Site Selection Group has been forecasting significant increases in wages for the last couple of years. It appears that our prediction may be finally becoming reality. After almost a decade of relatively flat wage inflation, you need to be prepared to deal with new labor market dynamics through the right site selection and recruitment strategies.
All types of operations are going to be impacted, including call centers, headquarters, manufacturing plants, distribution centers and software development operations. To help develop a plan for your company, Site Selection Group has identified some key market statistics and identified employers increasing their wages so you can get ahead of the pack.
Labor markets are reaching full employment
The strong job market is putting upward pressure on wages as proven by the labor cost data released in the fourth quarter of 2017. As the labor markets have tightened, there are clear signs of a pickup in wage growth which is desired by Federal Reserve officials who have long expressed concern about flat inflation. It is only common sense that wages will grow due to the strong labor market which is forecast to hit full employment this year. Economists expect the unemployment rate to hit 3.5% by the end of 2018. Full employment means big challenges for employers across the U.S. who are trying to retain workers and attract new workers at existing and new facilities.
The Trump tax plan is adding fuel to the labor market inferno
The $1.5 trillion Trump tax cut package passed in December is expected to further fuel wage inflation. There is clear evidence of this already happening as companies are either paying out one-time bonuses or raising wages for employees. Whether it is political or simply the companies trying to retain their workers, the additional compensation is going to make it challenging on employers already operating in a market as well as those in the site selection process who are trying to figure out where to locate their next call center, headquarters, manufacturing plant, distribution center or software development operation.
What are these companies doing to increase compensation?
It critical to understand how companies are changing the compensation plans so that you can stay ahead of your labor market competition. One of the most popular things happening right now is companies providing one-time cash bonuses as they claim they are sharing the windfall they expect from paying less in taxes. However, companies are also increasing the hourly pay, which will make the biggest impact on labor market conditions as these increases will have a long-term effect. For example, Walmart recently announced that it plans to boost the starting pay for hourly workers to $11 and pay up to $1,000 in a one-time cash bonus to eligible associates based on seniority. Wells Fargo said it would raise the company's minimum wage to $15 an hour from $13.50, and JPMorgan Chase & Co. increased its minimum wage from $10.15 to $16.50.
340 companies who have increased employee compensation
Americans for Tax Reform recently compiled a list of companies that have announced plans for bonuses and pay increases after the corporate tax rate was cut to 21% from 35%. The following is a list of 340 companies who are giving out these wage increases across the United States.
For additional information, please contact Site Selection Group.