.
You can read more here.
In response to a Federal Court of Appeals Decision that vacated the so-called 80/20/30 rule that was instituted in 2021, the Department of Labor officially reverted to the previous tip credit rule.
You can read more here.
In the final days before Christmas a few weeks ago, the Employer Reporting Improvement Act both became law.
As of January 1, 2025, the threshold for what qualifies as affordable coverage is now 9.02%, which means that an employee’s required contribution to the plan can be no more than 9.02% of their salary in order for the plan to be considered affordable and to avoid potentially paying the penalty.
You can read more about the affordability threshold here.
A federal court in Texas determined that the Department of Labor exceeded its authority last summer by increasing the minimum pay thresholds for employees to qualify under the executive, administrative, and professional and highly-compensated employee exceptions to minimum wage and overtime protections.
Those minimum pay thresholds have reverted to their prior levels - back to $684 per week for the EAP exemption (down from $844 per week under the now defunct rule), and back to $107,432 per year for the HCE exemption (down from $132,964 per year under the now defunct rule).
NLRB Says No Captive Audience Meetings on Unionization Issues
The National Labor Relations Board has issued a decision prohibiting employers from forcing employees under threat of punishment to attend meetings during which the employer will share views on unionization or its impacts.
Employers are allowed, however, to convene employees and share their views on unionization and potential impacts so long as employees are not disciplined or adversely affected in any way for not attending (or leaving early). Employers should not even keep or maintain such attendance records.
You can read more here.
Massachusetts: Employers with more than 50 employees must post the new veterans services poster that was just released by the Massachusett Executive Office of Labor and Workforce Development. The poster must be conspicuously displayed in an area that is accessible to all employees. You can find the poster here.
New York: Beginning March 2, 2025, all New York employers will be prohibited from requiring job applicants to provide a copy of their criminal history record, which closes a loophole employers had been exploiting to obtain such records despite restrictions regulating their access to those records.
Beginning May 8, 2025, NY employers with more than 3 employees must conspicuously post their lactation room accommodation policies and guidelines as well as the relevant state requirements both somewhere accessible by all employees and on the organization's intranet if applicable.
Beginning June 2, 2025, employers with 10 or more retail employees must have in place a written policy and training program for violence prevention measures and retail employers with 500 or more employees must install and/or maintain silent response buttons to alert authorities about emergencies. This legislation was originally slated to take effect March 4, 2025, But was amended to clarify employer responsibilities.
Further, as of January 1, 2025, New York employers are required to provide 20 hours of paid prenatal leave during a 52 week period. Also, as of the new year, the characteristics to which equal protection was extended via the New York State Human Rights Law and the resulting protections are formally enshrined in the New York State Constitution. Those characteristics include: age, disability, ethnicity, gender identity, gender expression, national origin, pregnancy, and anything else related to reproductive healthcare.
New York employers that receive criminal history records for applicants and employees must also now provide those applicants and employees with a copy of those records and a copy of the applicable New York corrections law as well as an opportunity to correct any inaccurate information that may be contained in those records.
Colorado: The City of Boulder increased the minimum wage to $15.57 ($12.55 for tipped employees) as of January 1, 2025.
Oregon: As of January 1, 2025, Paid Leave Oregon provides leave for employees completing necessary legal steps associated with adopting and/or fostering children.
You can read more here.
You can find the complete IRS 2025 benefit contribution limit list here.
As of January 1, 2025, the minimum wage for work conducted in association with federal contracts covered by Executive Order 13658 is $13.30 ($9.30 for tipped employees), while the minimum wage paid for work conducted in association with federal contracts covered by Executive Order 14026 is $17.75 per hour for both tipped and non-tipped employees.
Additional guidance about which kinds of contracts are covered by which executive order can be found here.
You can find guidance for ERISA 403(b) plan eligibility requirements for long-term, part-time employees according to the updated standards from the Secure ACT 2.0 here.
Key Takeaways:
State of the Union for US Labor Unions
As of this writing in the final week of February 2025, the outlook for organized labor over the next several years and beyond is very much up in the air.
