Companies consider mid-year increases to retain staff

ALEXANDRIA, Virginia – Feeling the pressure caused by decades of high inflation and keeping employees amid a tight labor market, some employers are giving bonuses or increasing their salaries. US companies have, on average, increased their base salaries by 4.8% so far in 2022, the Wall Street Journal reports, and about a third of employers are considering or planning to give raises mid-year.

Exxon Mobil gave its US employees a one-time payment of 3% of employee salaries, while Microsoft told its employees it plans to nearly double its global budget for merit-based increases. In the retail industry, Apple raises its initial hourly wage for US workers to $22 an hour or higher depending on the market. Additionally, Verizon is raising the minimum wage to $20 an hour. The Rotter Corporation of York, Pennsylvania, raised its starting wages to $17 an hour.

While some executives are concerned about the economic slowdown — Netflix is ​​laying off workers and so has crypto exchange Coinbase Global — other company leaders say the work is solid and that higher wages are needed to help their employees afford necessities like gas and groceries.

The magazine reported that companies have handed out 3% annual wage increases on average for years, but employee retention has been a big driver in paying people more.

“Labour shortage plus inflation is that perfect storm as we’re seeing a bigger annual base salary increase than previous annual increases and companies are thinking about doing something more,” Rebecca Thoman, vice president at Pearl Meyer, a compensation consultancy, told the newspaper.

Small businesses are feeling the pinch of the labor shortage, as the number of employees at companies with fewer than 50 workers has fallen in three of the past four months. They also increase wages and benefits to attract retail workers, with 67% increasing wages and 44% adding employee benefits.

Warehousing and logistics company Lansdale Warehouse Co. Pennsylvania wages its employees between 8% and 12% in 2020 and then again by a similar amount last year. This summer, the company, which employs 65 people, is giving workers “instant bonuses” of $25 or $50 for Wawa gift cards.

According to a WalletHub survey, the top five states that struggle the most to hire employees are Alaska, Kentucky, Georgia, Montana and Iowa.

“Employers need to position themselves as ‘preferred employers’ in their communities and regions,” Lisa Jepsen and Drew Conrad of the University of North Iowa told WalletHub. “In addition to offering competitive wages and benefits, employers must create flexible work environments where employees strive to achieve a better work-life balance.”

Pay and bonus increases hit employees at a time when more and more Americans are indulging their savings. The personal savings rate was 5.4% in May, which is lower than the average of the past decade and well below the record high of 34% in April 2020.

NACS hosted three webinars in June that discussed innovative ways to address the labor shortage facing the fit retail industry. Convenient retailers also have access to the Good Jobs Calculator, designed exclusively for NACS members and the convenience industry. This tool allows retailers to use their own data and custom assumptions about how much improvement or upgrading can be achieved, and executives can run scenarios about the underlying impact of a good jobs system.

Revisit “Understanding Your Local Work Landscape” in the December 2021 issue of NACS for tips on building an effective employee value proposition and how to gain an advantage when competing for candidates.