Continued High Inflation Rates and Employee Compensation
Author: Alliant
Inflation in the United States has seen its largest 12-month increase since 1981, creating a challenging economic environment for both organizations and employees. According to the Bureau of Labor Statistics’ (BLS) consumer price index, the U.S. inflation rate had increased by 8.6% as of May 2022. While some economists predict this rate will ease by the end of 2022, whether inflation will lower¬ and by how much remains to be seen.
Most employees have likely been impacted financially due to inflation and ongoing shortages. In turn, competitive pay remains a top demand of workers in today’s labor market. As a result, workers desire various types of assistance during this time, and in turn, employers are exploring strategies.
As inflation has increased, so has pay for many organizations. The BLS reported that average hourly earnings had increased 5.2% year over year as of May 2022. Although these numbers trail current inflation, this does show that employers are increasing pay slightly. According to Zywave’s 2022 Attraction & Retention Benchmarking Overview, 75% of employers consider increasing compensation to meet current demands as one of their top challenges for attracting and retaining employees. While large compensation bumps are not feasible for all organizations, even small increases can help employees address heightening day-to-day costs.
Alternatively, allowing employees to work remotely can help reduce expenses such as commuting—which has become more expensive due to increased gas prices. Remote working options can also help employees save money on lunches and other day-to-day expenses that come with going into the office. Such options as remote or hybrid work can be a perk for employees and can also be viewed as a benefit in lieu of greatly increasing wages.