Key Takeaways
Article - Federal Court Ruling May Put Millions of US Companies In Breach of ERISA Fiduciary Duty
A recent ruling from a Federal judge in Texas has put nearly every company in the US that offers a retirement or pension fund at risk of being sued for failing to uphold their fiduciary duties to their employees.
The core issue of the case is whether an employer can be found in violation of the Employee Retirement Income Security Act (ERISA) as a result of entrusting retirement funds to investment managers that take into account corporate environmental, social, and governance (ESG) considerations when managing those funds.
Based on this latest court ruling, much to the surprise of many legal observers, the answer to that question appears to be ‘yes, companies can be held liable for retaining retirement fund investment managers whose investment practices incorporate ESG principles’ - at least for the time being.
What remains to be seen, however, is the amount of money that the defendant company will have to pay as a result of their adjudicated infraction, which in turn is likely to have a major impact on how widespread the repercussions of this ruling will be given that a string of both appeals and copycat plaintiffs are almost certain to follow any final order front the judge that includes a substantial amount of money changing hands.
Spence v. American Airlines
The lawsuit in question was filed in the Summer of 2023 when a senior pilot with American Airlines initiated a class action lawsuit against his employer on behalf of more than 100,000 participants in a 401(k) plan offered by American Airlines.
The issue at hand stems back to an incident that occurred 2 years prior in the summer of 2021 when global investment giant Blackrock joined other major investment managers and activist investors to exercise their shareholder voting rights and elect 3 ESG-friendly board members to the 12-member ExxonMobil Board of Directors, which is an outcome ExxonMobil leadership at the time had spent months fighting to prevent.
Spence claimed that Blackrock was engaging in the pursuit of ‘non-financial ESG policy goals’ and that American Airlines was in violation of their fiduciary duty by utilizing Blackrock as investment managers for the management of those 401(k) funds.
Fiduciary Duty: Prudence & Loyalty
In accordance with ERISA, employers, and their agents - such as plan trustees, plan administrators, and members of plan investment committees - owe a fiduciary duty to act and make decisions that are in the best interests of plan beneficiaries.
This fiduciary duty encompasses many responsibilities under the law, including a responsibility to diversify investments, avoid conflicts of interest, and follow plan guidelines, but in the class action lawsuit Spence brought against his employer American Airlines, however, he alleged only violations of the fiduciary duty of prudence and the fiduciary duty of loyalty.
Interestingly, the standards and regulatory guidance for evaluating prudence and loyalty in the context of fiduciary duty have been in flux in recent years, with the Department of Labor for the then-outgoing Trump administration issuing final rules with amendments regarding the fiduciary duty of prudence and loyalty in mid-November 2020.
According to those amendments, prudence requires plan fiduciaries to make investment decisions based exclusively on “pecuniary” or financial factors. Loyalty requires that plan fiduciaries determine that potential investment alternatives are ‘economically indistinguishable’ from each other before fiduciaries can take into account potential collateral benefits beyond investment returns, in which case those collateral benefits essentially function as a tie-breaker.
In November of 2022, however, the DOL for the Biden administration issued a final rule that interpreted the fiduciary duties of prudence and loyalty in a way much more favorable to ESG considerations.
According to the Biden DOL clarifications, prudence requires decisions to be based on relevant risk and return factors with ESG being among the factors that can be rightly considered, and loyalty does not prevent plan fiduciaries from taking collateral benefits into account so long as plan alternatives equally serve the financial interests of beneficiaries over time.
While the Biden DOL’s final rule overrode the final rule issued by the Trump administration DOL in November 2020, Biden’s final rule did not take effect until January of 2023, so the Trump DOL rules were still applicable when Blackrock was among the investors that won the proxy battle against ExxonMobil in the summer of 2021.
Now that Trump has returned to the White House, it’s also worth noting that the definitions of prudence and loyalty about fiduciary duty under ERISA are likely to revert to the interpretations his previous administration issued shortly before he left office in 2020.
Where Did American Airlines Go Wrong?
In evaluating Spence’s claims against American Airlines, the judge determined that American Airlines had been prudent, but they had not been loyal.
Although Spence claimed that American Airlines had violated its duty of prudence by not directly monitoring Blackrock’s proxy voting activism and instead depending on a third party to do so, the judge ruled that the employee benefit committee at American Airlines had been prudent and exceeded industry expectations by meeting regularly with both internal and external experts to review and monitor plan performance.
As for Spence’s claim that American Airlines had breached their duty of loyalty, however, the judge determined that American Airlines was in fact in violation of the law because they failed to keep their own “corporate interests separate from their fiduciary responsibilities” which led to “an impermissible cross-pollination of interests and influence on the management of the Plan.”
The judge found that Spence provided sufficient evidence showing American Airlines was incentivized to ignore BlackRock’s shareholder activism in part because BlackRock owns both hundreds of millions of dollars worth of American Airlines stock, as well as hundreds of millions of dollars worth of American Airlines debt, which may have led American Airlines to become lax in its oversight of BlackRock’s retirement fund management practices.
In support of his finding that the duty of loyalty had been breached, the judge also cited an American Airlines employee who served both as corporate liaison to BlackRock and as a member of the American Airlines fiduciary committee and said that billions of dollars of potential loans might have been at risk if American Airlines had not followed ESG reporting protocols.
The judge further noted in support of his conclusion that the American Airlines asset management group had not requested information about BlackRock’s proxy voting, nor had American Airlines expressly asked the third-party consultant to review Blackrock’s proxy activities, nor had American Airlines received mandated reports from BlackRock about their proxy voting intentions.
Although he made clear in his judicial opinion that ESG considerations are not entirely impermissible and can be taken into account purely from a financial perspective as another factor or tool that can be utilized to help maximize long-term financial gain, the judge did not find that to be the case in this instance where BlackRock’s climate change goals seem at odds with the financial interests of ExxonMobil, whose primary area of business involves selling fossil fuels.
What Happens Next?
Recommendations as to what losses were incurred and what remedies are most available and appropriate were due from both Spence and American Airlines by the end of January, which the judge will review before ultimately deciding on damages.
Although the judge has already found American Airlines to be in breach of its duty of loyalty, the penalties assessed for their infraction will likely be very influential both on a micro and macro level and can significantly impact how widespread the impact of this decision will be.
For one, the amount of damages owed will probably play a significant part in American Airlines’ decision on whether or not to appeal the ruling in this case, which would result in drawing more attention to the lawsuit and either solidifying or overturning the ruling.
Equally if not more importantly, the severity of the remedy that the judge ultimately hands down will directly determine whether the damages awarded are sufficiently large to inspire a wave of lawsuits initiated by employees against their employers on similar grounds now that they have been validated in court.
Mployer’s Take
The potential size of the seismic quake that could come in the wake of this ruling can hardly be overstated.
That said, at this stage of the game, it is not yet certain at all that the aftershocks of this lawsuit will extend beyond the Northern District of Texas.
If the judge decides to bring his hammer down on American Airlines and requires them to pay a steep penalty, there may well be tens to hundreds of millions of plaintiffs who come out of the woodwork ready to step up and sue their employers on similar grounds.
In fact, in the inciting incident in this case, BlackRock was joined by State Street and Vanguard in electing the 3 dissident members to ExxonMobil’s board. These firms have all been ESG proponents and collectively are responsible for managing over $5 trillion in retirement assets - more than 12% of total retirement funds in the US - which could lead to tens of millions of additional plaintiffs from this one incident alone.
It’s unclear at this point just how broad this decision will ultimately prove to be beyond this particular case and proxy voting incident, however, since the judge pointed to the friction between climate change economics and fossil fuel economics as particularly at odds, and there were several clear conflicts of interest and breakdowns in communication and/or oversight on the part of both American Airlines and BlackRock, as well.
On the other hand, despite the conflicts of interest and insufficient proxy voting oversight, it remains unclear just what American Airlines was supposed to do to avoid this outcome in the first place.
Regarding the conflicts of interest, American Airlines presumably utilized BlackRock as a creditor because they provided the most favorable loan arrangements, and the airline has no control whatsoever about the equity stake in their company that any given investor like BlackRock might control at any given time.
The judge even noted in his decision that BlackRock’s significant ownership stake and outstanding debt with American Airlines “are not enough on their own to constitute disloyalty,” which seems to indicate the crux of the fiduciary duty violation is really the lack of oversight.
Even if American Airlines had been monitoring BlackRock’s ESG advocacy more closely, however, they were in no position to meaningfully influence BlackRock’s investment strategy one way or the other.
Essentially, if American Airlines violated its duty of loyalty by not monitoring BlackRock’s ESG promotion, then American Airlines would also have been in violation of its duty of loyalty just the same if it had been monitoring BlackRock’s proxy voting and had continued utilizing its retirement investment services anyway, so what choice did American Airlines have except to find a different investment manager that did not incorporate ESG into their investment decision-making process?
Regardless of how this case proceeds, one central takeaway from this situation is that employers would be wise to minimize conflicts of interest with retirement fund investment managers wherever possible, in addition to maximizing communication and oversight reporting with internal and external auditors.