President Trump’s nominee for Secretary of Labor Lori Chavez-DeRemer received scrutiny from both sides of the aisle last week, and her confirmation remains very much in question, with Republicans raising concerns about pro-union legislation she co-sponsored during her single term as a Congressional representative and Democrats criticizing her attempts to distance herself from her previous union support.
In the same week, however, the Acting General Counsel for the National Labor Relations Board - whose pro-union predecessor was fired as one of President Trump’s first official acts after reclaiming office - began rescinding policy memos issued under the Biden administration that provided guidance on topics ranging from non-compete agreements to the digital surveillance of employees.
Given these competing visions within the Trump administration and the Republican Party, there is a great deal of uncertainty about the future of labor unions in the US. Those questions come at a time when major, broad sweeping disruptions to the labor market due to technological advancement - especially artificial intelligence - seem more possible than maybe ever before.
In light of that uncertainty, and coinciding with President Trump’s planned State-of-the-Union-like address to a joint session of Congress next week during which he may very well provide some clarity on the approach his administration will take on labor protections and regulations, we wanted to take a closer look at labor unions as they exist in the US today, both as snapshot of the current environment for organized labor and as a benchmark to measure the success of new policies against as they are enacted and take effect.
US Labor Union Membership By the Numbers
According to the Current Population Survey, about 9.9% of all US workers ages 16 and older were members of labor unions, amounting to about 14.3 million, which is down by about 170 thousand workers from 2023 when there were a little over 14.4 million union members in the US accounting for about 10% of the labor force.
Due to the duty of fair representation, the number of US workers represented by unions is of course even larger than union membership rolls, with a little more than 16 million US workers befitting from union representation in 2024, representing about 11.1% of the workforce, which is down by about 170 thousand workers from almost 16.2 million in 2023, representing about 11.2% of the US workforce then.
Union membership in 2024 was split approximately evenly between public and private sector employees at about 7 million and 7.2 million, respectively. Because the private sector is so much larger than the public sector, however, the proportion of public sector employees who belong to a union is much greater than the proportion of private sector employees who do so.
The proportion of public sector US employees that were members of unions in 2024 was 32.2%, which essentially held steady year over year from 2023, whereas the proportion of private sector employees with union membership in 2024 was only about 5.9%, down from 6% the year before.
Almost 4 out of 10 employees on local government payrolls (38.2%) were union members in 2024, which is fairly unsurprising given union strength among police forces, educators, and firefighters, while the industries with the largest unionization rates in the private sector are utilities (18.7% union) and transportation & warehousing (15.8% union).
The lowest unionization rate among government workers belongs to federal employees, only 25.3% of which are unionized as of 2024, which is up from 25.1% in 2023 even though the number of federal employees that are union members fell by more than 130 thousand between 2023 and 2024, dropping to about 1.1 million.
In the private sector, the lowest unionization rates belong to the finance (0.8% union) and insurance industries (1.2% union), followed by the professional & technical services (1.2%) and agriculture industries (1.4% union).
Library and security & protective service workers had the highest proportion of union membership among occupations at 32.3% and 29.6%, respectively, while farm/fishing/forestry workers (1.5% union) and sales professionals (2.7% union) were the occupations with the lowest rates of unionization.
Union membership is lowest in the South and highest along the Pacific and Mid to North Atlantic coasts, with North Carolina (2.4% union), South Dakota (2.7% union), and South Carolina (2.8% union) claiming the lowest unionization rates.
Interestingly, 2 of the 3 states in which unionization was highest in 2024 were not connected to the continental US, with Hawaii and Alaska recording 26.5% and 17.7% union membership, respectively. New York (20.6% union), Connecticut (16.5%), and Washington (16.0%) had the highest unionization rates among contiguous states.
Almost 3 out of 10 union members (29%) now live in just 2 states - New York and California - which is almost double the percentage that all workers from New York and California - union and non-union alike - represent as a portion of the total US workforce (17%).
Mployer’s Take
Over the last 40 years, the proportion of the US workforce that belongs to a labor union has decreased by half - from a little more than 1 out of 5 full-time salaried US workers with union membership in 1983 to about 1 in 10 as of 2024.
During that same time, however, the actual number of union workers in the US has been reduced by a considerably smaller margin, with only about 2 million fewer union employees working in the US today than there were in the mid-1980s, accounting for only an approximate 15% decrease in total union membership over the last 4 decades.
