The last few years have been challenging for consumers and businesses alike. A worldwide pandemic, supply chain issues, an unpredictable economy, labor shortages, and now inflation. Today, the inflation rate is 9.06%, up from 5.39% last year.
Since inflation measures the increase in the prices of goods and services, this means that the cost of living has risen dramatically, taking a toll on both employees’ salaries and employers’ budgets as they try to remain competitive in today’s labor market.
Your employees are currently experiencing a loss in buying power for everything from food and gas to rent and home prices. Those increases far exceed the 3.4% rise in wages reported in a recent survey.
So, what else can companies do to help their workforce weather these financial storms? Companies must be creative with compensation and benefits packages to recruit and retain top talent.
Watching the numbers
Most employers tend to decide salaries based on what’s considered competitive in their labor market, but inflation combined with talent shortages may force employers to reconsider their pay strategies. According to a Mercer survey, nearly 50% of organizations will conduct additional salary reviews for all or some employees in response to inflation, even though 46% of organizations said that they do not usually factor inflation into salary budgets.
Employers should be transparent about how they set wages so that employees understand the logic behind their pay. And salary isn’t the only consideration. Beyond salaries, employers should look to their benefits and work culture as tools to recruit and retain their workforce.
Using benefits to offset rising prices
Experts remain divided about when this current period of rising inflation will end. Benefits can play a leading role when exploring ways to offset the pain of rising prices.
The bottom line is that everyone has to eat, and the cost of eating away from home can be quite high. The average American spends $2,746 a year on lunch.
Edenred’s Ticket Restaurant is a meal benefits program that gives employees a monthly meal allowance via a prepaid card. Not only does this help relieve the financial burden associated with lunch, but it also makes employees feel valued and appreciated, often leading to higher productivity rates.
Commuter benefits allow employees to use pre-tax dollars towards commuting costs like public transit, rideshares, and qualified parking expenses. These funds employees spend can help reduce their federal taxable income. Currently, the IRS allows employees to spend up to $280 per month for commuter benefits.
Utilizing a commuter benefits account can save employees a lot of money in the long run. For example, someone who earns $55,000 per year and uses the maximum amount of commuter benefits takes home approximately $1,500 more than someone with the same salary and commuting costs but doesn’t take advantage of a commuter benefits program.
Lifestyle Spending Accounts
Lifestyle Spending Accounts are wellness plans with various offerings that you can customize to your employees’ desires.
Employees can use Lifestyle Spending Accounts for health, general fitness, or well-being. Lifestyle Spending Accounts are very flexible and can be used for various goods and services, including athletic and camping equipment, entertainment, pet care, food and dining, continued education & tuition, and more.
How Edenred can help
During periods of inflation, employee benefits are helping companies provide financial relief to their workers. In addition, employee benefits can be a way to attract and retain top talent in a tight labor market. Schedule a meeting today to ensure you’re offering the most competitive packages to help your employees through these uncertain financial times.