[the_ad id="21475"]
[ad_1]
Amid discussions about inflation, recession concerns, and the ongoing competition for talent, American companies are seeking ways to manage risks and unlock value. Despite high-profile layoffs at large tech companies, many companies are increasingly seeing the business case for investing in their workers.
This investment requires additional attention in the face of the highest annual inflation in over four decades. A recent JUST Capital survey shows Americans overwhelmingly agree (87%) that it is a company’s responsibility to regularly increase wages to keep up with the rapidly rising cost of living. This agreement is seen across the political spectrum, supported by 93% of Democrats, 89% of Independents, and 76% of Republicans.
The American public’s priorities match the data. Regularly raising employee wages to match inflation can unlock business value by helping companies attract and retain top talent, weather the economic challenges, and thrive over the long term. Beyond the clear link between wages and employee satisfaction and retention, research has shown that higher wages for low-income workers result in higher productivity.
The effect of inflation on wages
All prices, including wages, are evaluated in terms of their nominal and real values. Nominal value is what you see on the price tag–the current monetary value. Real value is calculated in constant prices and adjusted for inflation. Inflation can be understood as the declining real value–or purchasing power–of a wage.
Understanding how inflation affects nominal and real values clarifies the state of wages in the U.S. today and their relationship with inflation.
It’s common for the media to report on wages in terms of their nominal gains–and then implicitly argue that these gains are the main cause of inflation and need to be brought down to reduce inflation.
However, though wages have grown in nominal terms over the past year, real wages have declined and were lower in October 2022 than before the COVID-19 pandemic.
In other words, the purchasing power of American workers’ wages has decreased even if their nominal values have grown, and inflation has disproportionately hurt low-income individuals and people of color.
For companies and workers, real value matters most because it influences worker satisfaction, productivity, and ultimately, company performance.
The business case for regular wage increases to match inflation
A recent BlackRock…
Click Here to Read the Full Original Article at Fortune | FORTUNE…
[ad_2]
[the_ad id="21476"]