Inflation in the US hit 8.6% last month, one of the highest rates in the world
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- Companies are offering multiple salary increases per year to stem worker attrition, WSJ reported.
- Some employers are factoring inflation, which hit a 40-year high in the US in June, into pay rises.
- 70% of companies implemented larger salary increases this year versus 2021, according to a study.
Companies are giving raises to new hires after just weeks on the job and reviewing salaries multiple times a year as bosses come to terms with a soaring level of inflation that is causing a global cost of living crisis, The Wall Street Journal reported.
Asset manager T. Rowe Price last month announced a 4% raise for 85% of its employees starting from July 1, according to the Journal. That raise, which is in addition to the company’s year-end salary adjustments, included new hires who had joined the company only a few weeks back, the company’s head of human resources told the Journal.
A low unemployment rate has created a competitive labor market that has seen the scales tip in favor of jobseekers. Some workers are finding that now more than ever, switching jobs results in a larger paycheck. In response, companies are looking to stem employee attrition by accounting for inflation in their pay raises.
US employers had accounted for salary increases of 3.9% in 2022, according to a December report from think tank Conference Board. However, US inflation recently reached a 40-year record 8.6% in May. Meanwhile, Pearl Meyer, a compensation consultancy, found that 70% of organizations had implemented larger salary increases this year compared to 2021.
Accounting firm PwC, for example, is spending $2.4 billion in the US to better retain and attract talent, with a 5% pay raise for all employees announced last month. In the UK, where inflation reached 9.1% in May, the firm is increasing salaries by up to 9% and boosting entry-level pay by 10%.
“As a business and an employer we can’t ignore market pressures and want to ensure pay at every level is as competitive as possible,” Kevin Ellis, chairman and senior partner of PwC UK, said in a statement announcing the raises last month.
Tech companies have also been forced to up their compensation to entice workers to stay, with Microsoft and Amazon both announcing significant pay raises in the past few months. The availability of tools like Glassdoor and Levels.fyi has contributed to more workers demanding higher wages from their employers after realizing they had been underpaid relative to industry averages.
And it’s not just office workers who are getting cost-of-living adjusted pay raises. Branch staff and junior employees at two of the UK’s biggest banks have received bonuses and pay rises this year after union intervention, for example. Elsewhere, more than three-quarters (76%) of small-business owners surveyed for The Wall Street Journal by business coaching firm Vistage Worldwide last month said they had increased wages to counter labor shortage challenges.