ALEXANDRIA, Va.— Feeling the pressure from decades-high inflation and keeping employees amid a tight labor market, some employers are giving out bonuses or increasing salaries. US companies on average increased their base pay by 4.8% thus far in 2022, reports the Wall Street Journal, and about a third of employers are considering or planning on giving mid-year raises.
Exxon Mobil gave its US employees a one-time payment that was 3% of employees’ salaries, while Microsoft told its employees it plans to nearly double its global budget for merit-based raises. In the retail industry, Apple is raising its starting pay for hourly US workers to $22 an hour or higher based on the market. Additionally, Verizon is raising its minimum pay to $20 an hour. York, Pennsylvania-based Rutter’s raised its starting wage to $17 an hour.
While some executives are worried about an economic slowdown—Netflix laid off workers and so did cryptocurrency exchange Coinbase Global—, other corporate leaders say business is strong and the higher pay is necessary to help their employees afford necessities like gas and groceries.
The Journal reports that companies have doled out 3% annual pay increases on average for years, but employee retention has been a large driver in paying people more.
“A labor shortage plus inflation makes up that perfect storm where we’re seeing larger than historical annual base salary increases and companies thinking about doing something more,” Rebecca Toman, vice president at Pearl Meyer, a compensation advisory firm, told the Journal.
Small businesses are feeling the sting of the labor shortage, with the number of employees at companies with fewer than 50 workers declining in three of the past four months. They’re also increasing wages and benefits to attract retail workers, with 67% boosting wages and 44% adding employee benefits.
Warehousing and logistics company Lansdale Warehouse Co. in Pennsylvania increased its employee wages between 8% and 12% in 2020 and then again by a similar amount last year. This summer, the company, which employees 65 people, is giving workers “spot bonuses” of $25 or $50 Wawa gift cards.
According to a WalletHub survey, the top five states that are struggling the most to hire employees are Alaska, Kentucky, Georgia, Montana and Iowa.
“Employers need to position themselves as ’employers of choice’ in their communities and regions,” Lisa Jepsen and Drew Conrad of the University of Northing Iowa told WalletHub. “In addition to offering competitive wages and benefits, employers must create flexible work environments as employees seek a better work-life balance.”
Pay raises and bonuses are hitting employees at a time when more Americans are dipping into their savings. The personal savings rate was at 5.4% in May, which is below the average of the last decade and is far below the record of 34% in April 2020.
NACS hosted three webinars in June that discussed innovative ways to address the labor shortage facing the convenience retailing industry. Convenience retailers also can access the Good Jobs Calculator, designed exclusively for NACS members and the convenience industry. This tool allows retailers to use their own data and customized assumptions about the amount of improvement or uplift achievable, and executives can run scenarios on the bottom-line impact of a Good Jobs system.
Revisit “Understanding Your Local Labor Landscape” in the December 2021 issue of NACS Magazine for tips on building an effective employee value proposition and how to gain an edge when competing for candidates.