The question as to what standards and by what measures employers are expected to hold retirement investment fund managers to account, however, especially about ESG-related issues, may not be adequately addressed, let alone answered, until long after this case reaches its final resolution.
It is still very possible, even after the judge’s finding that American Airlines breached their fiduciary duty to their employees that this case will ultimately conclude relatively quietly. If this ruling is upheld and reinforced in follow-up cases, however, it may simply be the end of ESG investing or we may very well be on the cusp of experiencing a sea-change-like shift in the employee benefits management industry.
Editor's Note: This report is based on survey data from January 2025 that was published in February 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)
US employers added 143 thousand jobs last month, which fell a bit short from the almost 170 thousand that economists were forecasting.
At the same time, the national unemployment rate average ticked down by one-tenth of a point to 4% for the first time since May of 2024.
Beyond the slight movement in unemployment rate and increase in payroll figures, however, the labor market showed little movement whatsoever, with no significant change in labor force participation rate (62.6%) or in the number of people working part-time but who want full-time work (4.5 million).
There was similarly little movement among the long-term unemployed (1.4 million) or the number of people who want a job but haven’t actively looked for one in the last 4 weeks (5.5 million) - only a relatively small portion of which had actively sought work in the last year (1.6 million) - all of which held steady from month to month.
Although the fewer than 150 thousand net jobs added across the US last month is down substantially from the more than 250 thousand net jobs recorded the month before, there were several industries that performed in line with expectations.
The healthcare industry reported the largest net increase in jobs last month with plus 44 thousand, which is slightly below the 55 thousand healthcare jobs averaged each month in 2024.
The retail industry had the next largest net job increase with plus 34 thousand, followed by government jobs at plus 32 thousand, then the social assistance industry, which grew by 22 thousand payroll entries.
Mining was the only industry that saw a net job loss over the month (minus 8,000), while the remainder of industries remained essentially unchanged, including the construction industry, the manufacturing industry, the wholesale trade, the information industry, the transportation and warehousing industry, the leisure and hospitality industry, the professional and business services industry, and the financial activities industry.
Average hourly pay rose by about 17 cents to $35.87 per hour (an increase of 0.5%), while the average workweek length fell slightly to 34.1 hours per week.
This BLS report contains the final batch of data collected under the Biden administration, which saw the US unemployment rate drop by 2.2% under its watch, down from 6.2% in February of 2021 to 4% as of January 2025.
This report also marks the 49th consecutive month of net job gains, which is the second longest streak of positive job growth since these numbers have been tracked.
In fact, the only longer period of consecutive job growth in recorded US history occurred between October of 2010 and February of 2020, just as the pandemic was ramping up in the US, and were it not for the COVID employment dip which was accompanied by a historically quick recovery, the current ongoing streak of job growth and the last would be almost 4 times longer than the next longest streak.
Given that the 5th longest streak is 44 consecutive months of job growth, even getting to 40 consecutive months of growth is historically noteworthy and hitting 50 or more months of job growth has only happened once before, about 10 years ago. If the US maintains its current trajectory and achieves positive job growth again next month, that will be the second occurrence ever of more than 50 consecutive months of job growth, and those streaks have essentially occurred back to back.
All that to say, while the current job growth streak is not exactly unprecedented, it's pretty close and the streak does become more of an outlier with each passing month.
With the transfer of power comes questions about how trade agreement negotiations and immigration policy orders will ultimately play out, for example, and those outcomes will affect labor and employment issues both directly and indirectly.
While those outcomes remain to be seen, however, the uncertainty itself can in many cases have a negative drag on economic views, perhaps as evidenced in the notable downturn in consumer sentiment of late, but it’s likely that sentiment will rise or fall with economic performance, and those numbers will start coming in next month.
Check out the Mployer blog here.
Key Takeaways
Article: Are Centers of Excellence On the Decline?
The proportion of employers offering employee health plans that utilize Centers of Excellence may have hit its high water mark and begun to recede among the nation’s largest employers.
Centers of Excellence have been an increasingly prominent component of employer-sponsored health plans since they were first introduced in 2014. Still, after 10 years of largely consistent growth, the tide may be turning.
Centers of Excellence: By The Numbers
In the US in 2024, about 19% of all employers that have 200 or more employees and provide health benefits offered access to some form of Center of Excellence program to their employees.
That number has essentially remained unchanged at 19% year-over-year from 2023 for all US employers that provide health benefits and have 200 or more employees, which indicates that the Center of Excellence adoption growth has stalled at the macro level across all large employers within this range.
What’s more interesting, however, is noting how Center of Excellence participation has changed from 2023 to 2024 when breaking down the large employer into smaller demographic subsets, which reveals a less optimistic vision for the future of Center of Excellence program growth.
From 2023 to 2024, among employers that offer health benefits, for example, the smallest subset of large employers - those with between 200 and 999 employees - increased from about 15% that had incorporated Centers of Excellence into their offerings in some way as of 2023, to 16% who have done so as of the 2024 data.
While that change reflects a relatively small increase in proportion, employers with between 200 and 999 employees are also the largest subset of large employers, so even a small increase in participation percentage indicates a significant number of employers incorporating new Centers of Excellence options into their health plan offerings that they did not provide the year before.
That said, the Center of Excellence adoption trendline is moving in the opposite direction for employers with between 1,000 and 4,999 employees, as well as for employers with 5,000 or more employees on their payrolls.
In 2023 among employers that offer health benefits and have between 1,000 and 4,999 employees, about 31% offered Center of Excellence programs for at least some conditions and/or procedures. By 2024, however, that percentage had shrunk to 29%.
The Center of Excellence participation slide was even more pronounced in firms that offer health benefits to their 5,000 or more employees, which decreased from 45% to 39% in a massive 6% year-over-year drop.
In this light, while Center of Excellence programs among health-benefit-offering employers may look stable across large employers with 200 or more employees as a whole, a small percentage gain among the subset of large employers that have the largest number of employers is offsetting more substantial participation loss among employers with 1000 or more employees.
Given that larger employers often have a disproportionate impact in shaping workplace trends and workforce expectations, Center of Excellence supporters and proponents seem to be losing ground in the most influential places, which does not bode well for these trends to turn around in the near future.
Centers of Excellence: Background
It’s been 11 years since 8 self-insured employers joined forces to establish the Employer Center of Excellence Network (ECEN), which has served as both a catalyst and model for the proliferation of Centers of Excellence since.
The plan was relatively simple: the group would identify and contract with a few select surgeons and hospitals throughout the country that could provide the highest quality of care at the lowest price for a few select, voluntary medical procedures.
By collaborating with other large healthcare purchasers and collectively funneling to those centers of excellence as many as possible of their employees who were seeking those select procedures, these employers realized they could create a situation that is mutually beneficial for all parties involved.
The doctors and hospitals obtain a pipeline of business that allows greater specialization and potential cost savings on the supply side of the healthcare equation, meanwhile, patients receive top-notch, specialized care at a bulk discount rate.
Employers, in turn, get lower and more consistent front-end costs on the procedure sticker price, as well as additional cost reduction on the back end from more consistent patient outcomes and fewer negative patient outcomes due to care provided by less specialized or skilled medical practitioners.
When the ECEN first launched in 2014, the group of select procedures was limited to just knee and hip replacement surgeries, but the group has since expanded to include a number of other conditions that can benefit from the model, including spinal procedures, cancer treatments, and organ transplants, for example.
How Do Centers for Excellence Reduce Costs?
The main benefit that Centers of Excellence provide to employers may be consistency, which is advantageous for employers on a few different fronts:
One study from Rand Corporation indicated that the Centers of Excellence they evaluated had reduced total costs for employers associated with the relevant procedures by more than 10% (cost savings per procedure averaged more than $16 thousand).
Patients saw even greater cost savings at almost 30% through reduced or removed copayments, which is an incentive many employers offer to encourage Centers of Excellence utilization.
Both patients and employers benefited from a readmission rate that was about 75% lower than the national average, as well.
Centers of Excellence: Flexibility vs. Rigidity
Even though the patient outcomes and reduced costs have served as effective positive incentive tools on their own to encourage employees to seek out Centers of Excellence for covered services, a significant proportion of employers see enough upside in Centers for Excellence programs that they supplement those incentives with additional sticks and/or carrots.
With regard to negative feedback and sticks, nearly 1 in 5 large employers that utilize Centers of Excellence programs require its employees to use those Centers for certain procedures without providing an alternative employer-sponsored option.
The larger the employer, the more likely the employer is to mandate Center of Excellence use, with only 14% of employers with between 200 and 999 employees requiring Center of Excellence utilization for prescribed conditions, while 27% of employers with between 1,000 and 4,999 employees and 31% of employers with 5,000 or more employees did so.
As for additional positive feedback and carrots to incentivize employees to take advantage of these programs beyond reduced costs, positive patient outcomes, and low readmission rates, a large number of employers also cover travel expenses that employees incur when visiting Centers of Excellence.
In 2024, 24% of employers with between 200 and 999 employees covered travel expenses for employees to seek care at Centers of Excellence, 25% of employers with between 1,000 and 4,999 covered these employee travel expenses, and 46% of employers with 5,000 or more employees covered them.
