You can still nab that raise despite inflation. How companies can still afford benefits.
- Though the job market's showing signs of slowing, there's still time to get better benefits and pay.
- But experts say act quickly because hiring is still strong in most sectors but can change fast.
- The tech sector is already seeing a big slowdown.
At a time when the economy looks uncertain, and many high-profile companies are responding with hiring freezes, lower salaries, job cuts and even rescinded offers, it can still be a good time to get a raise and better benefits.
That sounds counterintuitive, but some industries are still clamoring for workers. But with the U.S. economy slowing, people should act fast to lock in what they want.
"The labor market is still quite strong," said Nick Bunker, an economist at Indeed Hiring Lab. "Wage-growth data are very strong, so there are quite a few employers bidding up compensation to hold onto or hire people. There are headlines of layoffs and pauses in hiring, but it's relatively concentrated and not on an economywide scale "
Job postings on Indeed as of July 22 were 53.5% above their pre-pandemic baseline, signaling robust hiring intentions. New job postings, defined as those on Indeed for seven days or less, were also well above their pre-pandemic baseline, up 63.2%.
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Though the economy has shown clear signs of slowing – contracting for two consecutive quarters, heightening talk of imminent recession – Bunker said some businesses may be hesitant to slash workers.
"In this potential downturn in the near-term, we'll see if companies hold onto workers because they have had a very, very hard time hiring recently," Bunker said. "In 2020, companies laid off workers immediately. Maybe they'll be less likely to lay people off and potentially ride through the downturn because the cost of hiring again is so high."
What are companies doing to keep workers?
Many companies have already allowed employees to work from home and have more flexible work schedules. After the Supreme Court overturned Roe v. Wade, many of them, including Yelp, Amazon, JPMorgan Chase, and Dick's, also announced medical-travel benefits for their workers.
And if you work for a company whose headquarters is in a country still seeing economic growth, you may also be in luck – even if you're in the tech sector, which has seen jobs fall off most lately.
SimPRO, an Australian business software company, recently gave all its employees earning less than $80,000 annually an up to 10% raise amid surging inflation.
That means raises for about 85% of its 500 employees around the globe, including those in the U.S.
Australia's economy grew a real 0.8% in the March quarter. In the U.S., real gross domestic product fell 1.6% in the first quarter and slipped 0.9% in the second.
“With the Great Resignation, it was even more important to take care of employees," said Rod Lacey, the company's chief people officer. "It’s been a pretty lucrative market for job hopping.”
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What does this mean for workers?
Most workers who've been able to demand higher pay and better benefits in the economic recovery may be able to play that hand for a little longer.
Data from Indeed shows drops in job postings in the software development, media, and communications, and the human resources sectors.
Software development postings which include job titles such as software engineer, full stack developer, and product manager had fallen by 17.3%.
But restaurant and bar-related job postings (food preparation and service) rose 4.6% and child-care jobs increased 2.4%, for example.
If you're in one of those still-growing sectors, you should "strike while the iron is still hot," Bunker said. "Why delay asking for a raise or more benefits if you have the advantage?"
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How should people ask for a raise?
First, research what other employers are offering employees doing a similar job. If you see that they're offering more pay or more benefits, it might be a good time to show your boss what other companies are offering and ask your employer to match it, Bunker said.
If you want to be more aggressive, you can go look for a job and get an offer that tops what you currently have. Take that to your boss and hope you can not only get that offer matched but beaten, he said.
Warning: Always be prepared to take that job offer you're using as leverage in case your boss can't match or top it.
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How can companies afford more benefits?
With companies already being squeezed by inflation, how can companies pay for these new benefits?
At simPRO, “seven executives reduced our annual income to help fund it,” Lacey said.
That might work for simPRO, but the odds of that happening at a giant U.S. corporation seems unlikely. A recent AFL-CIO report showed that among S&P 500 companies, chief executive officer pay rose 18.2% last year, outpacing the 7.1% inflation rate last year. Meanwhile, nominal worker wages grew only 4.7% over the same period, cutting workers' buying power by 2.4%.
More likely, companies here will try to offload higher labor costs onto customers. For example, fast-food chain Chipotle said last week that it's raising menu prices again this month to cover higher costs, including wages for its workers.
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Is asking for a raise worth it?
For workers, definitely, yes. If you manage to gain some additional benefits now, you'll likely come out better in the long run.
During economic downturns, if you're not laid off, "employers usually don’t cut wages," Bunker said. "They just don’t give more."
For companies? Maybe.
If history is any guide, in 2015, Dan Price, CEO of credit-card processing firm Gravity Payments, took a $1 million pay cut so he could pay all his 120 employees a $70,000 minimum wage. Critics said then Gravity's move would doom the company, but it hasn't.
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Instead, Gravity has grown to about 200 workers, and there's been a baby boom among its employees, now averaging about six to seven babies born each year, it said.
Also, more than 10% of employees have purchased a house for the first time, personal individual 401(K) contributions have more than doubled, and more than 70% of employees with debt have been able to pay some of it down, it said.
That's what simPRO is banking on with its initiatives.
"When our employees are the best version of themselves, the entire business thrives,” Sean Diljore, simPRO CEO, said.
For companies that pass on cost increases to consumers, they run the risk of pricing out customers. So far, though, companies like Chipotle and even Dollar Tree, which caused an uproar when it raised most store prices to $1.25 despite its name, say consumers have absorbed price hikes that helped them continue to earn money and pay workers more.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at email@example.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.