Workforce: Hourly wages could hit new 14-year high in US 2022 ─Report

*Experts in a recent survey opined the increase in wages of new hires in the United States would play a factor in salary increase budgets for 2022, whereas 39 percent said the bump in inflation was the defining factor in the developed economy

Alexander Davis | ConsumerConnect

As a way to maintain an effective workforce at workplaces in the United States (US), it appears hourly wage workers could be in for a good 2022, if a new report on salary budgets comes true.

It was gathered that the latest Conference Board Salary Increase Budget Survey noted a 3.9 percent jump in wage costs for firms is expected next year.

ConsumerConnect reports the US Department of Labour says the Federal Minimum Wage for covered nonexempt employees in the country is $7.25 per hour, and the hourly rate in states, such as California as of 2021 is $14.00/hour.

The government Department noted that several states also have minimum wage laws.

However, in cases where an employee is subject to both the state and Federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.

Researchers stated that hitting that prediction would make the wage increase in 2022 the highest since 2008, according to the survey.

The report suggests that growth in wages for new hires is the main driver. Almost half of the respondents (46 percent) said the increase in wages of new hires played a factor in salary increase budgets for 2022, whereas 39 percent said the bump in inflation was the defining factor.

Workers under the age of 25 and people who changed jobs in the past year are the real winners in the wage hike game.

Gad Levanon, Founder of Labour Market Institute, also in charge of the Help Wanted OnLine programme for The Conference Board, stated: “The faster wage growth of new hires has led to pay compression, which is when wage premiums for work experience shrinks.

“When more experienced workers feel that their pay advantage is no longer significant, they may seek new jobs in the tight labour market, which leads to high labour turnover of more experienced workers.

Levanon said: “Indeed, the quits rate is now the highest in recorded history. Employers faced with extensive departures of experienced workers will raise wages faster for current employees in order to maintain an effective workforce.”

Does this mean the Great Resignation is over?

Will rising wages stem the flow of resignations or accelerate job-hopping? Ira Wolfe, President and Chief Googlisation Officer at Success Performance Solutions, said yes and no.

Wolfe noted that “throwing money at the problem is not a long-term solution.

“For some jobs, it’s simply supply and demand. Companies will dangle money to entice scarce top talent to flip jobs.

“For other jobs, it’s strictly doing what it takes to attract warm bodies to fill positions. But in neither case, does that address resignation, turnover, brain drain, and morale especially at the front line.”

The President and Chief Googlisation Officer also cited the example of his granddaughter, who has been working part-time for a grocery store while going to school.

According to Wolfe, after five years, her daughter said she makes $12 per hour, the same wage that new hires are making.

So, what did she do? She resigned to accept a job for several dollars more.

Wolfe said: “Raising wages to attract new talent also requires raising wages significantly for current employees, otherwise, they will leave. Replacements will come with a higher price tag and less loyalty – a terrible trade-off and bad business decision.

“Wages also don’t address the #1 and #2 worker demands – flexibility and purpose. In other words, will wages rise?”

She added: “Yes. Will it open a pandora’s box without proactively and aggressively addressing pay equity, compensation, benefits, company culture, and employment brand? Absolutely.”

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