Mployer’s Take
It is entirely possible that the dip in Center of Excellence utilization among the largest employers in the US last year was anomalous and not indicative of these programs falling out of favor at the top of America’s most influential private organizations.
It’s also possible that covering travel expenses became increasingly expensive for employers as covered procedures evolved from relatively fast procedures with relatively short on-site recovery times, like hip and knee replacements, to more invasive procedures with longer recovery times, like organ transplants, and treatments that themselves are more complex and long-term, like certain cancer treatment regimens.
Whatever the case may be, it must be somewhat troubling for Centers of Excellence advocates to see the most pronounced reduction in utilization among the largest employers, however, given that Center of Excellence programs seem most aptly suited to the biggest organizations who can negotiate low fees, provide steady streams of patients from many corners of the country, and take advantage of these potential cost savings.
That said, because Centers for Excellence are such a relatively recent addition to the employer cost-saving repertoire, there is still a process of trial and error that is happening which may result in some fluctuation in participation percentages but will hopefully ultimately lead to greater efficiencies and a more streamlined menu of services that best work in Centers of Excellence models.
In the meantime, as those issues and efficiencies get sorted out, Centers of Excellence are likely to remain a prominent component of health benefits service delivery for the foreseeable future, and we’ll keep an eye on these utilization trend lines as they continue to take shape and organizations figure out how to best optimize these programs.
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.
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 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 last weeks of 2024, the Paperwork Burden Reduction Act and the Employer Reporting Improvement Act both became law.
The former will provide an alternative means for employers to distribute forms 1095-B and 1095-C to employees, and the latter extends the time employers have to respond to IRS notice of audit 226-J forms from 30 days to 90 days.
In 2025, the threshold for what qualifies as affordable coverage also increases from 8.39% to 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).
New York: Beginning March 4th, employers with 10 or more retail employees must have in place a written policy and training program for violence prevention measures.
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.
Large employers with an average of 50 or more full-time employees or the equivalent are required to either offer employees minimal, affordable health coverage or they must pay a penalty in the event that an employee secures health coverage with a premium tax credit via the exchanges.
In 2025, the threshold for what qualifies as affordable coverage increases from 8.39% to 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, which allows employers to avoid potentially paying the penalty.
You can read more about the affordability threshold here.
Key Takeaways:
Article: Is Remote Work More or Less Productive Than On-Site Work?
There is little debate about the significance that the COVID-19 pandemic has had in terms of enabling the rise of remote work and reshaping both the workplace and worker expectations as a result.
There is considerably more debate, however, about the impacts that remote and hybrid work have on worker productivity.
While attempts over the last few years to quantify change in productivity due to remote work have yielded mixed results, the Bureau of Labor Statistics recently published what appears to be the most comprehensive analysis of productivity as it relates to remote work yet, which yielded some very interesting insights about more than just remote worker productivity.
The Big Question: How Does Remote Work Productivity Compare to On-Site Work Productivity
The simplest answer to the question of whether or not remote work is more, less, or equally as productive as on-site work is that remote work is on average more productive than on-site work.
As is often the case, however, the simplest answer is not necessarily the most helpful or accurate one. There are a number of different factors that can influence whether remote work is more or less productive than on-site work, including industry type and size, as well as less easily generalized factors such as off-site working conditions, which can vary from one employee to the next.
How remote work is defined as well as how productivity is measured are also crucial considerations that can significantly affect whether remote work is more, less, or comparably productive.
The Rise of Remote Work Across Major Industries
Remote work predates the pandemic, of course, and in fact about 6.5% of private sector workers in the US were already working remotely in 2019.
With the implementation of social distancing policies as the Pandemic spread across the US in the spring of 2020, remote work saw a dramatic upswing in many sectors, with some industries seeing more than 30% increases in the proportion of their workforces that are working remotely.
For the following analysis, the term remote work encompasses both fully remote work and hybrid work arrangements where the majority of work is done off-site.
Remote work rose across all industries in the first years of the pandemic. Although the proportion of employees working remotely fell some as social distancing policies at the workplace expired, remote work still remains above 2019 levels in all industries except the agriculture, forestry, fishing, and hunting industry. This, however, is in part because that industry had one of the top 5 largest remote participation rates among industries even before the pandemic.
Although remote work participation increased across almost all industries into the early post-pandemic years, that increase has not been equally distributed, and some industries have seen much more substantial increases in remote work than others.
In 2019, there were only 5 industries with more than 10% of their workforces working remotely - professional, science, and technical services (16.5%); information (11.4%); finance and insurance (10.5%); real estate rental and leasing (12.4%); and agriculture, forestry, fishing, and hunting (13.6%).
By the end of 2022, however, more than 75% of major industries had at least 10% of their workforce working remotely.
In fact, as of the most recent data collection, there were only 5 major industries with less than 10% remote participation: retail (9.4%); mining (7.2%); construction (7.8%); food services (4.8%); and transportation and warehousing (8.8%).
At the same time, there are 4 major industries with more than 30% remote work participation, including 1 with more than 40%: information (38.8%); finance and insurance (37.6%); management of companies (33.0%); and professional, scientific, and technical services (41.4%).
Measuring Remote Work Productivity
While different firms have attempted to use a range of different metrics by which to evaluate remote work productivity, including emails sent, managerial performance reviews, and phone calls logged per hour for example, for the purposes of this analysis, productivity is measured by Total Factor Productivity (TFP).
TFP is calculated by dividing worker output by all the inputs that go into producing that output, which provides a more comprehensive and dynamic understanding of productivity as a function of the varied costs that facilitate production.
For example, TFP takes into account not only the reduced labor costs that can accompany remote work due to remote workers accepting lower wages in exchange for flexibility or because they live somewhere with a lower cost of living, but TFP also takes into account other inputs that can change as a result of remote work, such as reduced office space, utility usage, turnover/recruiting service needs, and on-site/local perks and benefits expenses per employee.
How Industry Type and Size Impact Remote Work Productivity
Industry Type
Each industry has its own set of challenges and opportunities when it comes to implementing remote work, and not all industries have been equally proactive in embracing remote work and/or capturing the maximum productivity/value from remote operational structures.
In that light, it does not necessarily follow that industries with higher TFP scores are better suited for remote work while industries with lower TFP scores are less well suited because the circumstances involved within each industry and how each has approached remote work can be radically different.
That said, some industries have certainly fared much better than others when it comes to retaining and increasing productivity output relative to input via remote work.
Some of the industries with the highest TFP ratio, indicating the greatest year-over-year growth in net output over input as remote work quickly escalated during the pandemic, include data processing, internet publishing, and other information services; funds, trusts, and other financial vehicles; publishing; rental and leasing; and chemical products.
Some of the industries with the lowest (negative) TFP ratios, indicating a loss of productivity correlated with the rise of remote work, include air transportation; oil and gas extraction; metal products; and performing arts, museums, spectator sports, and related activities.
The industries with the largest productivity gains as remote work rose during the pandemic were funds, trusts, and other financial vehicles; data processing, internet publishing, and other information services; computer system design and related services; and publishing services including software.
The only industries to record decreasing remote work productivity during the pandemic as measured by TFP are securities, commodities contracts, and other financial investments; insurance carriers and related activities; and broadcast and telecommunications.
Industry Size
Productivity gains must also be considered in light of industry size, with relatively smaller industries seeing more extreme productivity swings than relatively larger industries.
Some of the larger industries that recorded remote-work-induced productivity gains include construction; real estate; miscellaneous professional, scientific, and technical services; and federal reserve banks, credit intermediation, and related activities.
Some of the larger industries that experienced a net decrease in productivity because of remote work’s rapid adoption are retail; wholesale; broadcasting and telecommunications; insurance carriers and related activities; and ambulatory healthcare services.
In total, across the 61 industries that were analyzed, on average each 1% increase in remote work participation resulted in a 0.08% increase in TFP.
Mployer’s Take
With 7 out of the top 10 industries that recorded the largest increases in remote work during the pandemic all correspondingly increasing their output by a larger margin than their input costs, the correlation between remote work and increased productivity is clear.
That said, remote work is not a one-size-fits-all solution for every given job function or private organization let alone any/every industry.
Certain industries - especially those heavily involving tech, data, publishing, and professional and scientific services - seem to be particularly well-suited for remote working arrangements, while other industries with a disproportionately large number of location-specific jobs like retail, mining, transportation & warehousing, and construction, are less well-suited in general.
That said, within nearly every organization regardless of industry there are jobs that are primed for remote work, even if not every organization in every industry is equally prepared to capture the same value and productivity from remote arrangements where applicable.
Despite the growing evidence of the productivity benefits associated with remote work, however, many organizations may move away from and/or downsize remote programs in the coming years, especially if the job market shifts in favor of employers as it is likely to do.
Larger and older organizations with more established managerial structures may choose to bring employees back to on-site work for a variety of reasons such as fostering collaboration, justifying commercial real estate expenses, and encouraging voluntary turnover in line with planned reductions in the organization’s payroll.
