US inflation is at 9.1 percent, the highest level in over 40 years. While wage increases are also at their highest level in four decades — 4.8 percent according to a new Pearl Meyers survey — they are not high enough to combat inflation, especially when you consider the discrepancies in them. According to Pearl Meyers, only 25 percent of survey participants provided pay rises anywhere near inflation figures. These companies reported giving their workers’ pay rises of over six percent to retain their services and help them combat inflation. But even these increases — the most generous reported in the survey — were a full three percent less than inflation itself.
Large companies such as Microsoft, Alphabet (Google’s parent company), and Amazon have all said they plan to raise pay significantly. Amazon’s announced jump is the largest I have seen so far. It said it would double its maximum corporate worker base pay to $350k, up from 160k. In addition to inflation, Amazon cited the competitive labor market as one of the factors behind the change.
However, not every employer has the resources these global high-tech giants do to help their employees combat inflation.
So, what are some other steps that smaller companies can take to make life easier for their employees?
Here are three strategies to help employees fight inflation:
1) Embrace remote or hybrid work.
Private research and that done by the US Labor Department show that as work reopens after the pandemic, most employees prefer working from home, especially women. As companies struggle to hire and retain workers – and now help their employees deal with family budget-crushing inflation — it is time to get strategic about hybrid work models. Employers should think of hybrid and remote work as strategies to accelerate hiring and retention, improve productivity and innovation, and reduce the cost of wasted office space — costs that executives can redirect to strategic business priorities. (Learn more about implementing hybrid work from my blog.)
Besides the company benefits of hybrid and remote work, permitting employees to work from home decreases the cost and time of commuting. According to the US Bureau of Labor Statistics, gas prices have risen dramatically since the start of the year, with the national average hitting $5.01 a gallon on June 14. Energy prices are one of the highest drivers of inflation, accounting for nearly half of the 9.1 percent rise in June’s consumer price index.
In addition, employees can save money by making lunch at home.
2) Delay medical premium increases.
Health care costs are expected to rise dramatically in 2023 due to inflation, deferred care and late diagnoses related to Covid-19, and health care provider shortages (such as nurses). With employees already reeling from inflation, employers should hold off increasing the employees’ share of health-care premiums. They could go further still by deciding not to increase health-care premiums in 2023 as well as not increasing what employees pay.
3) Provide perks.
Some employers have already taken to handing out gift cards for employees to pay for food and gas. Gift cards are a simple way to provide employees temporary relief from inflation and boost morale. However, gift cards may become a logistical headache for employers, and employees may be irritated by the tax surprise that comes with them. So if you do give gift cards, ensure your workers understand the tax implications of them. Gift cards provided to employees are considered the equivalent of cash and are taxed, even if they are worth only $5.
Another outstanding perk is to cut prices at the company cafeteria with more generous daily features such as inflation-fighting breakfasts and lunches or an overall price cut for a period of time.
When will inflation begin to subside?
Economists say the data are mixed and hard to predict. However, as long as there is a war in Ukraine, China maintains its zero-tolerance Covid-19 policy, and supply chain problems remain unsolved, it’s reasonable to expect that inflation will remain high for some time.
As employers plan their salary increase for 2023, I recommend they track the salary market data closely and think four to six percent, with extra amounts for their highest performing and highest potential employees.
Add to that my three strategies to help employees fight inflation, and their employees will have good reason to say thank you.
About Victor Assad
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and managing partner of InnovationOne. He works with companies to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com.