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The biggest challenges for businesses to overcome amid COVID

In this article:
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Paychex CEO, Marty Mucci, joins Yahoo Finance to discuss the continued growth experienced in the job market, challenges facing employers, and how the pandemic will continue to affect the labor market moving forward.

Video Transcript

[MUSIC PLAYING]

BRIAN SOZZI: Although Wall Street economists are out there slashing their GDP forecasts because of the Delta variant, most macro folks still agree-- the US labor market will continue its recovery well into 2022. And that could be a nice tailwind to payroll services company Paychex.

Joining us now is Paychex president and CEO, Marty Mucci. Marty, good to see you again this morning. Good to see you at the NASDAQ, back out, celebrating your 50th anniversary here. Like I mentioned, I can't think of a better company that has a better pulse in the health of the labor market. What are you seeing in the labor market right now? Are you seeing the recovery stall a bit because of concerns around Delta?

MARTY MUCCI: No, actually, right at this point, we're still seeing a pretty consistent improvement, particularly in the leisure and hospitality team employee set. We're seeing the growth pick back up. It's almost back up to our-- our base levels of our small business index, which was set in 2004. So job growth getting back to kind of that level.

So certainly some things like construction are slowing a bit. I think that's raw materials and supply. But leisure and hospitality, other services, certainly picking up, still very strong.

JULIE HYMAN: Hi, Marty. It's Julie here. As you kind of reflect on-- obviously, you haven't been there all the 50 years-- but as you reflect on this history of the company, we've been talking a lot over the past year about how much the job market has changed, sort of the power dynamics and so many other aspects of it. From your perspective, what are sort of the-- what is the biggest change or the biggest changes that you have seen over the past 18 months?

MARTY MUCCI: Well, I think it's been mobility and the ability to get to clients, our businesses and their employees, wherever they want to be and serve them however they want to be served. You know, I think it has accelerated all of the thinking of, I can be from anywhere and get work done, and the digitalization, basically, of the market, meaning that you have to be able to serve with your products and services anywhere.

Our mobile app, the use of our five-star mobile app at Paychex has increased dramatically in the last 18 months. And it's giving you anything from your net pay to be able to move money, look at your retirement plan. Everyone is expecting that their mobile apps are going to be the same as their peer-to-peer apps, their consumer type of apps.

So we've seen a great increase in mobility. And the ability of innovation in the technology we've introduced at Paychex, particularly in the last 8 to 10 years, really make a huge difference during this pandemic.

JULIE HYMAN: And Marty, just to follow up on that, if mobility is the biggest change, what's the biggest challenge associated with that? Is it that you're dealing with more-- employers are dealing with more different tax regimes that they then have to funnel through your software and technology? Or are there other issues?

MARTY MUCCI: No, I think the biggest challenge right now for businesses, particularly small and mid-sized businesses, is just how to handle not being able to find enough employees. You know, this is the big challenge right now, in particular the last three months. How do I find enough employees and retain employees? There's a tremendous amount of turnover in all industries, really, of people just deciding to go to other jobs. Also, some staying at home still.

Don't think it's just the unemployment, the higher unemployment benefit. I do think we don't see a big correlation there. I think it's more just still concerns about COVID, concerns about child care, and deciding just what they want to do with their life, because they've been home and created new habits. So it's really this enormous change in the workforce right now is-- it's never really seen anything like it in, certainly, the last 10 or 20 years. So it's a big challenge for businesses-- how do I hire, onboard, and retain and develop employees?

BRIAN SOZZI: And Marty, the return-to-office dates for many very large companies, I'm sure a lot that you work with, those are being pushed back until later this year, in some cases into 2022. Have you seen a pickup in the HR part of your business?

MARTY MUCCI: Oh, definitely. The HR outsourcing, the support that is needed to be able to handle COVID policy, return-to-work policy. Now the big issue, right, with Delta coming out with its announcement is, do we change our health care premiums? What do I do with health care? Do I offer different health care premiums to my employees who are vaccinated or not vaccinated?

All of these questions, it's never been so complex for businesses to handle HR. And it's that recruiting, hiring, and retaining and developing. But it's also things like, how do I handle medical benefits, how am I going to charge my employees, and that kind of thing. It's never been more need for HR support than right now.

BRIAN SOZZI: Yeah, Delta, speaking of Delta, they really took a strong stand yesterday, Marty. Is that announcement from Delta-- is that now something you are looking to implement inside your own company?

MARTY MUCCI: We are. We're looking at it, because the cost is very high. And, you know, you can talk about whether to mandate the vaccinations or not for your employees. But also, you need to be able to say, hey, there are consequences, there are costs that come with not being vaccinated.

And I think Delta made the comment that the average hospital stay for someone not vaccinated is, like, $50,000. You don't want to spread that to all of your employees. So you have to find ways, just like smoking and non-smoking, ways to try to get the cost to the possible cost causer and-- and be as fair as you can to your employees to keep your rates down for health insurance.

BRIAN SOZZI: So just following up on that. So at Paychex, your premiums might go up a couple hundred dollars if you work there?

MARTY MUCCI: For our employees, they may go up. But we're looking at that now to see what's the fairest way to handle that. And our benefits will come up for renewal this fall, and then go to our employees. And it's something that-- trying to keep the rates down for all of our employees may be something that we have to do as well.

BRIAN SOZZI: Fair enough, we'll leave it there. Paychex president and CEO, Marty Mucci, always good to see you. Good to see you out there getting more mobile down at the NASDAQ. We'll talk to you soon.

MARTY MUCCI: [CHUCKLES] OK, thanks.