In effect, as the US and the US worker population has grown, union workers as a proportion of the total population has decreased considerably, but union workers and union jobs have remained fairly entrenched nonetheless, even if unable to keep up with population growth and economic expansion.
If current union membership figures rely on entrenched workers, however, those workers are rapidly aging out of the workforce, and how well-protected those jobs are going forward may be put to the test sooner than later.
Just looking at the age breakdown alone paints a fairly grim picture of the future of union membership. For example, workers between the ages of 45 and 54 have the highest rate of unionization at 12.6%, while workers ages 16 to 24 claim the lowest proportional union membership at 4.3%.
That said, although unionization was much higher among full-time workers (10.7% union) compared to part-time workers (5.7% union) in 2024, the percentage of unionized full-time workers fell last year (minus 0.2%) while the unionized percentage of part-time workers increased (plus 0.5%), which is a noteworthy development. With growth in part-time employment outpacing full-time growth, unionization may have some tailwinds here.
Realistically, however, while the future head of the Department of Labor remains unknown for the time being, the current nominee is representing positions that are both more favorable toward organized labor than any potential future nominee from this administration is likely to be, but also less favorable toward organized labor and worker protections than the previous Secretary of Labor, so the trend is apparent even if the ultimate appointee is not.
Still, the advantages that unions offer to workers remain significant, perhaps most notably when comparing pay rates, with full-time, salaried union workers bringing in median annual earnings of about $70 thousand in 2024 whereas non-union members earned a little less than $60 thousand under the same conditions, which is more than 15% less.
The momentum is working against the expansion of unions and enhanced worker protections, however, and if President Trump’s first term and/or Elon Musk’s questioning of the constitutionality of the National Labor Relations Board serve as any indication, the momentum against organized labor is more likely to intensify than to subside over the next few years at least.
Key Takeaways:
The Ozempic, Semaglutide, and GLP-1 Problem For Employers
Since the Food and Drug Administration first approved semaglutide (a type of GLP-1 drug) as an injectable weight loss medication in 2021, the demand for brand name versions like Ozempic and Wegovy has skyrocketed. With skyrocketing demand has come skyrocketing prices, however, and neither the demand for these prescriptions nor their price points appear likely to come down any time soon.
Much of the demand for these drugs is a direct result of just how effective they have been, at least in the short term. What remains to be seen is how effective these medications will ultimately prove to be in reducing the incidence of tangential, obesity-related conditions in the long term, and what range of associated healthcare cost savings can be expected as a result.
This represents the central dilemma of semaglutide coverage, which is whether the uncertain future benefits justify the substantial upfront costs.
Further complicating the issue is the uncertainty surrounding future benefits. These are amplified for employers, which also have to account for turnover risk when weighing long-term investments in the health of employees who may no longer be with the organization by the time those benefits are realized.
Taken together, these factors are inspiring an increasing number of employers to rethink their approach to semaglutide coverage and how it fits into their larger organizational mission, not just in terms of their health plans but also in terms of talent attraction, retention and workforce management.
Employer Semaglutide and GLP-1 Coverage By The Numbers
According to the Kaiser Family Foundation (KFF), only about 18% of all large firms (defined here as those with 200 or more employees) offered semaglutide and/or other similar GLP-1 medications for weight loss purposes in 2024.
The proportion of employers offering these medications tends to increase as employer increases in size as well, with KFF’s data indicating that about 16% of employers that have between 200 and 999 employees offering semaglutide and/or other GLP-1 coverage for weight loss, while 24% of employers with between 1,000 and 4,999 employees cover these prescriptions, and 25% of employers that have 5,000 or more employees do so.
Data from Mercer, on the other hand, points to much more widespread adoption of GLP-1 medication for weight loss, with 44% of large employers (defined here as those with 500 or more employees) offering semaglutide and/or GLP-1 coverage in 2024 - a 3% increase up from 41% in 2023. An even larger proportion (64%) of the largest employers (defined here as those with 20,000 or more employees) covered these medications in 2024, up from 56% in 2023 representing 8% year-over-year growth.
