From Jason Lee, Founder and CEO of DailyPay: the economy is growing, and so you need more workers. However, inflation isn’t keeping up, which means you can’t afford to pay them more. What can you do?
And so in honor of back-to-school, I thought I’d review a Day 1, Econ 101 principle:
Last week, we learned that the US grew at an annualized 3% in the second quarter. That’s strong. The economy is growing which means we can expect inflation to increase, which means higher priced products, and higher wages. But last week we also learned that inflation grew only 1.7% over the same time period.
I would argue that the fundamental relationship between growth and inflation is now breaking up. At the risk of pointing to a doomsday scenario, one cannot help but think of Japan who just reported its strongest growth numbers at 4%, but has been mired in a 0 inflation environment for decades. While perhaps we will see some degree of mean reversion in the United States, it is not unreasonable to at least consider the fact that growth and inflation may no longer be inextricably tied as they once were.
Today’s economy is more global, less dependent on organized labor, and has the unique development of major players working to keep prices down, further contributing to the deflationary setting.
This backdrop presents an unprecedented challenge for managing your workforce: the economy is growing, and so you need more workers. However, inflation isn’t keeping up, which means you can’t afford to pay them more. This means that despite your best efforts to create an amazing work environment, your employees have an easy time quitting over minor opportunities to increase their pay or shifts.
If you are unable to pay your employees higher wages, then you must get creative with the benefits that you offer to attract prospective employees and retain your current workforce. My company, DailyPay, has created a unique benefit that can set you apart from your competitors. With no changes to your existing payroll platform and at zero cost to your company, you can offer daily wage payments to your hourly employees with our propietary software solution.
Don't believe me? Check out this page that explains how our solution works. See how companies in your industry have utilized DailyPay as a retention strategy and a recruiting tool to expand the applicant pool.