Inflation Crisis: How Employers Can Help

A visit to the grocery store and a glance at the day’s headlines are quick reminders of the tough economic times we’re living in. Inflation is hitting our pocketbooks; the cost of goods is rising and we could be headed for a recession. This uncertainty is clouding the financial futures of employees trying to keep up with their bills in a post-pandemic world.

Impact of Inflation

Budgets are tightening and workers are looking for ways to meet the rising cost of living. While they’re trimming expenses, they may also be looking for side hustles or new jobs if their salaries aren’t enough to help them stay afloat. 

Companies are facing their own financial challenges. Compensation increases aren’t always feasible, yet it’s more important than ever to focus on remaining competitive when it comes to attracting and retaining talent. 

Some employers are finding other ways to provide staff with financial relief, such as offering an ‘inflation bonus’.

What is an ‘Inflation Bonus’?

An ‘inflation bonus’ is money given to employees beyond their existing base wages or salaries. Several North American companies have already announced their plans to jump on the ‘inflation bonus’ bandwagon. Lowe’s recently announced it’s spending $55 million on bonuses for hourly workers. Airbus says it’s giving employees a $1,490 cash bonus to deal with rising inflation. Financial firm USAA is offering some employees a one-time bonus of $1,000.

An ‘inflation bonus’ could look like any of the following:

• Bonus: A one-time bonus in addition to wages; could also be provided more frequently, such as on a monthly, quarterly, or annual basis.
• Signing Bonus: The ‘great resignation’ is making this practice more common. Some roles and skillsets are harder to fill than others, so companies may find this an effective way of attracting top talent.
• Temporary Compensation Increase: A monthly lump-sum payment or top-up based on hourly wages could be offered for a limited time.
• Gift Card: Employers could provide a gift card to help employees pay for groceries or gas.

How Else Can Employers Help?

A strong compensation strategy is key, but it’s not the only way for businesses to attract and retain talent – especially as they look to improve their own bottom lines.

Here are 5 other ways companies can help workers with extra costs from inflation:

• Four-day Work Week: A shorter week at work can help employees cut costs on childcare and commuting. Some studies also suggest a four-day work week can improve productivity.
• More Vacation Time: Offering more paid time off can also help employees cut work-related costs and help retain talent. 
• Retirement Contributions: Inflation is forcing employees to stop or reduce their retirement savings, and most employers are worried about an emerging retirement income crisis. Increasing your company’s contribution amounts to retirement accounts could offer support and come with possible tax benefits. 
• Reduce Benefits Costs: Consider covering more of the costs of health benefits, which would result in higher take-home pay for employees.
• Student Debt Support:  The federal government plans to make its pandemic-era pause on student loan interest permanent. As an employer, you could offer additional support by providing student debt assistance in the form of employer-matched savings.

We’re Here to Help

There are many ways your organization can support and retain employees. If you have questions about where to start or whether you should consider offering an ‘inflation bonus’, contact us so we can work together to create solutions that work best for you and your organization.

Suggested Reading

https://www.benefitnews.com/news/inflation-bonuses-can-help-employees-through-a-recession

Additional Resources

https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/employers-weigh-inflations-impact-on-annual-pay-raises-shrm-survey-shows.aspx

https://reba.global/resource/top-five-bonuses-and-incentives-to-help-fight-inflation.html