The future of hourly pay

March 07, 2021

Going from reactive to strategic and from anecdotes to facts

“I’m losing all my workers! They’re going next door for $2 an hour more than we pay! HR, you’ve got to do something about this!” — Joe Manager, Manufacturing Plant

Sound familiar? If you’re working in a company that needs a significant number of hourly workers to succeed, I’m sure you’ve had these conversations with managers and leaders.

And what tends to happen next? Well, we’ve all done it — you start looking at job boards and postings as well as reaching out to ex or current employees to gather whatever intel you can. Often, you end up making decisions based on anecdotes, not really able to find a lot of concrete data that can allow you to proactively plan to stay competitive in your local hourly market. You wish this were different, but there just doesn’t seem to be any hourly tools or surveys on the market that will meet your needs.

Until now…

The Mercer Hourly Compensation Tool will provide you with robust hourly data showing you what your labor market competitors are paying today, as well as how the market is directionally moving.

Labor market is the challenge

As with any market pricing, the key to success is truly understanding your labor market, and how it differs for each job. With hourly jobs, the labor market is unique — it’s both narrow and broad, all at once. Let’s look at the specific challenges.

  • Narrow: When you recruit for employees to fill hourly roles, typically the labor market is defined by a reasonable amount of commuting time for the employees as hourly workers predominately perform their job in-person and on set schedules. Unlike salaried jobs, no one is going to drive an hour or more and risk delays from traffic for an hourly job. Often the employees applying for these roles may have transportation challenges as well — single car households with multiple workers, reliance on public transportation, or even needing to be in walking distance of the job. For this reason, the labor market is particularly narrow when it comes to geography — specific to your town or zip code. When using typical salary surveys, it’s often difficult to find deep enough data at the zip code or city level that would allow you to confidently set hourly pay rates.
  • Broad: Though narrow geographically, the labor market for many hourly jobs is fairly broad when it comes to industries and specific jobs. Rather than needing someone with experience in your industry that has worked in a specific job, you’re typically looking for candidates with particular skills and abilities that can learn what’s needed on the job. For example, Mercer recently conducted an analysis for a healthcare provider and found that 31% of their entry level patient care roles were being filled by candidates coming from non-healthcare positions, such as retail clerks and call center customer service. This presents a challenge when trying to price hourly jobs given that most companies have access to industry specific salary surveys and possibly a general industry survey. How are they supposed to efficiently use that data to create a profile of a more generic skills-based profile that represents what they’re looking for in the market? It’s possible, sure, but not easy.

As the world is changing rapidly, for hourly roles we need to be able to quickly access data across industries and locales, while still having the ability to get very specific when necessary. Typically, this would mean investing in a library of surveys and compensation tools to be able to have this flexibility.

Not anymore.

Revolutionizing hourly market pricing

With the Mercer Hourly Compensation Tool, you will no longer have to piece together your hourly pay rates using not-the-best-fit data and anecdotes from managers and employees. You will now have access to a whole library of hourly jobs from multiple industry surveys and the ability to be as specific or broad as you want. Of course, it’s still up to you to dig deep and understand your labor market for your various hourly jobs. But, once you do that, you’ll now have a tool at your fingertips that will allow you to pull customized hourly data and make decisions based on your hourly pay strategy. Moving you from reactive to proactive — strategic, even. Watch this short video now to see how it works.

Tool features

The Mercer Hourly Compensation Tool consists of access to an online database of best-in-class survey data. Consisting of data aggregated from nine different surveys, we have organized the data and jobs using Mercer Job Library, which provides a consistent framework based on nature of work and clear definitions of career levels. This makes it easy to combine jobs from various surveys therefore allowing you to combine skills and industry experience broadly, all by selecting different filters. Simple as that!

You can easily consider pay rates for a broad set of jobs by doing roll-ups by level, or be more specific in terms of scoping by industry or job family, all while narrowing in on the geography that matches your recruiting area.

In addition, the tool will show you aggregate statistics as well as individual job statistics in a simple dashboard based on the filters that you select. This will help you understand directionally where pay levels are both from a broader market perspective and on an individual job basis that will help you make decisions for your organization.

Within the same dashboard, you will see descriptions of your job selections as well as the critical information about short-term incentives allowing you to understand the full cash compensation package — and craft yours accordingly.

Do you have union employees? Whether you’re responsible for preparing yourself for contract negotiations or simply concerned with setting pay equitably across the board, Mercer Hourly Compensation Tool can help by allowing you to filter based on union or non-union data.

What are you waiting for?

With a large hourly population and the strong competition for local workers across industries, can you really afford to be without this tool?

To learn more visit the Mercer Hourly Compensation Tool webpage or contact our helpful associates at 855-286-5302