Still, because remote work is most effectively utilized by smaller, more tech-heavy organizations, new market entrants will increasingly rely on remote work to capture the productivity benefits and gain an advantage over the entrenched players in their markets.
As a result, remote work is likely to see an upward trajectory over the long term as successful remote-friendly new entrants grow and absorb an increasing share of the market, but the short-term prospects for remote work growth remain uncertain and may be linked to the greater economy and job market.
As this analysis makes clear, however, on average, remote work is more productive than on-site work, and organizations that are best able to capture that value regardless of industry or organizational size/type can obtain and/or maintain a meaningful advantage over their competition.
Editor's Note: This report is based on survey data from December 2024 that was published in January 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)
Despite the expectation-exceeding quarter of a million net jobs added last month across the US, unemployment actually increased in 6 states and only decreased in 2 states, with the remaining 42 states and Washington DC showing no significant movement in either direction.
Payroll figures were even more steady month-to-month, with 48 states and DC seeing almost no change in payroll during December while only 2 states saw a net increase in payroll figures.
Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary for January 2025.
Nevada had the highest unemployment rate for the second consecutive month, holding steady at 5.7%, followed by California and Washington DC at 5.5%, Kentucky and Illinois at 5.2%, and Michigan at 5.0% unemployment.
All other states have unemployment rates that are at or below the national average of 4.1%
Mississippi and Alabama had the largest jumps in unemployment rate last month - both climbing from 3.1% to 3.3%. Colorado, Maine, Massachusetts, and Pennsylvania each saw their state unemployment rate climb by 0.1%, as well.
Over the last year, 28 states in total have recorded an increase in unemployment rate, with the steepest rises occurring in South Carolina (1.7%), Rhode Island (1.2%), Colorado (1.1%), and Indiana and Kansas at 1.1% each.
South Dakota has maintained the lowest unemployment rate in the country for the last 12 months in a row, staying consistently at 1.9% unemployment for the last 3 months.
Vermont has the next lowest unemployment rate at 2.4% followed by North Dakota at 2.5%.
In total, 21 states have employment rates below the US average of 4.1%.
Only 2 states recorded a decrease in unemployment over the last month - Minnesota, which saw its unemployment rate drop from 5.5% to 5.3%, and Montana, which saw its unemployment rate fall by 0.1% from 3.2% to 3.1%.
Over the last 12 months, 6 states in total have seen net unemployment rate reductions, led by Connecticut, which saw its unemployment rate decrease by 1.2% over the year, followed by Wisconsin and Arizona at minus 0.4% each.
No state recorded net job losses over the last month or the last year.
Texas and Missouri were the only states that had a net increase in payroll last month, adding about 37 thousand and 11 thousand jobs respectively.
Over the last year, 33 states have seen an increase in their payroll figures, with Texas and California reporting the largest number of net jobs added while Idaho had the largest percentage increase in payroll figures at plus 3.6%, followed by Missouri and South Carolina at 2.8% each.
Despite the downtick in the unemployment rate and huge over-performance of jobs reflected in this month’s Employment Situation release, there was relatively little evidence of those gains seen in the states, which were a model of stability nearly across the board.
Data from different labor surveys can and will often lead to results that don’t necessarily align, and that appears to be the case here.
Next month might provide some additional context that may help better interpret the disconnect between employment reports showing growth and those showing stability, but next month’s report will cover data collected on both sides of the transition from one session of Congress and one presidential administration to the next.
Whether there is much insight yet to be obtained about economic data at the close of the previous term will quickly become overshadowed by the potential economic implications of new policies that are proposed and enacted over these first few months of 2025.
With a flurry of activity both at the federal and state level already, including both legislation and executive orders that carry significant economic implications, that’s where we’ll be keeping an eye out in the months ahead as the economic and workforce impacts take shape.
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Key Takeaways
The Employers’ Guide To The H-1B Visa Debate
Despite having Republican’s sweep the November elections and win control of not only the White House, but also both chambers of Congress in Washington DC, a stark divide within the party emerged on the issue of H-1B Visas prior to taking formal control of the federal government.
On one side of the debate, head of the Department of Government Efficiency and advisor to the incoming president Elon Musk has taken a strong stance in favor of the H-1B visa program, which has resulted in considerable pushback from a significant portion of President Trump’s MAGA voter base.
In response to the growing debate, President Trump sided with Musk in support of H-1B visas, which seemed effective at preventing the dispute from escalating further, but it remains to be seen if/how that ideological division between MAGA leadership and the MAGA movement will impact H-1B policy going forward as actual legislation and regulation are put on the table in the coming months.
In light of the uncertainty about the fate of the program in the future, we thought it would be worth taking a look at H-1B visas to get a better understanding of the size of the program, the scope of impact that potential that could result from any proposed changes, and what industries and organizations are likely to bear the brunt of the potential impacts.
H-1B Visa Program Background
The H-1B visa program launched in 1990 as a means for employers to obtain temporary work visas for highly skilled foreign professionals who work in ‘specialty occupations’ - often requiring a college degree or higher and specialized, relevant skills - or as fashion models of distinguished skill.
While the program has evolved some over the years, for the last 2 decades the number of H-1B visas issued each year has been statutorily capped at 65,000 for standard H-1B visas plus an additional 20,000 for applicants with a master's degree or higher obtained from a US college or university.
H-1B visas are distributed via a lottery system and last for a duration of 3 years, although applicants frequently seek and are granted extensions beyond their initial term for a maximum of 6 years, after which time the applicant will need to reapply and obtain a new H-1B visa or the visa-holder must leave the country.
The H-1B Debate
The central question in the debate over H-1B visas is whether or not the H-1B program provides US companies with the talent necessary to keep ahead of and/or keep up with global competitors, or whether the H-1B visa program effectively suppresses wages for US workers by enabling US companies to access specialized labor at a discounted price.
In defense of the H-1B visa, Musk credited the H-1B program as the reason he’s in America, and he said it is responsible for bringing in so many critical people who helped build companies that made America strong.
Opponents of the H-1B visa program often concede that the program can serve a valid purpose in a relatively small portion of cases where a person with unique or rare skills, abilities, and experience must be recruited from outside the US.
In practice, however, opponents argue that the program is primarily used to recruit foreign workers with qualifications that are readily available among the US workforce but who are willing to accept lower wages in order to obtain a US visa, which works against the interests of similarly skilled US workers.
H-1B Visas By The Numbers
There are approximately 600 to 700 thousand foreign workers operating in the US under H-1B visas, but the H-1B visa-holding population tends to fluctuate cyclically.
The low point for the H-1B holders population comes at the end of each fiscal year when some foreign workers begin leaving the country to pursue new opportunities outside of the US before their visas expire, meanwhile, the annual H-1B cap has already been hit so no new foreign workers can replace them until the beginning of the next fiscal year, as depicted in the chart below.
Last year, employers submitted more than 850 thousand applications for H-1B visas, which is more than 10 times the 85,000 annual cap for new H-1B visas, so the demand for these specialized foreign workers among US companies significantly outpaces the available supply.
Demand for these visas among foreign workers is strong , with workers from India and to a lesser degree China accounting for the vast majority of H-1B visa-holders. For example, in 2023, 76% of H-1B visas were issued to workers from India, with the next largest proportion going to Chinese applicants (12%). Men also tend to be disproportionately represented, accounting for 71% of successful H-1B applicants in that same dataset.
The average salary for H-1B visa holders is just under $120,000 per year as of 2024, which is up slightly from about $115,000per year in 2023. As of the most recent data available, about 75% or 3 out of 4 jobs filled by H-1B visa-holders last year paid $150,000or less.
H-1B applications tend to be concentrated in computer science, IT, and/or finance-related work across a relatively limited range of industries, with a handful of tech companies dominating the H-1B lottery, followed by accounting/auditing firms, universities, investment banks, and consultancies.
Mployer’s Take
In the recent H-1B debate, both sides are right in a sense.
The H-1B program has been bringing top (largely tech) talent to the US since the days when the internet was coming through the phone lines, and that talent certainly contributed to building the global digital infrastructure that we’ve come to know today.
It’s also clear that the size of the tech industry where H-1B holders have largely landed and the demand for tech talent in general has grown much faster over the years than the number of H-1B visa holders available to fill that growing demand, so the impact of H-1B visas on the US tech labor force has actually shrunk over most of the last 35 years.
On the other hand, with potentially fewer than 6 million tech workers currently employed in the US, if 75% of H-1B visa-holders are doing or supporting tech work, that could account for almost 10% of jobs in the space and would drive down wages for US tech workers enough to validate their opposition to the program.
Given both Musk and Trump’s stated support, along with significant bipartisan endorsement, the H-1B program does not appear to be going anywhere anytime soon., Even if the program were significantly pared down, the resulting impact on wages would be negligible everywhere outside the tech industry.
That said, the impact of significantly reducing the H-1B program on US tech worker wages could be meaningful, and that is especially true when the tech industry is in a state of contraction itself.
Still, expansion of the H-1B program seems more likely than reduction, but in light of the pushback against H-1Bs we’ve seen from the Republican voter bloc over the last couple of months, any expansion that may be trial-ballooned is unlikely to bring the program back to anywhere near the level of influence it had on the tech industry in eras past.
