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August 08, 2008
Why $4 per Gallon Gas Is an HR Problem
With little relief in sight from escalating gas prices, employees are changing their commuting habits, and employers are enhancing their benefits packages to help ease the burden, according to recent surveys.

High Gas Prices Drive Employers to Rev Up Benefits

With the average cost of gasoline topping $4 per gallon, employees are feeling the pain at the pump. Forty-four percent of about 540 professionals who participated in a recent survey by staffing firm Robert Half International (RHI) said that higher gas prices had affected how they commute to work or their work arrangements, compared to 34 percent 2 years ago.

Their pain could hurt employers in their recruiting and retention efforts. RHI (www.rhi.com) found that 30 percent of workers whose commute has been affected by higher gas prices were looking for work closer to home, and 25 percent were asking for increased compensation to offset their commuting costs.

"I don't think we've seen a mass exodus yet," says Linda Blandford-Beringsmith, vice president of Human Resources for RHI. However, high commuting costs could have a bigger impact on retention in the future, so employers need to be aware of this issue, she says.

Other surveys conducted this year raise similar concerns for employers. Even when regular gasoline cost $3.13 per gallon back in February (a bargain by today's standard), 37 percent of the 21,000-plus American commuters surveyed by SnagAJob.com said they would not travel more than 10 miles (one way) to a job. SnagAJob.com, an hourly job website, also found that 31 percent of participants would commute up to 20 miles to work, while only 15 percent said they would travel more than that.

Although only 7 percent of the 100 HR executives surveyed in May by global outplacement consultancy Challenger, Gray & Christmas, Inc. (www.challengergray.com) said an employee had left because of increased commuting costs, 34 percent said potential job candidates had turned down job offers due to long commutes.

Especially when combined with the economic downturn, high gas prices could lead to morale problems among workers who are struggling financially. "Employers may be missing an opportunity to improve morale and reduce turnover by helping their staff cope with the burden of rising gas prices ?," says Max Messmer, RHI chairman and CEO. "Companies can build loyalty and motivation by showing employees that they are empathetic to their concerns during challenging times."

Adding Benefits, not Increasing Pay

Forty percent of RHI survey participants indicated that their employers are offering, or planning to offer, benefits that offset increased commuting costs. Fifty-seven percent of Challenger, Gray & Christmas survey participants said their company provides one or more such programs.

In a separate survey of 550 HR professionals, the Society for Human Resource Management (SHRM) found that more employers are adding benefits--as opposed to increasing pay--to help employees cope with high gas prices, and that more employees are tapping existing benefits.

Increased mileage reimbursement for business travel was the most frequently cited tactic used by employers in both the SHRM and RHI surveys to offset high gas prices. SHRM (www.shrm.org) found that 42 percent of employers were raising their mileage reimbursement to the Internal Revenue Service maximum--50.5 cents per mile at the time. In 2007, only 13 percent of employers did so.

More recently, the Internal Revenue Service (IRS) announced an 8 cent increase--to 58.5 cents per mile--in the optional standard mileage rate for business travel for the last 6 months of 2008. Although the IRS typically updates standard mileage rates each fall for the next calendar year, it announced the special adjustment in June due to high gas prices.

Among other things, SHRM survey participants also reported using the following benefits to help offset increased commuting costs:

  • Flexible work schedule (26 percent)
  • Telecommuting (18 percent)
  • Public transportation discounts (14 percent)
  • Rewarding employee performance with a gas card (14 percent)
  • Information on alternative ways to get to work (13 percent)
  • Carpools (12 percent)
  • Pre-tax transportation reimbursement accounts (11 percent)
  • Priority parking to employees who carpool (7 percent)

A small percentage also helps new hires find housing closer to the office, provides a cost-of-living raise or stipends to employees with a long commute, or provides a monetary incentive to buy a hybrid car, according to SHRM.

The RHI survey pointed to ridesharing or vanpooling, subsidized transportation, relocation assistance, bike-to-work programs, telecommuting, and more flexible work schedules, including 10-hour, 4-day workweeks. Employees, says Blandford-Beringsmith, are looking for any type of assistance to help alleviate their increased commuting costs.

What to Do

Here are a few suggestions to keep in mind when offering benefits aimed at offsetting employees' commuting costs:

Communicate existing benefits. Employees tend to forget about a benefit if they don't need to use it when they first learn about it, Blandford-Beringsmith says. "It is extremely beneficial for employers to republicize" such perks.

Be proactive. Determine what benefits you can offer to increase morale and to decrease the chances that workers will seek work closer to their homes.

Look for low-cost alternatives. You don't have to invest a small fortune in gas-related benefits to show employees that you recognize their concerns and that you care about them. Blandford-Beringsmith suggests educating employees about carpooling and vanpooling programs and, if applicable, local transit schedules for your area.

Offer flexible work arrangements. Reduced commuting costs are not the only advantage that comes from telecommuting and condensed workweeks; such perks also promote work/life balance.

Consider offering a pre-tax commuter benefit. This allows employees to pay for qualified parking and public transportation costs on a pre-tax basis and "is not a high-cost item for employers at all," she says.

Tout your benefits to recruits. Blandford-Beringsmith recommends familiarizing potential job candidates with your proximity to public transportation and with available commuter benefits.

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