Although these figures do not allow for an apples-to-apples comparison, they clearly represent a fairly wide coverage range, with KFF reporting much lower rates of semaglutide and GLP-1 coverage than Mercer, but this data discrepancy can perhaps be explained in part by the 31% of KFF survey respondents who stated they did not know whether their employers largest health plan covered these medications for weight loss treatment.
The International Foundation for Employee Benefit Plans (IFEBP) survey was somewhere in between KFF and Mercer, estimating that about 34% of US employers (no employee count specified) offered GLP-1 drugs for weight loss purposes in 2024, which is up 8% from 26% in 2023.
Data from the same IFEBP survey indicates that GLP-1 drug costs as a proportion of total annual claims are increasing, with GLP-1 expenses accounting for an average of 8.9% of total annual claims for US employers, up from 6.9% in the 2023 survey.
In total, 21% of employers reported that GLP-1 medications were responsible for 2% or less of total claims, while 47% of employers reported that GLP-1 medications amounted to 10% or more of total annual claims.
Rising GLP-1 Costs Lead To Health Plan Changes
Demand for these medications has led to substantial financial losses according to data released by a number of entities in the healthcare industry that are all telling very similar stories about how semaglutide and GLP-1 prescriptions for weight loss are affecting their bottom lines.
Many insurers took a GLP-1-related hit last year, for example, Blue Cross and Blue Shield of Massachusetts recorded losses amounting to nearly $115 million dollars just in the first 3 quarters of 2024, which corresponded with an approximate 250% increase in GLP-1 claims over the same period.
Hospital systems were comparably affected, for example, UPMC out of Pittsburgh posted an even larger loss of about $370 million over the same term, which it attributed to increased medical utilization and pharmacy costs, while Highmark Health - also of Pittsburgh - despite avoiding operational losses, reported a significant decline in operating gains in 2024 relative to 2023, which administrators blame on high prescription drug costs - most notably GLP-1s.
According to the Chief Pharmacy Office at UPMC, the “costs are unsustainable” due to the “explosion in demand” and many organizations are implementing additional cost controls in an attempt to suppress some of these quickly ballooning expenditures.
For insurers and care providers alike - the path forward of least resistance seems to involve increased prior authorization in the short term while the supply chain becomes better capable of meeting demand over time.
But for employers who must also take into account the role that their health plans play in terms of talent attraction and retention, controlling costs via adding additional obstacles and further limiting access to an increasingly popular weight loss option can be counterproductive and risk increased turnover.
How Are Employers Adapting?
These high cost and high demand dynamics have led to two separate trends among US employers - some employers are dropping GLP-1 coverage for weight loss and others are expanding GLP-1 coverage for weight loss, and the difference is largely driven by how one calculates and weighs the potential long-term health benefits in the cost-benefit analysis.
Even for employers betting that the potential long-term health benefits associated with GLP-1 utilizations and weight loss - including reduced risks for cardiovascular and kidney disease - will ultimately outweigh the substantial upfront costs, those rising upfront costs are becoming problematic.
In a previous piece covering semaglutide and other GLP-1 medication, we discussed some of the ways that employers are adapting in order to offer these drug treatments to employees without exposing the health plan to out-of-control costs, including implementing lifetime caps, minimum BMI caps, and limiting access to cheaper GLP-1 options:
Just as many private health insurers may come to increasingly rely on prior authorization and reduced access to these prescriptions to rein in costs, many employers may likely implement similarly tightened restrictions over the next few years.
While reducing the number of potential employees with access to these medications can be an effective safeguard against overrun expenses, it also limits how effective those health plans may be as talent retention and attraction tools.
Should the popularity of GLP-1 treatment for weight loss maintain its current trajectory, the next evolution of GLP-1 access for self-insuring employers may involve both restricted access for employees based upon qualifying criteria (e.g. BMI threshold exceeded, payment cap not exceeded, etc.) and also expanded access in the form of perks or incentives for employees who do not otherwise qualify for coverage.
What Comes Next?
Access to some GLP-1 drugs is already starting to improve as a result of pharmaceutical and insurance companies exploring new cost-saving approaches and proactively working with legislators to bring down some of these expenses.
