Companies Pay Raises For Stay Workers: According to a study in The Wall Street Journal, inflation is feeling the squeeze of workers obtaining their most significant pay raises in decades. Wages for those who remained in their occupations increased by 5.5% in November from the same month a year earlier, as the Federal Reserve Bank of Atlanta reported.
According to the research, this represented the fastest yearly growth rate in the 25 years of data collection, which began in January 2022. Pay increases of 7.7 percent year over year in November were seen by workers who switched businesses, positions, or industries, as reported by the Journal.
According to Layla O’Kane, senior economist at Lightcast, “if I can see that the Burger King down the street is providing $22 an hour and I’m making $20 an hour at the Dunkin’ Donuts that I work at, then I know very clearly what my potential cost is.”
“As a result,” the article continues, “employers are responding by increasing wages internally because they do not wish to lose the workers that they have already trained.” Companies are increasing wages for current workers partly because of the risk that workers will leave for higher pay elsewhere.
However, tremendous wage growth contributes to historically high inflation as some businesses raise prices to cover their increased labor costs. However, although inflation has slowed marginally in recent months, last year saw price increases at the most significant rate in four decades.
Officials from the Federal Reserve have stated that they are keeping an eye on wage growth as they consider future interest rate hikes to slow the economy and bring down inflation. Following a downwardly corrected 6.1% increase in October, prices rose 5.5% in November compared to the same month a year ago.
While many workers are bringing in more cash, they aren’t benefiting from wage increases. After adjusting for inflation, which averaged 7.1% for the year ending in November, the Labor Department reports that salaries for private sector workers fell by 1.9% during the preceding 12 months.
Additionally, some indicators show that pay growth is beginning to slow as the job market relaxes. Wage growth has slowed to 5.1% in November from March’s 5.6% annual rate of increase. Several experts cited by the Journal expressed concern that wage growth would continue to decelerate in the coming months.
According to Paul McDonald, senior executive director at Robert Half, a professional staffing organization, “companies are prepared for salary rise to match inflation” in industries with high demand for personnel. With lower inflation, pay growth can finally catch up.
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The annual rate of increase in the consumer price index (CPI), which tracks changes in the prices people pay for a basket of goods and services, slowed to 7.1% in November from October’s 7.7%.
Wage pressures, however, are expected to persist in industries with high competition. In a poll conducted in September and made public by Robert Half, over half of professionals reported feeling underpaid, and 40% said they would consider leaving their current jobs for a 10% pay increase.
Companies can’t find enough workers. Therefore, wages are rising for both new and existing employees. In October, there were 10.3 million job opportunities, according to the Department of Labor. This is significantly more than the 6.1 million unemployed people in the United States.
To that end, a Mercer survey of more than a thousand businesses found that in 2023, employers want to allocate more money than they have in the past 15 years to merit pay hikes to motivate their staff.
According to the Journal, a management consulting business in Chicago gave new college grad Daniel Powers a 10% boost at the end of the year on top of the six-figure income he was given when he was employed in September.
“There’s no false sense of ‘We’re family here,'” Powers remarked of his company’s management, meaning that they are aware of and prepared for business realities. Please share this with your friends if you find it interesting. Visit Lighthousejournal.org for more celebrity updates and breaking news.
Emma is a Master of Science candidate at the California Institute of Technology. Since approximately four years ago, she has been a freelance writer, producing content for newspapers, magazines, blogs, and the internet