Compensation Conundrum: Salary satisfaction levels are rising despite a stabilization of medtech wages.
Unemployment is down, and the stock market is up. Way up.
An unbelievable kind of up, in fact: The Dow Jones Industrial Average is roughly 19 percent above its 2016 Election Day closing value, surging past 22,000 in just nine months (hitting 21,000 in March and 22,000 in August). Similarly, the Nasdaq composite has swelled nearly 23 percent, and the S&P 500 is now valued at 24 times earnings.
The U.S. economy is forging ahead too, growing 2.6 percent in the spring and 1.9 percent overall for the first half of 2017. Though the numbers aren't exactly robust, they're solid enough to give rise to speculation of an extended--and possibly historic--recovery for the world's largest economy. "The likelihood that the expansion will break the prior record is consistent with our long-standing view that the combination of a deep recession and an initially slow recovery has set us up for an unusually long cycle," Goldman Sachs economists wrote in a note this past May.
At 95 months, the current expansion is now the third-longest in American history in 33 business cycles dating back to 1854, the Goldman Sachs economists noted.
Such a boom should bring glad tidings to the companies and workers who lost sales revenue and livelihoods during the Great Recession of 2008. But a healthy economy can be a double-edged sword, on the one hand helping restore the market to full employment but also leading to labor shortages that can strain and potentially slow the pace of expansion even as jobless rates remain stubbornly high in some areas (think Rust Belt, inland California).
The labor shortage has become particularly problematic in places like Salt Lake City, Utah, and Kosciusko County, Indiana, the world's unofficial orthopedic device capital. The county's unemployment rate is 2 percent, and 40,805 of the 42,387 adults living there have jobs, according to government statistics.
Kosciusko is one of 73 U.S. counties with unemployment rates of 2 percent or lower, U.S. Bureau of Labor Statistics show. Its largest city, Warsaw, is home to four major orthopedic manufacturers--DePuy Synthes, Medtronic plc (Spinal & Biologics division), Wright Medical Group N.V., Zimmer Biomet--and several smaller firms (OrthoPediatrics Corp., Precision Medical Technologies, Cutting Instruments division of Avalign Technologies). The city's population has ticked up significantly since the turn of the millennium--to 14,289 from 12,689 in 2000--and surgical appliance manufacturing employment, which covers orthopedic device production, has ballooned from 5,003 jobs in 2005 to 6,803 positions in 2015, Kosciusko County data indicate.
Despite such strong growth, Warsaw's orthopedic community is struggling to find enough qualified workers to help it keep pace with market demand for its products. Precision Medical, for example, has 10 unfilled positions, while Zimmer Biomet has donated $50,000 to the city school system's STEM program and $2 million for a nearby college's science center in an effort to attract young blood to the industry. Zimmer Biomet and other firms also have offered to pay the tuition of the first group of high school manufacturing trainees at Ivy Tech Community College's Orthopedic and Advanced Manufacturing Training Center, but only a handful of students signed up for the program.
"There's great demand for our product," Matthew Linville, Zimmer Biomet's director of human resources, told The Washington Post in June, "but there is a limited amount of skilled labor in the area."
And other parts of America, apparently. Results of Medical Product Outsourcing's latest salary survey shows the labor market paradox frustrating Warsaw's orthopedic manufacturers is not limited to Kosciusko County. Several respondents cited the lack of skilled workers as a top job grievance, with one identifying Northern California as a particularly difficult area to find qualified talent.
"[The] San Francisco Bay Area economy is red-hot in terms of tech companies (Apple, Google, Facebook, etc.), which has made it difficult for medical device companies to find and retain talent, and also made it expensive to lease space without going further away," the respondent griped.
"Difficulty hiring manufacturing personnel..." acknowledged another when asked about job frustrations.
"Lack of experienced talent in all disciplines to support our growth," chimed in another.
The labor shortage, however, pales in comparison to internal politics and the regulatory process--the top two factors leading to worker discontent. Nearly a quarter (24 percent) of MPO survey respondents are disheartened by internal politics, while 17.6 percent are frustrated by regulations. "Government regulations are not improving for the betterment of business," one survey participant said.
