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Relief for Pain at the Pump

August 12, 2008
Related Topics: Benefit Design and Communication, Workforce Planning, Featured Article, HR & Business Administration
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The view from his window gives David Lewis, CEO of Stamford, Connecticut-based human resources consulting firm OperationsInc, a pretty good sense of the discomfort that his employees are experiencing from rising gas prices. "My office looks out upon three gas stations," Lewis says. "I watch the guys climbing up ladders with poles, changing the prices every week."

Lewis allows two of his 25 employees to work from home, and another two are able to use public transportation to get to clients’ work sites. But for the remaining staffers, who live in distant suburbs, there’s no real alternative to an increasingly expensive daily round trip of as far as 70 miles by car. Each upward tick in prices at the pump makes Lewis a little more nervous about losing hard-to-replace talent to job opportunities that offer a less costly commute. "My big­gest concern is that somebody is going to walk in and say, ‘I’m quitting because I can’t afford to keep coming here,’ " he says.

Lewis isn’t the only employer who’s noticing that for the American workforce, gasoline prices are reaching a tipping point. With the cost of regular unleaded hovering around $4 a gallon nationwide, the cost of filling the tank is eating up so much of workers’ incomes that many are finding themselves in financial crisis, compelled to make painful and humbling cutbacks in their lifestyles simply so that they can afford to drive to work each day. Research shows that workers’ stress over gas prices is actually harming their productivity, and it’s leading them to re-evaluate their career priorities as well. Recruiting consultants say workers increasingly are turning down job offers that might require a longer commute, and many are now looking for a job closer to home, even if it doesn’t involve a salary bump or professional advancement.


45%
Percentage of employees who have fallen behind on their finances because of gas prices

The potential impacts of these shifts have U.S. companies scrambling to find ways to ease commuters’ pain. Roughly half of employers have instituted programs and benefits to assist employees, ranging from providing ride-sharing databases on corporate intranets and free shuttles from public transit stops to offering compressed work­weeks that reduce the number of trips from home, ac- cording to a recent study by Challenger, Gray & Christmas, a Chicago-based nationwide executive outplacement firm. Others, such as Lewis, are reimbursing employees for some of their gasoline costs or even contributing some of the cost of buying or leasing a more fuel-efficient car.

Corporate HR leaders and consultants say that no single remedy works for everyone, and that an employer should evaluate data about workforce commuting patterns, staffing needs and cost-to-benefit ratios before embarking upon a program. While any such effort requires some financial commitment, experts say that investing in commuter assistance can provide companies with a significant strategic advantage when it comes to retaining and competing for talent.

So Lewis decided to help out his employees. He gave an American Express card to everyone in his operation who drove to work, and allowed them to charge up to $100 a month to pay for gasoline purchases. "It was easy to set up," he says. "And people seem to have really appreciated it. It doesn’t cover all their commuting costs, but they don’t expect that. This gives them a little more breathing space. It costs us an extra [$20,000]-$25,000 a year, but fortunately, we’re in a business that even in this economy is doing very well, so we can afford it." Lewis’ company may actually come out ahead on the deal, considering that the program’s cost is a fraction of the replacement cost of an experienced HR consultant, which can exceed $100,000.

How high fuel prices hurt workers, employers
    High gasoline prices are a huge problem in a nation long accustomed to getting to work by car. U.S. government data shows that nearly nine in 10 Americans drive to work, with nearly eight in 10 driving alone. And those daily commutes can be lengthy because they’re based upon population distribution and workplace locations that remain from an era of cheaper fuel. The fortunate ones, who commute five miles or less each way to work, amount to less than a third of the workforce. Twenty-two percent travel six to 10 miles each way, while 27 percent travel 11 to 20 miles and 23 percent cover more than 20 miles each way. Two percent of workers are what the U.S. Census Bureau calls "extreme commuters," spending 90 minutes or more on the road each way daily.


