As gas prices surpass $4 per gallon in many cities across the country, employers that, in the past, helped workers cope with higher commuting costs through shorter work weeks, increased telecommuting and transportation subsidies, may not be as willing or able to offer much assistance this time around, according to one workplace expert.
“Circumstances have changed significantly from early 2008, which was the last time we experienced such a dramatic spike in fuel prices. Companies are focused primarily on rebuilding efforts as they struggle out of the worst recession in decades and, right now in this job market, they have the upper hand and do not have to offer extra incentives to attract or retain workers,” according to John A. Challenger, chief executive officer of global outplacement consultancy Challenger, Gray & Christmas, Inc.
The price for a regular gallon of gas reached a national average of $3.88 this week, up from about $3.00 in the first week of January, according to the U.S. Energy Information Administration (EIA). Some cities, includingChicago,Los AngelesandSan Francisco, saw a gallon of regular soar to as much as $4.25.
The last time gas prices reached such heights was 2008, when the price of a gallon of regular rose from an average of just under $3.00 in February to $4.00 by the beginning of June, peaking at a national average of $4.12 by mid-July, according to historical data from EIA.
During the 2008 surge in gas prices 2008, 57 percent of human resource executives surveyed by Challenger, Gray & Christmas said their companies offer some type of program designed to alleviate increased commuting costs, the most popular of which was to condense the work week into four 10-hour days (utilized by 23 percent of respondents).
While no new survey data is available, John Challenger is confident that employers are less likely at this stage of the recovery to do anything that would increase their costs or possibly disrupt fragile customer relationships.
“While the economy was officially in recession in early 2008, the severity of the downturn was still unclear. The bank failures and the surge in corporate downsizing did not occur until the second half of 2008. Many employers were, in fact, still adding workers in the first half of the year and unemployment was hovering around 5.0 percent. At this point, existing and prospective workers still had some leverage and employers were more willing to provide extra perks,” said Challenger.
That changed in an instant with the sudden collapse of the financial markets, which set off a tidal wave of downsizing. Job cuts went from an average of 70,893 per month over the 12-month period ending in June 2008 to just over 137,000 per month in the following year.
“Now, the recovery is just starting to gain momentum. Many companies are beginning to enjoy the fruits of recovery, but they realize that the economy is in a fragile place. Hiring is slowly ramping up, but we have yet to see a burst of job creation. Demand for products and services are increasing, but most companies are trying to squeeze every last ounce of productivity from their existing workforce before adding new employees,” Challenger noted.
“In this environment, employers would be reluctant to cut a day from the work schedule. Even if the hours are the same by condensing 40-hours over four days, the loss of a day when customers and prospective customers might need service is too much to risk at this point in the recovery. Telecommuting is also less likely to be increased in this environment. Despite data showing that telecommuters are just as if not more productive, many companies are in an “all-hands-on-deck” mode and want their employees on site to handle fires as they arise,” he added.
The only employers that might not be reluctant to institute four-day work weeks are state and local governments. However, this change would be the result of cost-cutting measures in the face of growing deficits, not the desire to help employees with rising gas prices.
In 2008, the state ofUtahmoved most of its workers to a four-day work week in order to save money on energy, operations and fuel costs. In March,Utahgovernor Gary Herbert vetoed a bill that would have required state offices to return to a five-day work week.
Texas andOregonlawmakers are now considering switching to a four-day work week, each with the desire to rein in costs.
Not every employer is shunning the idea of four-day work weeks to help workers lower commuting costs. A 60-employee Pennsylvaniadie-casting company recently instituted four-day work weeks in response to rising gas prices, according to a report in The Philadelphia Inquirer.
In Illinois, 87 Cook Countycompanies enrolled in a program that allows their workers to purchase transit fares with pretax income. The program gives commuters a strong incentive to switch to public transportation by cutting 30 to 40 percent off their commuter costs, according to the Center for Neighborhood Technology, which administers the Transit Ridership Improvement Program.
“Unfortunately, these types of examples are few and far between. A lot of companies learned in 2008 that the spike in gas prices are temporary, but once you introduce four-day work weeks, telecommuting programs and transportation subsidies, it is difficult to take them away even when gas prices fall to more comfortable levels,” said Challenger.
“Knowing that gas prices will probably fall by summer’s end, or sooner if the government steps in or OPEC increases production, most companies are inclined to ride it out, focusing primarily on ways to cut their own exposure to higher energy prices. Meanwhile, employees who have just survived the recession with their jobs intact are not likely to put pressure on companies to provide relief for higher commuting costs.
“Instead, they will have to find their own ways to cut commuting costs. That may lead to more people biking to working or taking public transportation. We may also see more carpooling. What we won’t see is a lot of people leaving their jobs to search for employment closer to home. People who are employed are, for the most part, just happy to have a job and will find a way to absorb their increased commuting costs,” Challenger concluded.