This summer, large corporations are taking a risk and offering raises to their employees in order to keep them happy and to help them deal with inflation.
An average annual pay increase of 3% is given between January to April. However, rising inflation and high gas prices are making it difficult for workers to get a raise.
Gallagher, a consulting company, found that nearly two-thirds (or more) of employers have increased their compensation budgets between January and June.
Gallagher’s human resources expert Scott Hamilton said that inflation and its impact on costs of working, feeding a family, and keeping the lights on is what is driving discussion about pay increases. “Companies are discussing pay increases, gasoline gift certificates, and reimbursement for travel expenses in order to ensure that the workers needed to keep these services running are present.
ExxonMobil, a gas company, and Microsoft are just a few of the large corporations that have recently increased employee compensation and benefits.
ExxonMobil increased its stock program for high-performing employees in April. This doubled the share count. Exxon paid 3% of its U.S. employees a cash payment in June. A spokesperson for Exxon said in a statement to CBS MoneyWatch.
Microsoft doubled its global budget in May for merit-based raises. A Microsoft spokesperson said that the increased investment in global compensation is a reflection of our ongoing commitment to provide a high-competitive experience for our employees.” CBS MoneyWatch was informed by a Microsoft spokesperson.
T. Rowe Price also offered workers sweet deals, offering 4% increases in salaries by July 1, “to reward them for their commitment and ensure we remain an employer choice,” a spokesperson for the company told CBS MoneyWatch.
These pay increases were given to more than 85% of employees. They came on top of their regular salary increases that took effect at the beginning of this year. T Rowe Price mentioned inflation trends and labor market conditions as the factors that led to these unusual pay increases.
Walmart announced in June that they would increase the hourly wage of more than 36,000 pharmacist technicians to $20 per hour.
Pearl Meyer, which provides advice to employers about compensation, conducted a June survey and found that companies raised worker pay an average of 4.8% in 2022. According to the survey, this was due to a “perfect storm” of record inflation, high turnover rates and a shortage in labor.
Pearl Meyer surveyed 33% of respondents to their survey and found that they plan or are contemplating rare mid-year raises for their top performers.
“It’s quite surprising, because historically it has not been very rare to see salary increases mid-year,” Rebecca Toman (Vice President of Surveys for Pearl Meyer) said.
Toman predicted that only top performers and mission-critical workers will receive mid-year increases. “We will see mid-year increases, but not everyone is going to be eligible.”
Surveys revealed that most organizations believed the higher inflation in 2022 was due to retention concerns and rising living costs.
Toman stated that inflation is a serious problem right now, but that there are also labor shortages in many areas and insufficient talent.
The inflation rate has increased to 8.6% in the past 12 months, which is the highest in 40 years. It continues to outstrip all increases in wages. Low-wage workers in low-wage industries such as hospitality, retail, and health care have seen their wages rise at even faster rates.