Under business-as-usual circumstances, the H-1B program would carry on operating undisturbed just as it has for most of the past 20 years and the recent debate would be replaced by another that is just as soon forgotten, but with would-be agents of change like Musk bringing the issue to the spotlight, it is impossible to count out the possibility that the H-1B program could see a massive overhaul of one sort or another in the near future.
If expansion of the H-1B program is proposed in the next few years, it seems a strong possibility that it would be coupled with some kind of accompanying US technical skill training program to help offset any blowback from the base.
Regardless of how the H-1B program is managed over the next 4 years, however, the only real certainty is that the demand for these types of visas will remain strong among employers for as long as they are available, and that demand will likely continue to outpace the supply.
Editor's Note: This report is based on survey data from December 2024 that was published in January 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)
US employers added about 256 thousand jobs last month, which exceeded economists predictions of about 150 thousand jobs by nearly 79%.
The national unemployment dropping to 4.1% also bet forecasts, which were predicting the national unemployment rate from holding steady at 4.2%.
The number of people who permanently lost their job last month was down significantly from the month prior as well, down from almost 1.9 million people in November prior to 1.7 million as of the latest report.
There wasn’t much change in terms of the number of long-term unemployed and the labor force participation rate, which held steady at 1.6 million and 62.5%, respectively.
People working part time due to economic reasons (4.4 million) and people who want a job but haven’t looked for one in the last 4 weeks (5.5 million) also was similarly unchanged over the month, as was the 1.6 million people who are categorized as marginally attached to the workforce, meaning they want a job and had looked for one at some point in the past 12 months but had not done so in the past 4 weeks.
Of the net 256 thousand net new payroll entries over the course of December, the healthcare industry was responsible for the largest portion at 46 thousand new jobs, with the retail industry close behind at 45 thousand net new jobs after suffering a net job loss in November’ report.
About 33 thousand and 23 thousand government and social assistance jobs were added last month, as well, while most of the remaining industries saw little change in payroll figures during the month, including leisure & hospitality, natural resource extraction, construction, manufacturing, wholesale trade, information, financial activities, and professional and business services as well as other services.
Average hourly pay continued rising, this time by about 10 cents to $35.69 per hour (an increase of 0.3%), while the average workweek held steady at 34.3 hours per week.
This latest employment report marks the second consecutive month of job growth that far outpaces expectations, but those two strong months come on the heels of an especially weak one in October.
Still, given that strikes, natural disasters, and related data collection issues were significantly responsible for the down month, the two latest strong months look all the better by comparison.
The recent job market strength, however, bolsters the Federal Reserve’s case for delaying additional rate cuts and makes it very unlikely that we’ll see any rate cuts over the next several months, especially in light of uncertainty about whether the incoming Trump administration will follow through with tariffs and if so, how broadly impactful they may be, which the Fed will monitor closely in relation to any inflationary pressure the tariffs may cause.
While we won’t know much more about how the months and years ahead are primed to play out until power formally changes hands, it’s worth taking a look at some of the milestones from the past year as we wrap up some of the last data points from 2024.
Over the last year, US payrolls have increased by 2.2 million, for an average monthly net job gain of 186 thousand. Unemployment is up three-tenths of a point from a year ago, while average hourly wages are up almost 4%.
Other than comparing last year to 2023, when more than 3 million net jobs were added for an average monthly increase of more than a quarter million, it is hard to look at the 2024 numbers and not be impressed at the strength and resiliency of the labor market and economy generally throughout the year.
With the new year comes new data, new milestones to mark, and in this case, new policies that will shape the labor market and economy going forward for years to come, but overperformance has become the new normal over the past several years, even when plenty of economists were expecting economic downturn, and overperformance is almost certainly unsustainable in the long run as expectations adjust to correct for previous errors.
We would be lucky to keep up the streak, to be sure, but regardless, we will continue keeping an eye on the labor market and economy as new developments come about.
Check out the Mployer blog here.
Key Takeaways
ARTICLE I Do Your Employee Benefits Make The Grade?
We are thrilled to announce the launch of Insights+, a first-of-its-kind solution that helps employers understand exactly how their benefits compare to the market and communicate that value effectively. For a limited time, qualified employers can access Insights+ at no cost through the end of 2024.
In today’s competitive talent market, employee benefits play a critical role in attracting and retaining top talent. Employers invest millions into their benefit programs every year, yet many struggle to prove the value of their offerings to employees and job candidates. This creates a costly communication gap where employers provide significant benefits that employees fail to recognize—often undervaluing them by over 50%. On average, that represents about $12,000 in annual value per employee that goes unacknowledged.
With Insights+, we solve this challenge by combining data-driven benchmarking with tools to highlight the value of your benefits in a clear and meaningful way. Employers can now see exactly how their offerings compare to competitors in their region, industry, and size—then showcase this independent validation to their employees and recruits.
Click here to see if you qualify for the free Insights+ early adopter opportunity!
FREE Insights+ Reports For Qualifying Employers -
How Insights+ Works
The process is simple. Employers submit their current employee benefits guide or, if one isn’t available, complete a short questionnaire. Using our proprietary database of more than 20,000 employers, Insights+ analyzes the full scope of your benefits, including medical, ancillary, leave, and retirement offerings. Within days, you’ll receive a detailed, 25+ page report that benchmarks your plan against similar employers.
But Insights+ doesn’t stop there. Employers also receive customized recognition tools—including badges and shareable materials—that can be used to communicate the value of benefits during recruitment and to current employees. These materials are designed to help employers bridge the perception gap by providing employees and job seekers with an objective and transparent view of the benefits being offered.
Click Here For A FREE 15 Minute Insights+ Expert Consultation
Why Insights+ Matters
Employers dedicate substantial resources to employee benefits, with the average annual medical benefits investment per employee reaching $23,200. Despite this significant expenditure, employees often fail to recognize the full value of what they receive, estimating the investment at just $11,200. This disconnect between actual and perceived value leaves employees undervaluing their benefits by more than half, which diminishes the impact of those benefits on both satisfaction and retention.
This perception gap isn’t just a communication failure—it’s a lost opportunity. Benefits are a key driver of employee satisfaction, yet when employees don’t understand their value, employers struggle to fully leverage their offerings. Insights+ solves this challenge by providing a transparent, independent analysis of benefit offerings that validates their true worth. Employers receive tools to effectively communicate the significance of their benefits package to both employees and recruits, ensuring that these investments drive the retention, satisfaction, and loyalty they are designed to achieve.
By bridging the gap between what employers provide and what employees perceive, Insights+ helps organizations unlock the full potential of their benefits program, ultimately improving workforce morale and amplifying their competitive advantage in the talent market.
Employee Benefits: A Missed Opportunity for Employers
Employee benefits consistently rank as one of the most important factors in hiring decisions. According to our research, 88% of job seekers evaluate benefits as part of their job search, yet only 22% of employers actively promote their benefits during recruitment. This creates a substantial gap between what candidates need to make informed decisions and what employers provide. For organizations that already offer strong benefits packages, this lack of communication is a missed opportunity to differentiate themselves in a competitive hiring environment.
The failure to clearly convey benefits not only impacts recruitment but also employee retention. When employees lack a proper understanding of their benefits, they are less likely to appreciate their employer’s investment in their well-being. For instance, many employees vastly underestimate how much their employer contributes to their healthcare, with responses ranging from less than 20% to over 80%. These varying perceptions reveal how poorly benefits information is understood across workforces, making it harder for employers to build trust and satisfaction.
Insights+ addresses these issues by offering tools that allow employers to present their benefits clearly, transparently, and effectively. With customized, shareable materials and independent verification of benefit value, employers can close the communication gap and ensure that employees and candidates alike fully understand what is being offered. This transparency enhances recruitment efforts, strengthens retention, and builds a more engaged workforce by helping employees see their employer as a true partner in their well-being.
The Bottom Line for Employers
Insights+ represents a major step forward for employers looking to maximize the impact of their benefits investments. For organizations already offering competitive benefits, Insights+ provides a way to highlight and promote their offerings to recruits and employees. For those whose benefits lag behind, the detailed benchmarking analysis identifies clear opportunities for improvement, helping employers align their benefits strategy with workforce expectations.
Even companies not looking to expand their benefits offerings can use Insights+ to identify cost-effective strategies for targeting candidates whose expectations align with their current plans. In every case, Insights+ delivers actionable insights that help employers achieve faster hiring, stronger retention, and better ROI on their benefits spending.
Mployer’s Take
We believe that transparency and data are critical to helping employers make smarter, more strategic decisions about their benefits. Insights+ delivers on this belief by giving employers the tools they need to evaluate, validate, and communicate the value of their benefits offerings.
For a limited time, we are offering Insights+ at no cost for qualified employers. Don’t miss this opportunity to see how your benefits stack up—and start using the tools that can transform your recruitment and retention efforts.
If you’re interested in seeing how your plan compares, click here to access your free Insights+ report for qualifying employers - otherwise, keep an eye out in future newsletter installments and on the Mployer blog for more information about the program coming soon!
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.
