The Consumer Price Index has outpaced average compensation increases for America’s workforce this year, creating financial stress for workers. For instance, those receiving a 3% compensation increase in the wake of 7% inflation have, practically speaking, seen their spending power decrease. This has prompted many employees to seek career changes and/or side jobs.
Despite recent Monster World Wide reflections and projections of employer confidence, many businesses have reported an ongoing inability to fill open positions. And while economic forces like inflation and projections of recession further compound the problem, industry experts suggest this may simply be the “new normal.” With the labor shortage and greater focus on compensation, many businesses may need to pay more to attract and retain from a smaller talent pool—a challenge for smaller businesses looking to stay competitive.
Business Takeaway: This is a tricky scenario to navigate for small business owners—employees are feeling the pressure of external economic forces, and many are being headhunted with a promise of higher wages. Of course, small businesses, also impacted by the economy, may not be in a position to simply raise wages and/or prices. What have you observed in your industry? What has worked for you in terms of attracting and retaining talent?