A survey of co-ops shows patterns and wide variations
Note: This article contains charts that are not pictured here. You can download a pdf of the article at the end of this page.
This article is the second half of a report on compensation practices in retail food co-ops. Part 1, in the May-June 2006 edition of Cooperative Grocer, focused on general manager compensation. Here we’ll look at pay and benefits for other co-op employees.
Survey results reflect current practices among participating co-ops and do not necessarily represent best practices or industry norms. We have not attempted comparisons with natural or conventional chain food stores. However, knowing existing practices among peers will give co-ops valuable information for improving employee compensation.
Participants and data
Our survey report is based on responses from 99 co-ops, a participation rate of slightly over 50 percent. Many of these co-ops share certain characteristics:
Participants represent a wide variety in store sales volume (see Chart 1: Size of Co-ops); their combined sales are $662,663,296 for the fiscal year ending September 30, 2005. The number of employees on payroll during that year came to 6,747, split almost exactly 50/50 between full-time and part-time. As expected, the number of staff hours is clearly connected to sales volume, as is the number of employees on payroll. (See Chart 2: Total Weekly Payroll Hours by Size of Co-op; and Chart 3: Average Number of Employees by Size of Co-op.) But while total payroll hours increases by store size in a consistent pattern, the average number of employees is much less consistent.
Meanwhile, total personnel expense (wages, benefits and payroll taxes) ranged anywhere from 18.3 percent to 30.5 percent of sales, without any clear correlation between size and cost of labor. (See Chart 4: Total Personnel Expense as a Percent of Gross Sales by Size of Co-op.)
What are co-ops paying?
When looking at the pay rates for entry-level employees and department managers presented here, keep in mind the impact of local labor market conditions. Costs of living vary widely from one town to another and one region to another. (The Cooperative Livable Wage Model—see related article—was created to address these discrepancies in local living costs.) Also consider that some states have a minimum wage set considerably above the $5.15 federal minimum wage—such as Washington’s $7.63 or Vermont’s $7.25—which effects starting pay. In addition, labor costs from one co-op to another can vary due to state requirements for specific employee benefits, such as workers compensation or disability insurance.
Starting pay rates for entry-level jobs range from $5.95 to $11.00 per hour. Median starting pay tends to increase with store size, from $7.00/hour for smaller co-ops (under $3 million) to $8.55 for co-ops at $10 million and over. (See Chart 5: Entry-Level Hourly Wage for Clerk Employees.) Larger stores continue to pay more than smaller stores both upon completion of the trial period and at one year. (See Chart 6: Entry-Level Hourly Wage after Trial Period, and Chart 7: Entry-Level Hourly Wage after One Year.)
For all co-ops in the survey, in the course of the first year of employment the median wage goes up by $1.18: from $7.57 to $8.75. However, this is not the typical raise at any given co-op. In each store-size category, the median pay increases by $.50 to $1.00 between the time of hire and the first-year anniversary. It appears that at most co-ops this increase occurs in at least two steps, with a raise upon completion of the trial period, and another at or before one year.
Nationally, the rate of inflation has been picking up steam. Between June 2005 and June 2006, the Consumer Price Index increased 4.3 percent. It appears that co-op employees in their first year are receiving raises that keep them ahead of inflation. Whether that pace of pay increases beyond the first year of employment is not clear to us, since it was outside the scope of this survey.
Because there are only 10 unionized co-ops in this survey, we don’t have enough data from which to draw firm conclusions about that factor. Nevertheless, having a union at these co-ops does not seem to lead to higher pay rates than at other co-ops in the same size categories.
Livable wage rates
Forty-six co-ops have determined a livable wage for their area, and 90 percent of those have a livable wage in place. These include all sizes of co-ops except the very small (below $1.5 million). Livable wage rates range from less than $7.00/hour to over $11.00, with most falling between $8.00 and $11.00. Given that the biggest factor in calculating a livable wage is the cost of housing, it’s not surprising that the amount of the livable wage corresponds more to location than to the sales volume of a co-op. The starting point for paying the livable wage follows no clear pattern. Some co-ops start new hires at the livable wage, while others wait till completion of the trial period, or six months, or a year or beyond. (See related article.)
Department manager pay rates
Although we collected data on other manager positions (store, marketing, membership, merchandising, meat and seafood, human resources, and information technology), it was evident to us from the explanatory comments of survey participants that (1) these positions mean vastly different things from one co-op to another, or that (2) there were not enough such managers in the sample to provide reliable data.
We did not ask for prepared foods manager pay rates in this survey because we were concerned that specifics of that particular department vary extremely among co-ops. It might be worth conducting a future survey specifically on prepared foods positions that could take into account department sales volume and types of programs.
Salary surveys are fraught with peril. They provide a useful guideline but should not be taken too literally. Without being able to compare job descriptions, we can’t know exactly how comparable any of these manager positions are. Even with the department manager pay rates provided here, there are differ- ences in level of responsibility among jobs with the same title in different co-ops. For instance, is the front-end manager responsible for the customer service desk? POS system? Physical plant maintenance? Preparation of deposits and entering of daily cash receipts?
In addition, the local labor market and cost of living play a role in compensation for department managers, just as they do with entry-level employees. American Chamber of Commerce Researchers Association maintains a cost-of-living index comparing cities to a national average of 100 (e.g., Atlanta is at 97, Boston is at 137.) ACCRA data is not available free, but online research may lead you to figures for your own area. If you want to calculate the salary differential needed to cover costs of living in your city compared to another particular city, there are numerous free online tools such as Salary Wizard.
