GAWDA Cross-Industry Compensation & Benefits Report

Cross-Industry Compensation & Benefits Survey

This year, GAWDA once again took part in the CrossIndustry Compensation Study, the first time GAWDA has participated since 2020. Many GAWDA members requested that GAWDA participate in this year’s report, which is now available for purchase on GAWDA.org.

Demand for qualified employees is outpacing labor supply and quit rates are near all-time highs. Providing a competitive total reward packages is vital to attracting and retaining key employees. The results of this study provide the steps and resources for evaluating the competitiveness of your compensation levels and benefit offerings.

Business owners and HR managers can use this information to better their organization’s compensation practices and policies. The results of this study can be used to answer key questions such as: • Are you leading, matching, or falling below the market in terms of your compensation offerings? • How are companies attracting and retaining employees? • What are the top concerns/threats in your industry? • Is your turnover rate comparable to what others are experiencing? • How long does it take to fill an open position?

The Cross-Industry Compensation & Benefits Report answers these questions and many more in helping companies evaluate their compensation practices versus their industry and market areas.

Based on 2021 statistics, the 2022 Cross-Industry Compensation & Benefits Survey report provides a detailed analysis of key compensation and benefits related statistics for the distribution industry. The results are based on confidential surveys from 959 distribution companies, representing over 10,000 locations. GAWDA was one of 22 distribution related associations that sponsored the 2022 Cross-Industry Compensation & Benefits Survey and offered it to their member organizations as a value-added benefit of membership.

The 2022 Cross-Industry Compensation & Benefits Survey was compiled, tabulated, and analyzed by Industry Insights, Inc. (www.industryinsights.com), an independent professional research and analytics firm that provides research services focused on financial and operating performance, compensation and benefits, market assessments, customer satisfaction, educational programs, and other forms of customized research for associations and their members.

THE ECONOMY

Before analyzing compensation information for any industry, it is important to understand the performance of the overall economy. This section of the report will examine several indicators which are typically correlated with compensation levels and their corresponding trends. It is important to note that these correlations may not apply to every geographic location or individual distributor. However, these indicators do provide sound information and their projections for 2022 will serve as a good gauge for compensation estimates moving forward. Due to unprecedented government stimulus packages, the economic recovery from the pandemic has exceeded most expectations and the economic growth continued its strong pace into 2021. It was a bit of “rollercoaster” year in 2021. As we came out of 2020’s pandemic, there was optimism that life would begin to return to normal as vaccines became readily available to the nation. Early to mid-2021 saw strong growth in GDP but supply chain and inflationary concerns began to increase by late summer and into the third quarter. The fourth quarter saw strong growth return, though this was against the backdrop of the new COVID-19 Omicron variant. The remainder of 2022 and the next few years continue to bring a larger list of uncertainties than in most pre-pandemic years. How these uncertainties play out will determine whether we continue to have consistent long-term growth or hit a recessionary period.

SLOWING ECONOMIC GROWTH

Real gross domestic product (GDP) decreased at an annual rate of 1.4% in the first quarter of 2022. While some are pointing to this as a sign of a recession coming, there are a few

reasons that are likely temporary contributors to this decline. The fourth quarter GDP was somewhat artificially inflated as companies ramped up inventory purchases. At the same time, additional supply chain issues decreased inventory spending in the first quarter 2022. An increase in COVID-19 cases related to the Omicron variant caused additional restrictions in January 2022. Net exports (exports – imports) also contributed significantly to this decline. The trade deficit widened to a record high in the first quarter. It is believed that Russia’s invasion of Ukraine may have prompted businesses to push forward purchases in fears of additional anticipated supply chain ripples. In mid-2021, Real GDP growth for 2022 was forecasted to be in the high 4% range. Now, primarily due to inflationary concerns and geopolitical events putting strains on an already stressed supply chain, most are forecasting a slowed pace of 2.9%.

INFLATION

U.S. inflation, measured by the Consumer Price Index (CPI), has been relatively passive in recent years due to modest economic growth and lower commodity prices. Unfortunately, the government stimulus injected into the economy plus a strained supply chain and tight labor market has created an environment of strong demand far outpacing supply. In April 2022 the 12-month CPI growth of 8.3% was reported. While this was a slight improvement over the 8.5% increase in March, this remains at the highest levels seen since the 1980s. The Fed has firmly entered a monetary tightening cycle with two rate hikes as of May 2022—including 50 basis point jump in early May. Multiple increases are planned by the end of 2022 in an attempt to get inflation back into the 2% range as quickly as possible. It is anticipated that the monetary tightening will begin to take effect in the 2nd half of 2022 and start to pull inflation down to 3.6% by the end of the year.

UNEMPLOYMENT

Following the pandemic induced spike in unemployment, the labor market has steadily shown strong improvements. The unemployment rate has essentially reached pre-pandemic levels. Labor demand has far outpaced labor supply. The number of job openings is double that of unemployed people seeking employment.

The unemployment rate only reflects the percentage of those actively seeking employment who are unemployed. It does not account for anyone who has decided to stop seeking employment due to difficulty finding a job. This means that the reported unemployment rates are likely artificially deflated from real unemployment levels. Another useful employment measure is the labor force participation rate, which tracks the percentage of the population that is either employed or actively seeking employment. From 2002 – 2008, the labor force participation rate was around 66%. From 2014 – 2019, labor force participation fell to a range between 62%-63%, the lowest since the 1970s. In the peak of the pandemic, April and May 2020 both reported participation rates below 61%. The participation rate has been improving and reached 62.2% in April 2022 but is still well below the pre-pandemic level of 63.4% in February 2020.

TURNOVER RATES

The COVID-19 pandemic of 2020 brought record turnover rates as millions of employees were laid off/furloughed. Post pandemic, the demand for labor has far outpaced labor supply which has created an environment of increased wage pressures. In what many have termed “the Great Resignation,” 2021 saw quit rates surge to 32.7% nationally.

Respondents in the 2022 Cross-Industry Compensation & Benefits Survey reported average turnover of 20.6% and a quit rate of 14.8% for non-management employees.

To read the full report, including the supporting statistics, graphs and charts, and find out how your company stacks up with others in our industry and similar industries, purchase the full report today in the GAWDA.org Members-Only section.