39%
Percentage of employees who have cut back to a lesser standard of living because of gas prices

Recent studies create a stark picture of the discomfort caused by fuel costs among workers. A June Gallup survey found that nationwide, 11 percent of Americans say the high price of gas has left them with little or no disposable income and/or wrecked their family budgets, with 9 percent saying they are hurting financially. A study released in May by Florida State University management professor Wayne Hochwarter, which examined the plight of 800 full-time employees who drove an average of 15 miles each way to work, showed an even higher level of distress. Hochwarter found that 45 percent have fallen behind on their finances because of gas prices, and 39 percent have been forced to cut back to a lesser standard of living.
Thirty percent are considering cutting back on food, clothing and medicine to keep up.

The researchers have news that’s nearly as bad for their employers. According to Gallup, 15 percent of Americans say they can no longer afford the cost of driving or commuting to work because of fuel costs. Hochwarter’s study of long-distance commuters found that one in three would quit their job if they could find one closer to home.

Fortunately, most don’t seem to have followed up on that threat—at least so far. But companies already are seeing the impact of higher gas prices on corporate recruiting. While commuting costs once were a deterrent only for lower-wage employees, the expense of a lengthy drive from the nearest suitably posh suburb is starting to cause even job candidates in the $150,000-$200,000 range to think twice about making a career move. In the recent study by Challenger, 34 percent of companies said they’ve had job candidates turn down offers because of the commute.


30%
Percentage of workers considering cutting back on food, clothing and medicine because of gas prices

Paradoxically, even when job candidates want to switch to a job in another region with a shorter commute, they sometimes have to nix the move because prospective buyers for their old homes are deterred by the cost of driving to work from there. "People in the Phoenix area, where we’re based, are really stuck," says Mickey Matteson, an account executive for Recruiter Relocation, a firm that helps job candidates settle in new locations. "If you want to take the bus to work here, you’d need to get five transfers and walk a half-mile in the heat. We’re seeing deals not come together because of this."

Beyond that, stress from fuel prices is combining with a tough economy to threaten workforce productivity. Hochwarter found that workers stressed out about gasoline prices tended to be "less attentive on the job, less excited about their work, less passionate and conscientious and more tense."

"What I see is that people are just worn out from this," Hochwarter says. "They see no end to this—they hear the news media talking about five, six, seven dollars a gallon in the future. Worse yet, this is happening at a time when corporate profits are down and nobody is getting the 4 to 5 percent raises of the past, which might have helped them to keep up. Instead, they’re falling behind and struggling financially, and they’re thinking, ‘The company isn’t stepping up and helping me out. The days of me busting my butt for my employer are over.’"


84%
Percentage of workers who expect their companies to institute measures to remedy rising commuting costs

By the same token, workers clearly are looking to employers to do something about the problem of rising gas prices. A survey released in June by Opinion Research Group found that 84 percent of employees expect their companies to institute measures to remedy rising commuting costs. Fifty-one percent wanted the opportunity to work from home, and 42 percent wanted their companies to provide allowances for gasoline, as OperationsInc’s Lewis has done.

What companies can do
    The escalating crisis is compelling many employers to rethink the traditional benefits boundaries and reach out to help employees with commuting costs, as they already do with needs such as health insurance and child care. Challenger reports that 57 percent of the companies it surveyed say they’ve already implemented at least one program—often several—to help ease the pain at the pump.

While telecommuting from home is widely touted as the answer to gas-price woes, employers don’t seem to be embracing the concept. Only 14 percent of the companies in the Challenger study allowed employees to work from home at least one day a week. It’s not a practical solution for everyone, anyway, because by even the most optimistic estimate, 60 percent of workers still have jobs that have to be performed on site, according to a 2005 study, "Telework Adoption and Energy Use in Building and Transport Sectors in the United States and Japan," by H. Scott Matthews and Eric Williams.

Instead, the Challenger study found that 23 percent of companies are allowing their staffers to work a compressed workweek, such as a schedule of four 10-hour days, to reduce the number of trips they need to make. An additional 20 percent are helping organize car pools for employees, and 18 percent are subsidizing the use of public transit.


