Gas Prices Prompt Employers to Consider Varied Commuter Benefit Options

Copyright 2008 Institute of Management & AdministrationAll Rights Reserved Managing Benefits Plans

September 2008

HUMAN RESOURCES Vol. 2008 No. 9

1413 words

Gas Prices Prompt Employers to Consider Varied Commuter Benefit Options

With employees struggling to pay escalating gas prices, employers are beginning to offer workers commuting benefits ranging from flexible work schedules to free bicycles.

Moreover, such commuting perks may do more than put extra money in workers' pockets. They can also have environmental benefits, enhance work-life balance, and even decrease the likelihood of employees arriving late to the office.

Employers also may find the benefits to be a key recruiting and retention tool. A recent survey by Telework Exchange, a public-private partnership, found that over one-quarter (28 percent) of 377 surveyed employees said they are already looking for jobs closer to home because of gas prices, while 89 percent said they would limit a job search because of potential commuting.

Employees are also taking it upon themselves to save money on gas, as commuting to work using mass transit has risen dramatically. U.S. residents took 2.6 billion trips on public transportation during the first three months of 2008--almost 85 million more than they did during the same period in 2007, according to the American Public Transportation Association.

"Obviously, the huge increase in gasoline prices is a major factor driving this," said Larry Filler, chief executive officer and founder of TransitCenter Inc., a nonprofit organization in New York City that was created to push for greater use of mass transit.

"But we also noticed a growth in transit use due to other factors as well--growing traffic congestion over the last 20 years ... and a concern over the environment," he said. "People are looking for ways to reduce their carbon footprint."

Filler said employers can assist by providing workers up to $115 per month tax-free for mass transit commuting or vanpooling and up to $220 for parking.

What else can employers do? The Society for Human Resource Management in Alexandria, Va., said raising mileage reimbursement up to the Internal Revenue Service cap (currently 50.5 cents per business mile) is the most common strategy--reported by 42 percent of 553 human resources practitioners who responded to a May SHRM survey addressing the types of assistance organizations are offering to help workers handle high gas prices.

The next most common benefits HR practitioners reported their organizations are offering are flexible and compressed work schedules (26 percent), telecommuting (18 percent), public transportation discounts (14 percent), and gas gift cards as rewards (14 percent).

"Rising gas prices are cutting into everyone's personal budgets, so employees are taking a closer look at such benefits as compressed workweeks and public transportation discounts to reduce their costs," said Susan R. Meisinger, SHRM's president and chief executive officer. "In addition, employers are offering extra help as a tool to retain employees and improve employee morale."

Respondents to the SHRM survey said their organizations are also trying to recruit workers who live closer to the worksite, providing advance gas money to travel as opposed to post-travel reimbursement, and allowing workers to transfer to offices closer to their homes.

Compressed workweeks. Kent State University in Ohio recently implemented a four-day workweek option for custodial staff, and 74 of the 94 employees eligible to participate volunteered to do so, said Tiffany Murray, director of records, compliance, and employee relations at the university. Participants work 10-hour shifts, four days a week as part of the pilot program.

"We are working on a new initiative to roll this out throughout the university's eight-campus system," Murray said, noting that Kent State has 5,000 employees.

She said the compressed workweek has met with "favorable feedback from employees and supervisors" based on cost-savings from not having to travel an extra day during the week.

In addition, Murray said, work projects "have been completed earlier or begun much sooner."

"So it's beneficial from a business perspective, but the employees also recognize the immediate benefit of having that day off," she said.

Kent State's initial goal with the compressed work schedule was to "establish a healthy work-life balance," Murray said. But concern among employees about rising gas costs was another factor. "It's a financial burden for some employees," she said of fuel costs.

The Tallahassee-based Florida attorney general's office launched a similar pilot program in July. Thus far, 113 of 508 eligible employees statewide opted to work four 10-hour days, said Sandi Copes, a spokeswoman for the office.

As at Kent State, officials in the Florida AG's office had been discussing for several years the possibility of allowing employees to work compressed schedules as a way to enhance their work-life balance, Copes said. "But some employees have mentioned gas as a reason they would consider participating," she added.

Bicycle program rolled out. The Seattle Children's Hospital Research Institute launched a pilot program in February that involved buying bicycles to allow employees to use them for mid-day appointments. Employees also can take the bikes home on a trial basis to try out bicycle commuting, said Chris Cameron of the Seattle-based Cascade Bicycle Club, which helped the hospital launch its program.

Other plans this year at the hospital include giving bicycles to employees who agree to give up their company parking spaces. To receive a free bike, an employee would have to stop driving to work two days per week and commit to biking to work two days per week, a hospital spokesperson said.

In addition, Children's Hospital, in partnership with the University of Washington, plans to introduce a flex-bike program this fall. The program will be membership based, allowing bikes to be checked out for an hour or more, much like a Zipcar, according to the hospital.

"More human resource and transportation professionals are being encouraged by their employees to incorporate programs like this," Cameron said.

In Washington state, the Cascade Bicycle Club, which has almost 10,000 members, won a transportation grant of about $180,000 from the federal government to work with companies in the state to develop programming tied to commuter trip reduction using bicycling, he noted. The goal is to encourage companies there that have at least 100 employees to establish plans to reduce single occupancy vehicle travel, Cameron said.

Meanwhile, Filler said the TransitCenter has found that a growing number of employers plan to add a pretax commuter benefits program to their employee benefits packages this year.

Commuter benefits programs provide employers with the option of letting their employees pay for their monthly commuting costs tax-free in an effort to decrease traffic congestion and reliance on natural resources, he said.

Key findings in the 2008 BusinessWeek Research Services and Transit Center survey The Impact of Commuting on Employers: How Commuter Benefits Can Help found that commuting is a growing concern for employees. Eighty percent of 1,048 respondents to the online poll said they had some concern about the cost of commuting to work, while 92 percent said they were concerned about the high cost of fuel.

The survey also found:

More than half (52 percent) of solo drivers said traffic jams are getting "noticeably worse" on their drives to work.

Ninety-two percent of respondents said they have some degree of concern about the effects of global warming on the environment.

About one-quarter (24 percent) of respondents said they arrive at work late by at least 15 minutes on three or more days each month because of their commutes. Among commuters who said their commute is getting worse, 35 percent arrive late.

Twenty-six percent of all respondents said they could see themselves looking for another job in a different location based on their commute. Among employees whose commute is getting worse and who are also concerned with the cost of commuting, 63 percent "are vulnerable to leaving" their current job, the survey found.

The survey also indicated that employees increasingly value benefits that can help ease commuting pressures. In their next jobs, 79 percent of respondents said, flextime benefits would be important, while 72 percent said telecommuting would.

In addition, more than half (54 percent) of survey respondents said pretax commuter benefits would be extremely or somewhat important, while 47 percent said subsidized commuter benefits would be extremely or somewhat important.

August 6, 2008