Economic inflation is at its highest in 40 years. Unemployment is hovering around 3.5%. The risk of a recession is looming as consumer spending decreases with rising prices.
According to the Bureau of Labor Statistics monthly job report, while prices have increased 7.9%, wages have only increased 5.6%. No calculator needed here to tell there is disparity.
Here are a few tips on how companies and employees can address the issue –
- Gather Facts: Companies can perform a salary study to verify if their workforce is being paid properly. Some employers may be at their limit in how much they can increase, but facts need to be gathered. Employees can also research the market and determine wage ranges for their specific job, industry, location, etc. Knowledge is power.
- Case by Case: Each employee is an individual and any increases should be treated case-by-case, when possible, to account for performance, tenure, metrics, or whatever measurements are in place. However, if your entire staff is underpaid, it might be time for a company-wide adjustment.
- Get Creative: No budget for salary increases? Get creative and offer a one-time “inflation” bonus, gas gift cards, or extra time off. Any offering is better than none, especially when everything in our lives costs more now.
Retaining existing talent, recruiting new talent, and remaining a profitable business in this crazy economic market can be very challenging. There is not one clear solution for compensation as it relates to inflation, but companies and employees need to communicate clearly and work together. Ignoring the issue will only make things worse.