Just a few months ago in December 2024, for example, drugmaker Eli Lilly teamed up with a telehealth platform to offer a non-semaglutide GLP-1 alternative for weight loss directly to consumers for less than half the price that Ozempic and Wegovy in many cases.
Drugmakers are also making significant headway in developing and releasing generic versions of GLP-1 medications, with the FDA approving the first 2 generic GLP-1 drugs in November and December 2024, respectively, although neither of those drugs has weight-loss-specific uses.
It will still be a while before generic semaglutide medication becomes available, as it most likely won’t hit the market for another 5 or 6 years in 2030 or 2031.
There is a $4.1 billion facility in the works where significant quantities of Ozempic and Wegovy can be manufactured, which will increase the available supply of these drugs and hopefully bring down the sticker price, but it will be at least 3 or 4 years before these products would be available.
On the public front, the Department of Health and Human Services recently added both Ozempic and Wegovy to the list of drugs covered under Medicare Part D which will be subject to price negotiations in 2025. Although these negotiations won’t directly apply to prescription prices for private buyers, they may still set a benchmark that results in lower prices across the board. Even then, the new Medicare prices and any related private market impacts won’t come to be for another 2 to 3 years in 2027 or 2028.
In short, there are a number of potential changes in the supply chain that are likely to reduce upward pressure on prices for semaglutide and GLP-1 medications in the years ahead, but that supply-side price relief may not come all at once and could even conceivably be outpaced and canceled out by upward price pressure due to growing demand.
Mployer’s Take
The effectiveness of some GLP-1 medications as a weight loss drug has been pretty clear for several years, though the long-term tangential benefits of GLP-1-assisted weight loss will likely take another 5 to 10 years, at least, to be more fully assessed. Additionally, it will likely also take 5-plus years before the GLP-1 weight loss prescription costs normalize and find their equilibrium in the market.
As a result, there is a potential 5-plus year window of uncertainty before the cost-benefit uncertainty is effectively settled. With employers currently split and trending in diverging directions around their coverage of GLP-1 for weight loss, there is an opening for employers to establish a significant advantage over competitors who approach GLP-1 coverage differently.
Given that some studies are already showing significant healthcare cost savings associated with tangential GLP weight loss benefits, however, the odds that long-term benefits exceed the short-term costs of covering GLP-1 weight loss medication seem to be going up.
For example, one study found that GLP-1 use for weight loss across approximately 2,000 patients with heart failure and/or specific cardiovascular diseases reduced annual healthcare expenditures by $7,500 to around $9,000 dollars per person.
The opportunity for those kinds of cost savings makes GLP-1 coverage seem like an easy choice for employers.
At the same time, however, it is easy to see why employers that focus on short-term costs and/or the scope of the potential demand want to severely restrict access to these medications for weight loss purposes if not eliminate coverage entirely.
That perspective is especially understandable considering that more than half of US adults could be eligible for GLP-1 use either for diabetes, obesity, or heart conditions - the overall population who may want/need access to these drugs is large enough to be cause for concern for any payer - even those as large and well-funded as the US government.
Demand calculations based on the total number of potentially eligible, qualifying candidates that could benefit from any given medication, however, are not necessarily fair reflections of demand.
One recent Morning Consult poll, for example, found that 62% of respondents claimed they would rather make a diet change than use an injectable weight loss drug in order to lose weight, and that preference was even stronger among certain demographics, including men, baby boomers, residents of the Northeastern part of the country, post-graduate degree holders, and people earning more than $100,000 annually.
People can and do change their minds, of course, and there are certainly many people who may come around to the idea of utilizing GLP-1 as the user base grows and the effectiveness of the drugs becomes more apparent.
However newfound perspectives do not often emerge in mass overnight, and the process of millions of individuals reevaluating a personal position and reversing course takes time, just as increasing the supply of these drugs takes time and just as collecting evidence on long-term cost savings takes time.
In light of those potential long-term healthcare savings and the encouraging numbers we’ve seen on that front so far, however, assuming that demand doesn’t spike in line with worst-case scenario forecasts over the next few years, the trend toward covering semaglutide and GLP-1 for weight loss purposes with some restrictions seems likely to pick up momentum barring unforeseen events.
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