Amid the pandemic many companies have already been competing for a limited pool of labor as they jumpstart operations, Bloomberg reports. While employers have drastically boosted pay over the last year for low-wage workers, including in the hospitality and retail industries, that has not happened as much for office employees and higher-income earners. Now those office workers and higher-salary employees can point to rising inflation to negotiate for higher wages for themselves.
“The increase in cost of living is a feather in the cap for job seekers in negotiating pay with employers,” says Rich Deosingh, a district president for staffing agency Robert Half International. “If you look at positions in bigger cities, such as New York or the Bay Area, wages need to be in-line or above where the cost of living trends are going.”
Employers may be reluctant to give into higher wage requests tied to inflation as they themselves try to contain costs, but many HR professionals may follow Andrea Mullens’ lead and bump up salaries of existing staff preemptively to head off rivals vying for talent.
“It’s crazy,” says Mullens, vice president of human resources at the cloud-computing division of IT manufacturer Ingram Micro. “The market is inflating. We’ve really seen it.”
The IT industry has been offering 20% salary increases as well as one-time cash bonuses to keep workers from leaving. They also have sped up promotions, which can lead to a 35% jump in compensation.
Employers are being advised by workforce consultants to engage more “stay” interviews with the goal of learning what their current employees want and what makes them happy. “Companies looking at their budgets realize that [raises] are probably not going to meet inflation,” John Dooney, an HR manager with the Society for Human Resource Management, tells CNBC. “But what we see is more strategies around really rewarding high performers.”
AnnElizabeth Konkel, an economist at the Indeed Hiring Lab, notes that hiring managers can neutralize current employees’ arguments for a wage increase due to inflation by reminding the candidates that “‘we’re experiencing price increases, as well.’”
Konkel, as do other experts, instead suggest these employees hone in on their role in improving the company. Willis Towers Watson found in its 2021 General Industry Salary Budget Survey released in July that “…only 3% of companies are not planning to boost salaries next year, a drop from 8% that didn’t give raises this year.” That survey also found that 91% of companies awarded yearly performance bonuses this year based on 2020 performance. That compares with 76% of employers who awarded these bonuses last year.
“Companies are between a rock and a hard place when it comes to compensation planning,” says Catherine Hartmann, North America Rewards practice leader at Willis Towers Watson. “On the one hand, employers need to continue effectively managing fixed costs as they rebound from the pandemic. On the other hand, companies recognize they need to boost compensation with sign-on, referral and retention bonuses; skill premiums; midyear adjustments; or pay raises. Or they can utilize all of these options, especially with millions of Americans quitting their jobs, changing careers or postponing looking for employment.”