ALEXANDRIA, Va.—While workers are still demanding flexible schedules and meaningful jobs, historically high inflation has many employees turning their attention to cost of living wage adjustments (COLAs) to keep up with inflation, reports Axios.
Wages have increased substantially over the past year. Apple recently announced it will pay its workers at least $22 an hour, and Target set a new wage range, with some hourly employees receiving up to $24 an hour. New England grocer Big Y said it will give all its retail employees an increase in pay, though it did not disclose the amount but said it was investing multimillions in the increase.
Still, wages are not keeping up with inflation. Inflation was 8.6% year over year in May, while wage growth was 6.1%. The inflation-adjusted average hourly earnings in May 2022 were $31.95, 19 cents less than in February 2020 before the pandemic when they were $32.14.
COLA provisions were common in the 1970s when inflation was also an issue, but they began easing out of contracts once inflation eased, labor lost some of its negotiating power and health-care costs moved into the spotlight, Todd Vachon, a professor of labor studies at Rutgers University told Axios.
"There is increased interest in getting COLA provisions back in many contracts," Ray Curry, the president of the United Auto Workers, which represents nearly 400,000 workers, told Axios.
However, a few months ago, economists were concerned over a possible wage-price spiral, where rising wages drive the cost of goods higher, creating a cycle that pushes inflation out of control.
“What we don't want to have develop is a wage-price spiral, in which inflation becomes its own self-reinforcing kind of phenomenon that would become chronic in the U.S. economy—something endemic,” said Treasury Secretary Janet Yellen said.
Yesterday, the Federal Reserve took its most aggressive step yet to get a handle on inflation by raising interest rates 0.75%. It’s the central bank’s largest increase since 1994, and a similar increase could happen next month.
“What we’re looking for is compelling evidence that inflationary pressures are abating, and that inflation is moving back down,” Federal Reserve Chair Jerome Powell said at his news conference Wednesday, noting that instead the inflation situation has worsened. “We thought that strong action was warranted.”
Powell said that it has become harder for the Fed to slow inflation without causing a recession because of outside factors, including the war in Ukraine and factory shutdowns in China.
“We’re not trying to induce a recession right now, let’s be clear about that,” Powell said.
Powell said the Fed still want to get inflation down by 2 percentage points, while still keeping the labor market strong, or a “soft landing.”
“What Powell and the rest of the F.O.M.C. are saying is that restoring price stability is the primary focus — if they risk a mild recession, or a bumpy soft landing, that would still be successful,” Kathy Bostjancic, chief U.S. economist at Oxford Economics, told the New York Times. “The focus is greatly on inflation right now.”
NACS is hosting a series of HR webinars this month. While money is a shortcut to being more attractive as an employer, and non-competitive pay rates will put businesses at a disadvantage, it’s not enough to get convenience retailers to a fully staffed business with minimal turnover. To help get employees in the door—and retain them—this online learning series focuses on three tactics you might want to explore: same day and other payment options; flexible, innovative scheduling; and speed to hire: AI chatbots.
Convenience retailers also can access the Good Jobs Calculator, designed exclusively for NACS and the convenience industry. This tool allows retailers to use their own data and customized assumptions about the amount of improvement or uplift achievable, and executives can run scenarios on the bottom-line impact of a Good Jobs system.
Look for “Understanding Your Local Labor Landscape” in the December 2021 issue of NACS Magazine for tips on building an effective employee value proposition and how to gain an edge when competing for candidates.