Beginning on January 13, 2025, the extension period for certain renewal Employee Authorization Document (EAD) applications filed on May 4, 2022 or later is now 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 Paperwork Burden Reduction Act and the Employer Reporting Improvement Act both became law.
The former will provide an alternative means for employers to distribute forms 1095-B and 1095-C to employees, and the latter extends the time employers have to respond to IRS notice of audit 226-J forms from 30 days to 90 days.
In 2025, the threshold for what qualifies as affordable coverage also increases from 8.39% to 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.
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.
New York: New York employers that receive criminal history records for applicants and employees must 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.
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.
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.
Editor's Note: This report is based on survey data from November 2024 that was published in December 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)
Last month, the national unemployment rate rose to 4.2% (up one-tenth of a percentage point), but only 6 states saw their state-level unemployment go up while one state saw a decrease in unemployment and all the rest saw no significant change in state employment levels.
US employers added more than a quarter of a million jobs at the same time, but only 4 states plus Washington DC recorded a net increase in payroll figures, while the remaining 46 states saw no noteworthy change over the month.
Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary for October 2024.
Nevada had the highest unemployment rate last month at 5.7%, which is up almost one-tenth of a point over the month and about four-tenths of a point over the last year.
Washington DC has the next highest unemployment rate at 5.6%, followed by California at 5.4% and Illinois at 5.3% unemployment.
Those are the only states that currently have unemployment rates above the national average of 4.2%, with Idaho having the next highest unemployment rate at 3.7%.
Last month, 6 states recorded a higher unemployment rate than the month before, led by Alabama, Maine, and Mississippi, which all saw their unemployment rates climb from 2.9% to 3.1% over the course of the month. Iowa (now 3.1%), Kansas (now 3.5%), and Vermont (now 2.4%) all saw the unemployment rates in their states increase by 0.1%.
Over the last year, 26 states have experienced rising unemployment, with the largest percentage increases going to South Carolina (plus 1.8%), Rhode Island (plus 1.4%), and Colorado (plus 1.0%).
South Dakota is now 1 month shy of hitting the 1-year mark of consecutive months with the lowest unemployment rate among states - this month holding steady month-to-month at 1.9%.
The next lowest unemployment rate was 2.4% - recorded by both North Dakota and Vermont - which is more than half of a percentage point above South Dakota’s level, which further reinforces just how strong South Dakota’s labor market has been.
Delaware was the only state that experienced a net reduction in unemployment over the month, dropping one-tenth of a point from 4.0% to 3.9%.
Over the last 12 months, 6 states have recorded a net decrease in unemployment, but the largest reduction by far occurred in Connecticut where unemployment fell by 1.2% over the last year, followed by Wisconsin and Arizona, which each fell by only half a point each.
No state recorded net job losses over the last month or the last year.
Employers in the state of Florida added more net jobs last month than any other state, increasing payrolls by more than 60 thousand, while Washington state had the next largest gain, adding a little more than 30 thousand net jobs over the month.
Washington also had the largest percentage gain, increasing their workforce by 0.9%, followed by Alaska and Washington DC at 0.7% each, Florida at 0.6%, and Kansas at plus 0.5%.
Over the last year, 33 states have recorded statistically significant increases in net jobs.
Texas and California had the largest net increase in raw job figures at about 274 thousand and 208 thousand, respectively, while Idaho had the largest percentage growth (3.1%) followed by Alaska (2.8%), Missouri (2.7%), and Montana (2.4%).
Not much has changed on the surface, but several external factors are in flux that could significantly shift the economic outlook over the coming months (and years) depending upon how they resolve.
The current report is the third to last such dataset that will be compiled by the outgoing Biden administration, and there are still a number of uncertainties that remain about the priorities of the incoming administration and how the transfer of power will impact the economy and labor market, both in the short and long term.
While Congress was able to avert a government shutdown at the end of last week by passing a last-minute continuing resolution, that bill will only keep the government funded for a couple of months through the middle of March when Republicans will control all 3 branches of the federal government, and how they elect to respond to current inter and intra party disputes will have significant ramifications outside of DC, of course.
The end of last week also brought another quarter-point interest rate cut from the Federal Reserve, but that news wasn’t entirely well-received given that it was accompanied by statements from Fed Chair Jerome Powell indicating the Fed will probably only cut another half point from interest rates over the course of 2025, which is half of what many analysts were expecting.
The stock market ended the week on an upturn due to better-than-expected inflation data, but that upturn followed nearly 2 weeks of consecutive losses punctuated by an almost 3% drop on the day of the Fed’s announcement, and while the markets are up close to 10% over the last 6 months, they are down more than 2% over the week/month.
While there are certainly many questions up in the air about how the economic road ahead will unfold, we are unlikely to get many meaningful answers for at least another month and likely more.
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Editor's Note: This report is based on survey data from November 2024 that was published in December 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)
The national unemployment rate average ticked up one-tenth of a point to 4.2% last month as US employers added 227 thousand jobs, outpacing the approximate 200 thousand jobs that economists were predicting.
The number of unemployed people held comparably steady at about 7.1 million, as well, with about 1.7 million (17%) qualifying as long-term unemployed. The number of unemployed people has risen by around 800 thousand over the last 12 months, while the number of long-term unemployed has risen by about 500 thousand over the same time period.
Those figures, however, do not account for the nearly 5.5 million people who are not counted as unemployed because they have not been actively looking for work in the past 4 weeks.
Also, it’s worth noting that about 4.5 million people are currently employed part time for economic reasons, which is up from about 4 million people who fell into that category a year ago.
Altogether, the figures show general resilience and a strong rebound from last month’s hurricane and strike-induced dip, but the full economic picture is not entirely sunny, and evidence of some softening in the labor market persists.
That said, there’s not much of said evidence to be found in the jobs numbers, however, with 227 net new payroll entries over the month, but it could be argued that the concentration of new jobs across a relatively few industries is less than ideal.
For example, the healthcare industry and leisure & hospitality industry each added about 54 thousand net jobs, which collectively account for nearly half of the total job additions last month. Further, both the healthcare and leisure & hospitality job figures last month were essentially on par with their monthly averages, meaning that last month’s payroll additions were essentially right on the trendline.
Employment figures in government and transportation equipment manufacturing each rose by about a little over 30 thousand jobs, while the social assistance industry saw a net addition of about 20 thousand jobs.
There was little to no noteworthy change in the other industries with the exception of the retail industry which saw a net loss of nearly 30 thousand jobs over the course of November.
Average hourly pay continued its general upward trend climbing 13 cents to $35.61 per hour while the average workweek climbed one-tenth of an hour to 34.3 hours per week.
Average hourly pay is up 4% over the last 12 months.
In light of this most recent batch of economic data, last month’s report of only 12 thousand new jobs looks more like an outlier than evidence of a rapid cooling in the job market.
Although the upward revision to last month’s numbers of about 36 thousand jobs could look huge by some measures (plus 200% upward revision) or fairly insignificant by others (post-revision new payroll entries in October were still only about 25% of the average 186 thousand new jobs added each month over the last 12), the reality is that last month’s performance reflected hurricane and strike related data aberrations more than changing macroeconomic conditions.
Despite this positive jobs report, markets have not been dissuaded from believing another interest rate cut is likely in store when Federal Reserve leadership convenes again later this month.
Still, the outlook is not entirely positive across the board, with a decreasing number in job postings across nearly every industry, for example, indicating the job market is expected to continue cooling - which is in part why continued rate cuts are forecast.
What likely matters more at the moment than the bigger picture environmental factors that are shaping the current economic trends, however, are the political and regulatory factors that will begin impacting the labor market and US/world economies in general when control of the White House and US senate changes hands in the new year.
Even with Republicans in control of all 3 branches of the federal government, there remains a great deal of uncertainty both about which proposals they will pursue and prioritize, many of which can have significant impacts to the economy and labor force (e.g. tariffs, taxes, collective bargaining legislation).
That lack of clarity will begin coming into focus in 2025.
Check out the Mployer blog here.
Editor's Note: This report is based on survey data from October 2024 that was published in November 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)
There was no significant change in the national unemployment rate, which held steady at 4.1% over the month, nor was there any meaningful movement in national payroll figures, which fell far short of expectations and amounted to a net increase of only about 12,000 jobs.
The vast majority of states saw comparably little change in their in-state unemployment rates and payroll figures, although 3 states recorded an increase in unemployment throughout October (while 1 state recorded an unemployment rate reduction) and 2 states recorded a net decrease in jobs.
Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary for October 2024.
Washington DC had the highest unemployment rate among ‘states’ for the 6th month in a row - holding steady at 5.7% - joined this month by Nevada which saw its unemployment rate climb by one-tenth of a point over the month up from 5.6%.
California and Illinois are the only other states to have unemployment rates higher than the US national average. Those rates are currently 5.4% and 5.3%, respectively.
Over the course of the last month, Iowa is the only other state that saw its unemployment rate rise by a significant margin, rising from 2.9% to 3%.
In the last year, 25 states have seen their unemployment rates go up, led by South Carolina, Rhode Island, and Indiana with unemployment rate increases of 1.7%, 1.2%, and 0.9%, respectively over the last 12 months.
