Middle class families were the stars of President Barack Obamas State of the Union address Tuesday night, with financial wellness and retirement, while not forgotten, taking a back seat.
Several of Obamas proposals may change how employers plan their strategies on wages, sick leave and child care, as well as how employees prepare for retirement.
I think if youre a large employer, some of these things talked about last night you may already be doing, says Seth Perretta, a principal at Groom Law Group. But depending on the nature of ones business, some employers may be nervous about how the Presidents proposals could affect them. For example, says Perretta, small employers, mom-and-pop shops or low-margin industries such as hospitals, food and retail, may have a harder time complying with mandatory paid sick leave provisions.
The Society for Human Resource Management, meanwhile, says Obamas call for a federal sick leave mandate is the wrong approach.
Mandates limit employer flexibility and stifle workplace innovation and creativity, which are the hallmark of effective and flexible workplaces, said SHRM in a statement. As an alternative, the organization says it is committed to expanding voluntary workplace flexibility initiatives, including paid leave and flexible work arrangements.
And while the President devoted time to workplace issues in his address, whats not as clear, is how he plans to work with the Republican Congress to actually improve workplace policies, says Cara Woodson Welch, vice president, public policy, news & publications with WordatWork.
In addition to raising minimum wage and offering sick leave, another proposal Obama touched upon was two years of free community college. The federal government would front the cost through higher taxes on the wealthy.
The proposal could be cost neutral or even an eventual net positive for employers, Perretta says, but how the revenue is raised would need to be approved.
He notes Obamas emphasis on the working middle class, pointing to the necessity of dual incomes but lack of child care. I think hes [Obama] really coming out with the perspective of we need to create social programs to reinforce family, Perretta adds.
Small businesses are the folks that will be predominantly impacted by these proposals, he notes. I think Republicans, evidenced by their response last night, would be disinclined to move forward on entitlement programs or cost shifting to small employers.
Having universal access to retirement programs is also part of the many proposals Obama has addressed which would open 401(k) programs to part-time employees, says Alison Borland, a retirement expert with Aon Hewitt.
Most large organizations already offer 401(k) plans, she notes. Obamas proposals would close the gap for the part-time employees who dont have access to an employer-sponsored retirement program.
At the end of the day, it wouldnt [be] a significant change, but it would be meaningful to part-time employees, she says. If you dont have access to a plan, you dont even have a chance.
Another proposal thats been floating around a number of years would be requiring employers that dont offer 401(k) plans to auto enroll employees into an IRA.
Its one that keeps popping up, says Borland. There is a real cost to it, because those defaulted contributions are tax-deductible, so there is a cost. It is an idea that has historically received support, [but] there is a price tag.
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