"[Employees] see no end to this—they hear the news media talking about five, six, seven dollars a gallon in the future. ... They're thinking, 'The company isn't stepping up and helping me out. The days of me busting my butt for my employer are over.'"
—Wayne Hochwarter, Florida State University management professor

Which of these measures is best? HR consultants, academics and transportation experts counsel that there’s no one-size-fits-all solution to the problem of commuting costs. A program that’s effective at one company may not be right for another with different logistical challenges or geographical distribution of its employees. And it’s likely that an employer will have to offer an assortment of commuting benefits to meet the needs of a diverse workforce.

"The fundamental thing we’re trying to do is to get companies to offer a choice," explains Phil Winters, a program director at the University of South Florida’s Center for Urban Transportation Research, which recognizes employers with its Best Workplaces for Commuters awards. "It’s not enough for a company to just provide a free parking spot. They’ve got to be willing to help people who want to take the bus, or car pool, ride a bicycle to work."

Experts say that before doing anything, a company should gather and analyze an assortment of data about its workforce, including employees’ commuting patterns and the economic impact that high fuel prices are having on workers. It’s also important to assess the transportation options that are available in a particular area, including public transit agencies with which a company might be able to partner to offer fare discounts or subsidies.

It also might be a good idea to survey employees and find out what sort of commuter assistance they favor. Florida State’s Hochwarter notes that when the Florida government asked its employees how they felt about switching to a four-day workweek, most favored it, but a significant minority were strongly opposed.

"It turned out that it threw a wrench into some people’s child care arrangements," he says. "For them, it created more problems than it solved."


"We had trouble filling jobs for housekeepers, nursing attendants and others because they had come from far away and it cost too much."
—Joe Cabral, chief human resources officer, North Shore-Long Island
Jewish Health System

North Shore-Long Island Jewish Health System, a regional network of 13 hospitals with 38,000 employees, went through a careful planning process 18 months ago in an effort to stay ahead of the curve on commuting expenses. "Our situation is kind of complicated," says chief human resources officer Joe Cabral. "Our employees tend to come from within a 25-mile radius, but we’ve got some outliers. Probably about 80 percent of our people were driving to work, because the way that public transportation in Long Island is set up made it impractical for them to use. We also had the problem of having two hospitals in affluent areas where it was too expensive for some of our staff to live. We had trouble filling jobs for housekeepers, nursing attendants and others because they had to come from far away and it cost too much."

Cabral’s team devised a multifaceted plan. One initiative was a free shuttle bus that traveled inside the 25-mile radius and connected the 13 hospital sites. To help those outside that area, the health system is setting up a second shuttle along the Long Island Expressway that will pick up employees at park-and-ride sites at the far end of the region. To assist those who still needed to drive, the health system partnered with the New York Metropolitan Transportation Council and the New York state Department of Transportation to create a ride-sharing program that allows hospital employees to schedule their commuting trips online. Lastly, North Shore-Long Island Jewish Health System expanded the compressed workweek option that it already offered to nurses as a recruiting inducement, offering the schedule to physical therapists, respiratory therapists and operating room technicians.

Some employers even have managed to turn the problem of gas prices into an opportunity. One example is Ener­NOC, a Boston-based energy management company that has made commuter-friendliness—and environmental awareness—a significant part of its employment brand. The company deliberately located its headquarters in pricey downtown Boston rather than out in the suburbs, which makes it possible for all but a handful of the company’s 300 employees to get there via the region’s extensive public transit system. To help those few who need to drive to work, EnerNOC offers to pay an additional $100 a month to anyone who buys or leases a gas-electric hybrid car.

"We have several folks who are taking us up on that," says executive vice president David Samuels. "The important thing is that we’re giving everyone the chance to make responsible, cost-efficient choices."

Workforce Management, August 11, 2008, p. 1, 22-29 -- Subscribe Now!

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