For the 10th consecutive month, South Dakota has recorded the lowest unemployment rate in the country, dropping one-tenth of a point to 1.9% after holding steady at 2% unemployment for several months prior.
Those figures put South Dakota’s unemployment rate nearly half a point below the next lowest unemployment rate among states, which is Vermont at 2.3%, followed by North Dakota and New Hampshire at 2.4% and 2.5%, respectively.
Besides South Dakota, the only other states to record a decrease in unemployment rate over October are Connecticut and Delaware, which saw their in-state unemployment rates reduced by 0.2% each last month.
Over the last year, 6 states in total have seen a net reduction in unemployment, with the largest unemployment rate decrease over the last 12 months being recorded by Connecticut (minus 1.2%), followed by Arizona (minus 0.6%), Maine and Wisconsin (minus 0.5%), Arkansas (minus 0.4%), and Kentucky (minus 0.2%).
Florida and Washington state both recorded net job losses last month amounting to about 37 thousand jobs each representing 0.4% and 1% in-state workforce losses, respectively.
No state recorded net job losses over the last 12 months.
No state recorded a significant net increase in jobs over the last month, but just over half of all states (27) recorded net job gains over the last year.
In terms of raw job figures, Texas saw the largest number of new job additions at about 275 thousand payroll entries through the last 12 months, followed by California at about 212 thousand, and New York and Florida at about 133 thousand net jobs each.
Idaho has the largest net job gains over the last year as a percentage of in-state workforce (plus 3.1%), followed by Missouri and South Carolina at plus 2.7% each.
In some ways, this latest market employment report looks like a picture of stability at face value given that the unemployment and job numbers have barely budged since last month’s report.
What’s missing from the report, however, is consistency and predictability, as evidenced by the job forecasts exceeding the actual number of net new jobs recorded by a factor of 10.
To be clear, these job numbers are difficult to take at face value, as well, in light of the disruptions to both data collection and hiring caused by external factors such as hurricanes and strikes that occurred when this data was being reported and compiled.
That said, given that the average monthly job growth over the past year has been nearly 200 thousand net new jobs per month, it is exceedingly unlikely that those external factors can account for the entirety of the shortfall.
The labor market certainly seems to be continuing to soften to some degree, though the extent remains to be seen, but that softening was very much expected and in fact is an intended result of the interest rate hikes to help reduce inflation without triggering a recession.
With inflation down to 2.6% annualized and no apparent imminent recession on the way, and with the Federal Reserve already having cut baseline interest rates by half a point over the last couple of months while signaling more cuts for 2025, the soft-landing sought by the Fed seems to have been successfully executed.
Of course, there is no hard cut-off date by which the success of the interest-rate-hiking campaign and the soft landing will ultimately be evaluated, and the current inertia of the labor market could result in continued softening even with interest rates already starting to come down.
While there is no set bookend for evaluating the Fed’s soft-landing, however, there likely is a bookend on Fed Chair Jerome Powell’s remaining time in his current role given that his term is set to expire in May of 2026.
Assuming Chairman Powell serves out the remainder of his term, which he appears intent to do, we can reasonably expect continuity at the Fed and whatever economic consistency that continuity helps foster for nearly another year and a half after power in the White House and US Senate changes hands in the new year.
The bigger questions in the nearer term are what new policies we are going to see as a result of the shifting power (e.g. tariffs, tax cuts, work visas, labor regulations) and how those policies affect the current economic trajectory and momentum.
We will be keeping an eye on those policies as they emerge and take shape through the governing process in the months ahead.
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Key Takeaways
ARTICLE | 3 Questions That Will Determine How The 2024 Elections Impact Employer-Sponsored Healthcare
The 2024 elections are now in the books, and while votes are still being counted and will continue being counted for the next week or two at least, there are only a few handfuls of races at this point where there remains much uncertainty about the outcome.
As of this writing, control of the US House of Representatives has yet to be officially called, but in order to take the majority Democrats would essentially need to flip 6 of 8 swing districts that have yet to announce winners, all of which are seats held by Republicans currently, so it’s a tall order for Dems to say the least.
Given these odds and given that Donald Trump and a majority of Senate Republicans have already decisively won their respective elections, it is very likely the case that Republicans will soon control just about all the levers of power in the federal government, including a supermajority of Republican appointees on the Supreme Court.
Although the Senate majority will not be filibuster-proof, which is the one check on power that Democratic politicians in the federal government will maintain over the next 2 years, it’s fair to say that Republicans have a pretty clear path for the foreseeable future to enact whatever policies they choose.
With that in mind, we wanted to take a look at the 3 most significant open questions concerning how the incoming GOP majority will govern with respect to the US healthcare system - specifically in terms of how such changes may impact employer-sponsored health insurance - in order to shine some light on where we may be heading in the coming term.
One of the biggest unanswered questions at the moment with the greatest potential to impact employer-sponsored healthcare is whether or not the GOP will attempt again to repeal the Affordable Care Act, and if so, what if anything will they replace it with?
Of all the potential changes a future Trump administration and Republican Congress/Judiciary might make/allow, repealing the ACA may have the most far-reaching and significant implications from an employer’s perspective.
For employers, repeal of the ACA as-is would mean not only the elimination of penalties for failing to offer minimum-standard-meeting health insurance to employees (or possibly the reduction of those penalties in the event of repeal and replace), repeal of the ACA would also remove/reduce the minimum standards that those policies must meet in order to be brought to market in the first place.
From a practical standpoint, the elimination or reduced efficacy of the exchange system will likely have some major repercussions as well, as will ending coverage protection for people with pre-existing conditions, both of which will increase the perceived value of strong employer-sponsored benefit packages and can support talent attraction and retention efforts.
There are also a number of somewhat less significant potential outcomes that could be expected in the wake of ACA repeal and are still impactful enough to be worth noting, including reduced administrative requirements/costs and reduced or eliminated wellness program subsidies.
The downsides to eliminating everything from subsidies to preexisting condition coverage protections and the exchanges themselves will be substantial, however, given that the number of uninsured people would climb significantly in each case and the costs resulting from their lack of preventative care and emergency room dependence will ultimately make its way to commercial group plans and employer bottom lines.
To be clear, it is not at all a foregone conclusion that the GOP will use their control of government to repeal the ACA within the next couple of years.
For one, the ACA was only about 7 years old the last time that the GOP was in power and initially attempted to repeal it, and it’s been about 7 years since then during which time ACA provisions and expectations have become all the more entrenched within our healthcare system.
Further, while the outspoken calls for repeal of the ACA from both Republican leadership and Republican rank-and-file alike have never gone away entirely, they have become much quieter in recent years, perhaps partly in response to the pandemic and the attention it drew to both public and personal health matters.
There is certainly a degree of disagreement within the Republican party about the best path forward in terms of improving the US healthcare system, especially as it relates to the ACA, and in fact many individual Republican politicians have had different views on these matters at different times themselves, adding additional complication to the task of anticipating how it will play out when power transfers in the new year.
In a previous piece, we covered some of President-elect Donald Trump’s positions on various healthcare-related issues including the ACA as outlined by the actions he took during his previous administration as well as statements he made on the topic at the time and since.
Early in his first term, for example, Trump supported the attempted repeal of the ACA, but it is not at all certain that he will support doing so again given competing priorities and given that the healthcare exchanges and ACA infrastructure are further established and ingrained in our healthcare system now than when repeal last failed.
In fact, in a statement from March of this year, Trump said that he was not running to ‘terminate’ the ACA and instead wanted to improve it and make it less expensive, although he did not supply further detail as to how these goals would be accomplished.
During his first term, Trump did implement some ACA cost-saving measures such as allowing enhanced ACA direct enrollment through online brokers and reducing funding for outreach and enrollment assistance, but he also weakened individual mandate enforcement, resulting in reduced revenue to offset the costs of the program.
If cost-cutting is the goal and if they revive the strategy of reshaping the ACA via relatively small changes as opposed to a one-fell-swoop overhaul/repeal, it’s a good bet that the premium tax credits through the exchanges will not be renewed when they expire in 2025, for one.
Exempting employers from ACA contraception coverage requirements is another action the previous Trump administration took and the future Trump administration is likely to revisit, as is reinstating short-term non-ACA-compliant insurance options, as well.
Of course, Trump isn’t the only Republican leader who has offered somewhat mixed messages with regard to the future of the ACA.
After declaring ‘no Obamacare’ at a rally in Pennsylvania, when reports interpreted this statement as an indication of his intent to repeal the ACA, Johnson clarified that is not what he said.
Trump’s running mate and soon-to-be Vice President JD Vance, on the other hand, has signaled more direct support for the ACA, even telling an anecdote at the vice presidential debate about how his mother bought health insurance via Obamacare.
That said, Vance has also floated proposals for plans that undermine and run counter to the ACA, like allowing health insurers to stratify their groups which would reduce premium expenses for younger and healthier people but would cause them to increase significantly for older people and people with pre-existing conditions.
