Nonprofits Comp and Employee Trends, 2022
Nonprofit Comp and Benefits Bulletin – 2022
Top Trends
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View the most important employee compensation trends to keep in mind as your company navigates new challenges going into the new year.
New Minimum Wage Mandates Brings Reasonable Compensation Levels of $17 per hour
Effective 1/1/2022, the minimum wage for employers with at least 25 employees will be $15 per hour. However, to minimize the high level of attrition rates plaguing most employers, companies should position their starting rates at no less than 12% of the local minimum wage level. For example, this would be $16.90 for California employers. A 12% difference to the minimum wage is generally recommended as the threshold that companies should use to stay competitive in today’s active labor market.
Inflation worries and rising wages will force employers to offer larger raises
As 2022 approaches, California employers will face stiff labor force troubles. With resignation happening at unparalleled rates and inflation at a twenty-year high, employers will likely use compensation to safeguard their employee talent. Moreover, based on findings from the last quarter in 2021, there is evidence to suggest that wages and salaries are poised to grow at a rate not seen in years. In all, companies should plan to address movements between 3.5% to 4.5%. Shape Description automatically generated with low confidence
New: 2022 California Exempt Employees Minimum Salary Increases
California employers should review the base salary for all exempt employees to ensure the employees meet the compensation required to be exempt. As the state’s minimum wage goes up on January 1, 2022, the minimum salary to qualify for the white-collar exemption is as follows:
- Employers with 25 employees or less: The equivalent of two times the minimum wage of $14 per hour, or $58,240 per year ($1,120 per week)
- Employers with at least 26 employees: The equivalent of two times the minimum of $15 per hour or $62,400 per year ($1,200 per week)
- For computer professionals, the minimum salary is $50.00 per hour; $8,679.16 per month; $104,149.81 per year
**It must be noted that the salary basis test is set according to the California State minimum wage – not the minimum wage set by various local cities and counties in California.
California Pay Data Reporting, 2022
For employers with at least 100 employees, a reminder: California law (Government Code §12999) requires employers to annually submit data on the pay, hours worked, and demographics of their employees to the California Department of Fair Employment and Housing (DFEH). The first filing deadline was March 31, 2021, and annually after that on March 31. For more information about this law, including, filing instructions visit https://www.dfeh.ca.gov/paydatareporting/
It’s Time to Update Parental Leave Policies
For purposes of qualifying leave under the California Family Rights Act (CFRA), AB 1033 – passed in 2021 and takes effect on January 1, 2022 – adds parents-in-law to the definition of “parent“. AB 1033 expands SB 1383, which took effect on January 1, 2021, requiring employers with five or more employees to comply with the CFRA. CA employers should review their CFRA policies to ensure compliance with these recent changes.
Pay Gaps & Development Roles
Although the salary of a nonprofit development job depends on several factors (such as region, experience, education, mission/focus of the nonprofit, organization size, and more), narrowing down a precise salary for these positions is made more difficult by gender pay gaps.
Comp Stats – 2022 Adjustments and Increases
PROJECTED INCREASES FOR EXECUTIVE-LEVEL MANAGEMENT
- Performance-based adjustments for senior-level VPs are averaging 4.3%
- Performance-based increases for staff are up from the pre COVID-19 average of 3.2% to 3.5%
- Labor costs, including pay and benefits, will increase by 2.3%
GENDER PAY DIFFERENCES
- To prevent gender-based market flaws from filtering into their compensation programs, companies should set their benchmark levels 10% to 15% above prevailing market ranges
- Gender pay gaps from nonprofit organizations in Northern California averaged around 12%, while in Southern California, they were found to be around 16%
PROJECTED MEDICAL COSTS
- Medical premium increases for 2022 will fall between 4.1% to 4.3%
- Employee contributions towards their health plans will increase by 4% for those with individual coverage and 5% for family coverage
STAFFING LEVELS AND COSTS
- The voluntary attrition rate will likely jump to 10 per every 100 employees
- While 58% of nonprofits said that COVID-19 had a significant negative impacted on their operations in 2020, in 2021, their labor cost-reduction actions will be minimal
- The majority of employers (90%) are signaling aggressive plans to maintain existing labor levels and locking key talent by providing salary adjustments equal or higher than pre-COVID19 levels
Development Functions and Gender Gaps
Perhaps trying to recoup lost revenue, nonprofits are aggressively building their development efforts, and this has caused a surge in job offers to development-related professionals.
Gender pay gaps, in fact, often make competitive offers to highly sought candidates less than what they need to be, and nonprofits should be vigilant to their impact. Here is why:
Despite efforts to narrow disparity, the gender pay gap may be getting wider. In a 2017 article, Perennial Resources International cited that pay differences between men and women were about 5%. However, in multiple gender comparison cohort groups, these gaps were consistently averaging around 12% as reported by GuideStar 2020 compensation survey.
SALARY OFFERS FOR DEVELOPMENT PROFESSIONALS ARE HITTING AN ALL-TIME HIGH
For example, senior VPs, responsible for all development functions are commanding salary offers close to $164,000 in the San Francisco Bay area. However, in Southern California, with a lower cost of living, similar positions are commanding salaries around $145,000.
Other classifications are experiencing salary offer highs. Offers to directors in Northern California are averaging around $97,000; while in Southern California, they are commanding offers around $81,000. Program associates are getting about $62,000 in the Bay Area and $55,000 in Southern California.
The higher-than-average salary offers have pushed development-related classifications to a 3.6% jump. In 2020, on the other hand, only saw a modest 2.8% increase.
Not only are development jobs leading the way in salary offers, but they are also on top of merit-driven increases: Whereas in general, merit-driven increases averaging between 3.2% for entry and intermediate level jobs, to 3.5% for senior professional staff and mid-level managers, development positions, year-to-year change, is about 3.8% for professional and mid-level managers.
AVOID THE PITFALLS OF EVER-WIDENING GENDER PAY GAPS
Although gender pay gaps are widely known, organizations often miss the unintended role they play in their job offers. When organizations make job offers, they often rely on the “prevailing” market. However, in reality, the market may be uncompetitive and unrealistic – both to the detriment of the organization and to qualified and highly sought-after professionals, both male and female.
As an example, consider how gender pay gaps affect the recruiting chances for a top development official. Based on survey data reported by GuideStar, the average salary for a Development Sr. VP is $224,000. However, the male salary is found to be $241,000 and the female $200,530. In this case, the gender pay gap, in essence, has the unintended effect of deflating the overall salary level. For example, suppose the organization proceeds and makes an offer based on the prevailing salary of $224,000. In that case, they will be underbidding the more competitive salary level of $241K, thus increasing their chances that their offer will be refused.
Even if the candidate accepts the offer, and if they have an above-average resume, the tenure in position is likely to be around two years – much less than the 4.2 years estimated by the Bureau of Labor Statistics for such a position.
In general, nonprofits should at least discuss making offers above 10% of the general market as reported in most reputable surveys. Otherwise, the company may be making a low-ball offer to qualified and talented professionals.
January 1, 2022