“I’ve had more discussions about this in the last three months than in 20 years,” says Alan Johnson, whose New York City consulting firm Johnson Associates advises major companies on pay…
In the same way, high inflation may frighten retirees, or those planning to retire, whose nest eggs look alarmingly inadequate at 7.5% inflation versus the 2% inflation of years past. “If you’re hearing medical bills are going up, rent’s going up, food’s going up, you look at your significant other and say, ‘Is this really the time we want to walk away from our jobs?’” Johnson says. If workers who would otherwise leave the job market stay, the effect will again be downward pressure on pay.
Can a company become an employer of choice by promising to keep wages inflation-adjusted?
While tempting, some say the decision may not be wise. Employers should pledge to offer salaries that are competitive in relation to the marketplace and employees’ skills. But they should refrain from promising to keep wages inflation-adjusted, Johnson says. “Sooner or later inflation will spike, the economy will tank, and then you can’t afford it. Now you’ve lied to people.”
Fortune / February 15, 2022