Perhaps the biggest question mark about the future of the ACA involves the incoming Senate Majority leader. With Mitch McConnell set to step down as top Republican in the Senate, however, and with no obvious successor at the moment, there is no clear answer about how the ACA will be approached by the leader of the House of Congress that is likely to play the most significant role in determining the future of the ACA.
One fairly consistent theme across much of the ideology expressed by Republicans has been giving more power to states in making policy decisions in many situations.
In Trump’s first term, we saw this transfer of power manifest via Medicaid block grants and allowing states to mandate work requirements, for example, and has reemerged in Trump’s promises for his second term as well, exemplified by the stated plan to dismantle the Department of Education and allow each state to manage its internal public education without much federal assistance or oversight.
As laws and regulations become decentralized, however, keeping up with compliance can become more cumbersome, especially for large employers operating in multiple states, and that problem gets amplified as the variance in rules between states grows over time.
Furthermore, differences in policy from one state to another can have significant effects on attracting and retaining talent in some areas of the country, which can be a benefit to attraction and retention efforts in cases such as low/no income tax states, but state-level policy can be a detriment to talent attraction and attention when those policies are contentious and considered off-putting to various groups of potential candidates, especially when it comes to health issues.
There are more than a few such contentious state health-related policy considerations that can affect candidate perception of a potential relocation site including issues ranging from disability accommodations to gender-affirming care access and vaccine mandates, but there is no more contentious now-state-level healthcare issue than abortion, which has significant implications for employers not only with regard to talent recruitment but also family planning as it relates to business operational efficiency.
While some Republican leaders have called for a national abortion ban over the last couple of years after the Supreme Court overturned Roe v. Wade, Trump has repeatedly stated that he favors leaving abortion up to the states and that he will not sign a national abortion ban.
Speaker Johnson, however, appears less opposed to a national abortion ban, but he recently stated that he thinks it would be too soon to introduce such a ban within the next year without having first built political consensus for such a measure.
Perhaps the biggest question marks surrounding these statements for both supporters and opponents of abortion rights, however, is whether or not the statements refer exclusively to an outright ban or if they also encompass achieving the same or similar results via other means, such as banning abortion drug mifepristone, enacting fetal personhood, and/or legislating additional abortion restrictions that don’t constitute a total national ban.
Even in the event of additional national abortion restrictions of some kind, however, it’s important to keep in mind that those restrictions are likely to set a minimum standard that states can then go beyond in terms of implementing additional restrictions if they elect to do so.
As a result, both the perception and the reality of abortion access and the correlated access to other reproductive healthcare may continue to grow as factors influencing candidates’ willingness to work in certain locations.
Further, a piecemeal approach to abortion and reproductive healthcare access across states will make issues involving contraception access all the more relevant, especially in places with more limited abortion access.
As already noted, Trump exempted employers from complying with ACA contraception requirements based on moral and religious grounds, which is a policy that seems likely to be reinstated.
That policy, however, may make certain aspects of family planning considerably more complicated for a large number of employees, which in turn may negatively impact employers not only by shrinking the talent pool of labor willing to work for some employers in the first place but also by reducing the potential availability of the labor that is accessible to them as a result of employees having less control over if and when they have children.
In attempting to reform the healthcare system absent successfully repealing ACA, the first Trump administration turned much of its attention to addressing the rapidly rising costs of care.
Some of those cost-saving measures that were implemented were systemic reforms that share wide bi-partisan support such as efforts to lower prescription drug prices, increase cost transparency, and improve provider billing practices, all of which are goals that the Biden administration has pursued in the interim as well, so there shouldn’t be a much of a shift on these fronts when Trump retakes office.
The Biden administration, however, did not continue some other measures related to privatization and consolidation that the first Trump administration implemented with an aim to reduce healthcare expenses, for example promoting Medicare Advantage at the expense of Medicaid and showing a greater willingness to greenlight mergers and acquisitions across the healthcare business spectrum.
A second Trump administration is expected to continue its support for both Medicare Advantage and a robust M&A environment in the healthcare space, which will likely be a benefit to companies that are able to join forces and diversify via merger, but the ultimate impact on costs for employer-sponsored plans from these consolidations remains to be seen.
As healthcare and healthcare-adjacent companies consolidate, grow, and absorb accounts and market share over the next couple of years, employers would be wise to stay proactive in working with their insurance brokers and consultants to monitor how the shifting landscape may impact coverage going forward as policies change hands and terms and conditions evolve.
There are several reasons that there are still major questions about how the GOP will approach healthcare despite the fact that the president-elect has previously held office and just completed a years-long campaign that included major media interviews, two debates, and quite a few political rallies.
In terms of historical data, we of course know what Trump did the last time he was president when he also happened to start the term with majority support in both Houses of Congress and the Supreme Court, but that evidence of action is somewhat incomplete given how much time and resources the GOP invested in repealing the ACA only to come up a few votes short.
After unsuccessfully repealing and replacing the ACA, many of the other healthcare-related policy changes enacted in Trump’s first term felt more like afterthoughts than a fully formed representation of Republican healthcare goals at the time, and as noted above, full repeal of the ACA seems less likely now than it did then.
As for why we don’t have better information about Trump and the GOP’s healthcare plans going forward, the fault largely lies with the voters in a sense. Since election polling this cycle consistently revealed that healthcare was not one of the most pressing issues on voters’ minds, candidates up and down the ticket on both sides of the aisle largely neglected the topic on the campaign trail, and the media did the same for the same reason.
It’s most likely not the case, however, that healthcare became less of a priority to voters than it has been over the last 20 years, especially still living in the aftermath of a recent global pandemic. It’s probable that other issues like the economy, immigration, and abortion have become more urgent in recent years in a lot of voters’ minds and they simply jumped to the front of the line.
Regardless of why we know relatively little about the GOP’s healthcare priorities, assuming that Republicans do ultimately hold onto the House of Representatives when the final vote tally is complete, at this point it shouldn’t take long for those priorities to become clear.
Although their majorities will be slim in Congress, Republicans and Republicans alone are likely to be setting the agenda in a matter of months, and we’ll be back to weigh in with our take as those plans come into focus.
Editor's Note: This report is based on survey data from October 2024 that was published in November 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)
The unemployment rate held steady at 4.1% for the second straight month, while US employers added around 12 thousand jobs, which was about 90% below growth estimates.
Not only was the labor market essentially unchanged over the month, there also wasn’t much noteworthy change over the year in terms of the unemployment rate, which rose just three-tenths of a percent from 3.8% over the last 12 months.
The number of people who qualify as long-term unemployed after remaining jobless for at least 27 weeks also showed little movement at about 1.6 million people, as did the number of people not currently in the labor force but want a job despite not actively looking for one (7.3 million).
To be clear, however, while most of these metrics were fairly consistent from month to month, seeing the number of new payroll entries fall so far beneath the predicted levels does represent a significant departure from the norm in recent years.
Still, the vast majority of industries recorded little to no meaningful change in payroll entries over the month, including construction, natural resource extraction, wholesale, retail, information services, transportation & warehousing, and leisure & hospitality.
The healthcare industry saw the largest number of new jobs last month at 52 thousand, which is just below the average monthly growth recorded in the healthcare industry over the past 12 months.
The government sector recorded an increase of about 40 thousand jobs last month, as well, which was similarly in line with the monthly average of about 43 thousand.
The number of temporary employees and manufacturing employees, however, declined by about 50 thousand each over the course of October, with manufacturing strikes playing a significant role in the latter reduction.
Meanwhile, the average workweek was essentially unchanged at 34.3 hours per week while average hourly pay spiked 13 cents for the second straight month based on initially-reported figures, rising to $35.46 per hour and representing a 0.4% increase over the month before.
From one perspective, this report looks like the picture of stability - with practically no perceptible change to either the unemployment rate or the payroll figures. Taking that angle, this report may represent a reversion to the mean after a couple of years when the market has been particularly hot, but it is generally indicative of business as usual.
From another perspective, this report looks like the job growth figures just fell off of a cliff, coming up about 100 thousand jobs short of forecasts and almost 200 thousand short of average monthly job growth over the past year. This vantage point might suggest that recession is imminent.
The reality is that this report largely represents an incomplete picture and may in fact not be a fair reflection of the current state of the labor market. Factors such as Hurricane Milton, Hurricane Helen, and the Boeing strike among others have potentially skewed the jobs data via disruptions not only in the ability of companies to conduct businesses, service customers, and hire employees according to demand, but there have also been disruptions in the data collection process that could be influencing the report, as well.
That said, the job numbers from the last couple of months were also revised downward in the latest report by more than 100 thousand collectively, the unemployment rate was stabilized in part by job-seekers at least temporarily abandoning the job hunt, and the data collection period was still within statistically acceptable ranges despite being cut short.
Put more succinctly, hurricanes and strikes significantly impacted the latest employment release, but the softening we may be seeing in the job market may go beyond those impacts alone.
For one, the upcoming elections and the uncertainty surrounding the distribution of power among state and federal offices alike may well be influencing business decisions in the short term before some of those uncertainties are resolved.
In any case, both hurricane season and election season will be over in a matter of weeks and we’ll get a better look at how the markets and economy are likely to respond heading into the new year.
Check out the Mployer blog here.
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