Groceries, gasoline, rent, interest rates, and more—the cost of living is going up, up, up. Over the past year, consumer prices have increased 5%. Meanwhile, average hourly wages have risen at a much slower pace, up only 4.4% year-over-year. It’s not surprising then, that many employees feel like they’re being stiffed on their paychecks. According to a recent Monster poll, 81% of workers said their current wage has not kept up with the rising cost of living.
Of course, businesses themselves are not immune to inflation’s pinch either. Heading into 2023, Monster’s Future of Work survey found that meeting candidates’ salary expectations was one of employers’ biggest recruitment concerns (up 12% from last year).
However, experts say the cost of not paying employees a livable wage can be severe. “Employers that don’t pay a living wage will probably have more turnover, meaning they will lose institutional knowledge, team cohesion, and continuity on projects,” says Daniel Altman, chief economist for Instawork. “They’ll also have to spend more time and effort on training.”
Here’s what employees have to say about wages and the rising cost of living.
Most Employees Haven’t Received a Raise
Annual pay raises and bonuses are often a great way to ensure employee pay keeps up with the cost of living. It’s also a great way to show continued interest and support for your current workforce.
Unfortunately, most workers didn’t see any increases in pay this year. According to Monster’s poll, 62% of workers never received a bonus, while 55% said they have not had a raise in more than a year.
Some Workers Would Consider Leaving
When wages don’t keep up with the cost of living, employee retention can become a huge issue for employers. In fact, about two-thirds of workers in Monster’s poll said they are looking for a higher paying job due to inflation and the high cost of living.
If the “Great Resignation” taught us anything, it’s that employees need to feel valued and should be rewarded in some way for their time, loyalty, and productivity. (This is usually outlined in an employer value proposition.)
“Employers can retain high-performing staff by investing in their personal training and progression,” says Wendy Makinson, human resources manager at Joloda Hydraroll, a material handling company. “By demonstrating the employee is valued and the business is willing to dedicate time and money to improving their skills and qualifications, it shows a level of commitment that an employee may be willing to accept during a time of high inflation.”
Additionally, Altman says, “Employers concerned about retaining workers in this tight labor market can also offer loyalty bonuses.” Beyond that and higher pay, of course, he says flexible schedules, skills training, benefits, promotions, and paid time off can be some of the most prized aspects of a job.
Others Might Moonlight to Make Ends Meet
Given the high cost of living, some workers are taking on second, maybe even third jobs to help pay the bills. Over the past year, BLS data shows a 2% increase in the number of people holding multiple jobs. Looking ahead, Monster poll data indicates that percentage may continue to rise, as 40% of workers said they are considering taking another job to keep up with inflation.
Our advice to employers, especially those who are unable to give raises or bonuses this year, is to be mindful of employees who may want to moonlight or take on additional jobs outside of their normal working hours. “Offering a flexible schedule is the best way to allow workers to integrate flexible work with their permanent jobs,” Altman says. “Our business partners offer shifts at all times of the day, so people who have family obligations and other responsibilities can find the most convenient time to earn extra income. Employers can do the same for their permanent workforces.”
Lots of Employees Are Stressed Out
When employees are stressed about putting food on the table and a roof over their heads, that stress can often carry over into the workday. This can lead to burnout, lower productivity levels, and greater risk of error. In fact, Monster’s poll found that 38% of workers are burned out, saying that inflation and the cost of living is negatively impacting their performance at work.
Adding onto that stress is the news of mass layoffs that’s been making headlines. Monster’s poll also found that 27% of workers are avoiding taking sick days or time off for fear of losing their job. “Employers should be wary of this kind of behavior because it can affect productivity as well as well-being,” Altman says. “Nobody wins when sick people show up to work. Employers can tell workers that the use of sick days and benefits will not affect their standing. Having a written code of conduct that reinforces this idea is even better.”
There Are Other Forms of Compensation to Consider
Keep in mind that pay isn’t the only form of compensation employees look at. In addition to salary, compensation packages can—and should—include benefits like paid time off, healthcare, and more. However, Monster’s poll found that 77% of workers have not been offered any additional benefits to keep up with the high cost of living.
“Pay is the best way to help workers keep up with the cost of living,” Altman says. “But employers can also offer lower cost-sharing for health insurance, higher matches for retirement funds, and on-the-job benefits like free lunches.” Additionally, Makinson says switching to remote or hybrid work can be seen as a benefit to employees during inflation as workers can often save money on commuting, food and drink, work clothes, and even childcare.
Rethink Your Recruiting Approach Amid Economic Uncertainty
Business confidence is falling as the reality of inflation and the impending recession begins to take hold. As such, many employers may need to rethink their approach to recruitment and retention in today’s uncertain economy. For more insights on how employers can navigate the road ahead, check out Monster’s latest eBook, Confident or Cautious: Recruiting in Uncertainty.