As the U.S. continues to experience rising inflation, there is immense pressure for business owners to increase employee wages. As of June 10th, the U.S. Department of Labor (DOL) reported the inflation rate reached 8.6 percent; the highest level since December 1981. There are many factors combined that create pricing pressures across the economy, specifically the unusually tight labor market. Over the past year, inflation was fueled by a mass demand for goods and lacking supply. However, a new problem has emerged, rising labor costs.
The Continued Workforce Shortage
The gap between job openings and available workers has continued to widen. The unemployment rate within the U.S. hit over 5.5 million in the month of April. This equates to two jobs per every unemployed worker. The continued pressure on wages has created an increase in the consumer price index (CPI). The CPI has risen to over 8.5% -- biggest price 12-month increase since 1981. The labor shortage combined with inflation has become detrimental for businesses.
The Rising Cost
Workers have begun taking advantage of the tight labor market. Despite the unemployment rate falling in recent months, the U.S. is still enduring a major gap. As inflation continues to rise, employee take-home pay holds less buying power. The recent surge in inflation leaves employees desiring more wages and benefits. As a result, employers are now offering increased compensation in hopes of attracting top talent, while remaining competitive.
According to SHRM, the average budgeted salary in 2022 climbed to 5.2 percent, compared to 4.5 percent last year. Many companies must adjust where budgets are typically set in advance. To keep key employees, some businesses are planning a midyear pay increase and salary adjustments - in addition to annual raises. While employers continue increasing salaries to retain their top talent, they must implement changes to attract new talent.
Employee Benefits Options
One way to remain competitive within the current market is to offer perks beyond salary adjustments. Companies are providing remote working options, providing gift cards to their employees for gas and groceries, and increasing bonus opportunities. Other organizations are offering additional perks such as student loan reimbursement, daycare options, or fertility benefits. These investments have a payoff as employees want to feel supported and appreciated.
How GMS Can Help
Due to rising inflation, it is vital for employers to remain competitive. When you partner with GMS, our HR experts can help you attract and retain top talent. Along with providing you top-of-the-line benefits, while ensuring the lowest rate. Our team supports your business through all unprecedented times and ensures your business has all the tools to remain competitive and successful. Contact us today to learn more.