Full-time vs. part-time
A key factor determining eligibility for benefits is how full-time and part-time status is defined. More than three quarters of the co-ops in the survey use 30 to 35 hours as the cut-off for full-time, with most of the rest using 36 to 40 hours.
When it comes to part-time status, however, co-op practices are all over the map. This may tie into the inconsistency we noted above in average number of employees (Chart #3). Sixty-four percent of respondents report that employees must work 20 hours or less to be considered part-time, and 40 percent reported part-time to be 15 hours or less. We were surprised at this minimal hours requirement for part-time status, since it seems that this would raise personnel costs—staff discount, payroll administration, evaluations, meetings, training, etc.—without necessarily creating any efficiencies. Looking at these numbers, we wondered whether some co-ops have the appropriate number of employees for their size.
As the number of Americans without health insurance continues to rise, this benefit becomes increasingly valuable in terms of employee recruitment and retention. Out of the 99 co-ops in this survey, 84 offer health insurance in some form to their full-time staff, 62 offer dental insurance, and 38 offer vision benefits. (See Chart #13: Health Benefits Offered.)
Of the 84 co-ops that provide health insurance, almost half require employees to work somewhere between 30 and 35 hours a week to be eligible. Larger co-ops are more likely than smaller ones to provide insurance to employees working less than 30 hours.
Well over half the co-ops that provide health insurance cover 75 percent or more of the premium for a full-time single employee, and only a handful cover less than 50 percent. In addition, 30 offer Flexible Spending Accounts (FSAs) to help employees with their premium payments, and 22 provide FSAs to help with medical expenses not covered by insurance.
If they have access to health insurance, part-time employees pay more for it than their full-time coworkers. Of the co-ops that provide health insurance to part-time employees, two thirds pay less than 25 percent of the premium, and only a handful cover 75 percent or more. And fewer co-ops make FSAs available to part-timers than to full-timers. Even if they have to cover the majority of the premium themselves, part-time employees might still consider this a worthwhile benefit, since they probably could not get as good a deal with an individual health insurance policy.
When it comes to coverage for family members of full-time workers, roughly one-third of the co-ops that provide health insurance pay more than 25 percent of the premium, but very few offer anything for families of part-timers.
At least a third of the co-ops offering health benefits are partially or wholly self-insured. Although they are represented in every size category, the proportion of self-insured co-ops increases with volume of sales. Few co-ops have Health Savings Accounts or Health Reimbursement Accounts (nine and seven respectively), both relatively new developments in the field of health insurance.
Survey participants wrote extensive comments to explain eligibility for their health insurance plans, giving us insight into the variety and complexity of these arrangements. We don’t know whether it is their insurance companies’ requirement or these co-ops’ own choice to set up multiple tiers of hours that must be tracked to earn different levels of employer contribution to the insurance premium. But we were struck by the added labor implied by having several different categories of employees.
For every type of employee benefit, even the popular discount at the register, fewer co-ops provide it to part-time employees than to full-time staff. While the Non-Health Benefits Offered chart speaks for itself (see Chart #14), we have a few comments on the results.
A significant number of co-ops, 42 percent, merge vacation, sick leave, personal leave, and holidays (or some mix of these) into one benefit called “Paid Time Off.”
We are glad to see that half the co-ops in the survey are offering retirement benefits. These include 401(k) plans—by far the most common—plus SEPs (Simplified Employee Pensions), SIMPLE IRAs, union pension plans, profit-sharing plans, and other unspecified arrangements.
Seventy percent of survey participants offer some form of cash bonus, with two-thirds of those bonuses based on profit-sharing. Bonuses potentially reward staff for their contribution to the financial success of the co-op and provide a viable way of increasing compensation without committing the co-op to additional costs that cannot always be sustained.
Employee Assistance Plans provide a cost-effective resource to employees and managers. For as little as $20–25 per employee per year, an EAP offers confidential counseling and referrals for personal problems, such as marital, financial, or substance abuse problems, to all staff, and advice to managers on handling difficult personnel situations. We think the fact that only 29 co-ops—most of them larger stores—have EAPs might be due to lack of common knowledge about the value of these programs.
In addition to the more standard benefits listed in the chart, we heard about benefits unique to a particular co-op, such as birthday pay. Also, we did not collect data on some items that are technically benefits but are seldom viewed that way by employees, such as pay advances and jury duty and bereavement leave.
Compensation is a package
Compensation includes a broad spectrum of benefits in addition to pay. By looking at employee compensation in its totality, co-op management can have a dialogue with employees about the costs and benefits involved. Ultimately, the goal is to develop co-op staff into business partners who can shape their job satisfaction and their own success, as well as the success of their co-ops.
Many thanks to all participating co-ops! If your co-op participated in the survey and you would like information that you don’t see here, please contact us at [email protected] or [email protected]. We may be able to provide data in more detail for the size of your co-op.
- 75 percent are members of the National Cooperative Grocers Association;
- 86 percent participate in CoCoFiSt data sharing;
- 94 percent have a general manager structure, while 6 percent are managed by co-managers or a collective;
- 90 percent are not unionized;
- 84 percent operate one business unit, 13 percent operate two, 3 percent operate three or more. We have provided tables for minimum, maximum, and median pay rates for five department manager positions, sorted by store sales volume: Grocery, Produce, HBC,Vitamins, Front End, and Finance. (See Charts #8–12: Department Manager Hourly Pay Rates.) For the sake of consistency, we chose to use hourly pay rates in these charts; but keep in mind that some department managers are paid on a salary basis.