Other sources of worker frustration include inadequate project funding (cited by 10.2 percent of respondents), shareholder expectations (2.8 percent), and merger/acquisition fears (1.8 percent), according to survey responses. Compensation, of course, was a major grouse as well--more workers specified poor pay as their top grievance compared to last year (14.8 percent compared to 10.9 percent), but fewer are bothered by the lack of advancement at their company (5.6 percent vs. 7.7 percent).
Those feeling gipped by their employers are in the minority, though. Twenty-nine percent of MPO survey respondents expressed dissatisfaction with their pay this year, down from 33 percent in 2016 but matching the previous year's numbers. More than half--57.4 percent--believe their pay adequately reflects their level of responsibility, up from 46 percent in 2016.
The uptick in compensation contentment apparently is not improving worker loyalty, though: Thirty-two percent of the MPO survey respondents vow to leave their respective companies in the next two years, up 5 percent from 2016 and 10 percent from the previous year. Conversely, 37.3 percent pledged allegiance to their employers, down 5 percent from last year.
The dip in employee devotion could be attributed to growing workloads, although it is impossible to pinpoint a specific cause for jobhopping. Still, many survey respondents mentioned busier workdays when asked about changes in their jobs over the past year.
" [I have] additional tasks since no one was hired to take over [my] old position," one pollster said.
"[I'm] being asked to do three different jobs under a title that only involves one," replied another.
"[I'm] asked to do more tasks with no compensation and all ISO standards changed with no extra help to make the changeover," a third respondent complained.
"Asked to do more with no increase in pay," declared a fourth.
Et cetera. Et cetera. Et cetera.
Not surprisingly, none of the (reported) increased workloads came with a corresponding pay raise (another likely source of employee discontent). MPO survey results show 44.4 percent of respondents did not receive a salary hike in 2016 and 36.1 percent do not foresee improved wages in their future. Expectations are big, however, among those anticipating pay increases: Five and a half percent of respondents are awaiting a 1 percent raise (compared with 3.1 percent last year), 12 percent envision a 2 percent hike (15.5 percent in 2016), 25 percent expect a 3 percent increase (comparable to last year), 3.7 percent are counting on a 4 percent boost (8.5 percent in 2016), 11.11 percent predict a 5 percent hike (4.7 percent last year), 2.78 percent anticipate a 10 percent raise (down from 7 percent in 2016), and 2.78 percent are confident of receiving more than a 10 percent bump in pay this year.
Such a hefty increase might be necessary to offset flatlining medtech base salaries. Survey results indicate more workers earning less than $15,000 annually (3.7 percent vs. 2.3 percent last year), and fewer collecting between $15,000 and $75,000 (24 percent vs. 28.7 percent in 2016); most still bring in between $75,000 and $150,000 annually (39.7 percent, though that figure is still lower than the 47.3 percent that fell within that range last year), while 19.4 percent take home $150,000-$200,000 (up 4 percent from 2016), and 13 percent earn more than $200,000 (up 6 percent from last year).
While more money can certainly help boost job satisfaction levels, it's not the only path to professional prosperity. Regardless of their compensation levels, device workers increasingly are finding comfort (and happiness) in company perks like tuition reimbursement and flexible work schedules, or more abstract concepts such as freedom, respect, daily challenges, decisionmaking, autonomy, creativity, and product design. For some, however, it's the patient and the technology itself that brings the sweetest reward. As one respondent noted," [It's] the opportunity to be involved in the design of devices that will improve the quality of life of the recipients."
That sentiment was shared countless times in survey comments by other medtech workers.
"[I like] making a difference and helping to improve the lives of patients and caregivers," one participant said.
"[I like] creating and refining solutions that will make a difference," another agreed. "Improve[d] patient outcomes and lower healthcare costs."
Michael Barbella * Managing Editor
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|Publication:||Medical Product Outsourcing|
|Date:||Oct 1, 2017|
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