Should Companies Give Raises To Loyal Workers Amid Record New Hire Wages?
New Hires Have Better Wages Than Anytime In Recent History
It's a good time to be looking for a job. There are some great starting wages for employees in almost every industry. Locally even fast food places are paying $15 an hour. There are hiring incentives in place for many places. In most cases new hires are making more money than ever before. This has some workers feeling left out.
I'll share you a real life story that many people can relate to. I have a friend who started her job ten years ago. At that time new hires for this role made $10/hr. She worked hard for years working up the ladder to make about $16 an hour with this corporate business. Imagine how it must have felt when the next year they changed their pay rate so that new hires in her previous role now made $15 an hour at the start.
Don't get me wrong, that's great that the company is paying a more livable wage voluntarily. But how do they expect loyal, long term, dedicated employees to feel with this slap in the face?
What about yearly raises and cost of living increases for existing employees?
The argument could be made that cost of living increases and raises throughout the years should adjust for the difference in pay. In a perfect world where corporations would pay cost of living raises that would be true. However, as many people know, cost of living raises and yearly increases aren't guaranteed. In some cases employers don't do them at all.
Take a hike if you're unhappy.
The other argument could be if they are unhappy with their pay, they should quit their job. That absolutely is a legitimate answer, and many people do. This year has been lifechanging for so many people. The Washington Post has an article where they say that 1 in 3 people under the age of 40 are considering switching careers. A high stress year really made people take a hard look at their life and make some changes. But should people have to quit their job to get better pay somewhere else?
Wouldn't it just be easier to compensate your loyal employees with a raise? It's actually cheaper to the employer to retain an employee than hire a new one. In fact pre pandemic in 2017 studies were done that showed it costs about a third of an existing employees salary to hire a new employee according to HRDrive.
Some corporations are getting it right.
There are a lot of corporations that are getting it right. Walmart & Target both are now offering programs to pay college tuition for many of their employees, both new and existing. Many of the companies on the list from Great Place To Work have increased benefits and pay of their employees.
Time will tell
Right now recruitment is through the roof, and businesses are desperate to get quality hires. How long will this last? Has the pandemic changed things for workers to be better paid permanently? Will people losing unemployment benefits affect the labor shortage to bring wages back down? The New York Times believes the competitive wages will persist. We will just have to wait and see.
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