Dolphin Group

One of the hottest workforce topics this year is how it seems every employer is raising their wages and with significant percentages that have not been seen in years. According to cnbc.com, “Employers project average annual salary increases of 3% for executives, management, professional employees and support staff in 2022, a survey by benefits consulting firm Willis Towers Watson found. That’s up from 2.7% in 2021 and the average 2.8% boosts that were seen for a number of years before the pandemic.”

Companies that can’t or won’t raise wages are looking at other hiring incentive According to CNBC.com, Some 4.1% of companies posting on Indeed in June were offering hiring incentives, more than double the rate of a year ago. Driving-related occupations as well as personal care and home health were the leading industries in offering incentives, with cash bonuses ranging from $100 to $30,000. Food prep jobs offered bonuses of $100 to $2,500.

Whether you are thinking about increasing wages, using hiring bonuses, or still resisting any change, read on below to see the argument for why it’s not necessarily a bad thing to invest in your employees:

1. It can increase worker productivity

   According to a NY Times article on several studies conducted on the effects of higher pay for minimum wage workers in the nursing and fast-food industries, “the new research shows that raising the minimum wage improves workers’ productivity, which translates into businesses offering higher-quality service. Because many customers are willing to pay more when quality improves, a company can raise its prices without losing sales volume. That means that profits need not suffer even though employee salaries increase….the study has an important implication during a crisis like this one: When the labor market was weakest, a higher minimum wage led to the biggest improvements in job performance. A period of economic distress is precisely when workers really want to hold onto their jobs, so the “efficiency wage” effect is large.”

   Even if your business is not in these fields of work, it is worth getting on the higher wage bandwagon and seeing the effects, both good and bad, that raising wages can have on your company. You may be pleasantly surprised that if could have far more positives than negatives for your bottom line.

2. It is proven to lower turnover

   “A study by P.B. Reich and his coauthors in 2003 also documented a stunning turnover rate of nearly 95 percent per year among security screeners in mid-2000, which fell to 18.7 percent when pay improved. Fairris et al. (2005) examined evidence from Los Angeles, finding that when employers were directed to offer higher wages, the decline in worker turnover yielded savings equal to around one-sixth of the cost incurred.” While it’s hard to make the first step and invest in your employees before they invest in you, these studies prove that the savings you will reap from lower turnover is worth the upfront cost.

    

3. It makes you more competitive as an employer

Higher wages is quickly becoming the expected norm with employees. As piie.com explains,”…offering higher salaries yielded an applicant pool with a higher IQ and with personality scores and motivation that made them a better fit for the advertised jobs. Moreover, the first firm to offer higher wages is more likely to attract and retain more productive workers.” To stay competitive for securing top-talent employees and remain competitive in the workforce, raising your wages or offering hiring bonuses is becoming necessary. Not only does it attract top talent, it also shows your employees that you care about them and their overall wellbeing. More and more workers are looking not just at the pay benefits of a potential job, but the unseen benefits as well such as good work/life balance and a flourishing company culture. Showing your employees you want to invest in them in turn makes them want to invest in you, both by coming to work for you and turning out productive work as well.

If you haven’t yet thought about raising your wages to support your current employees or attract new talent, now is the time, for it looks like not only could this be beneficial to your business, but the outlooks are making it clear that this trend is not going away