Blog post from Jason Lee, CEO of DailyPay, Inc.
On Friday, we learned that US employers added a whopping 220,000 jobs while wage growth for hourly workers continued to remain below trend at 2.5% compared to last June. This is a remarkable time for the labor market. Since October 2010, the U.S. has added jobs every single month. That’s 81 consecutive months.
Yet, during this job expansion, wages for hourly workers have grown on average 2.2% a year. This is notably less than the 3% growth rate of the 2000s, the heady 3.2% growth rate of the 1990s, and the 3.3% growth rate of the 1980s.
Personally, I don’t get it. The theory (and natural intuition) is that worker incomes should rise faster in a tightening labor market. Now I understand there are competing theories out there, e.g. globalization is suppressing wages, or maybe that the unions just aren’t as powerful as they used to be. And of course, pretty close to home in the technology space, that machines are on the brink of replacing people.
But none of those will explain a wholescale anomaly like the one we are seeing today. It only leaves me with one conclusion:
Wage pressure is coming because it’s just going to get too hard to hire people.
My advice is to be prepared. Do the math on what it takes to increase wages in a flat or modest inflationary environment, where you can’t raise the price of your product/services in lock step. More importantly, start considering ways to increase your employee engagement so as to not suffer the cost of turnover.
One way to do that is with DailyPay. Our platform is a non-disruptive payment application that allows your employees to be paid their earned wages, instantly, and without any changes to your existing payroll system. Offering this benefit to your employees can help your company’s recruiting efforts. A recent survey we conducted showed that employees are willing to take 13% less in wages when offered daily pay versus weekly pay. By utilizing DailyPay for your employees, you could save money in payroll and keep your employees engaged.
To see how much your company could save by adopting DailyPay, check out our cost savings calculator.