The quick turnaround of the economy from the post-bust years following 2008 to the current boom is breathtaking. As a result, employers run the risk of being caught in the age of yesterday’s salaries. While it really was just yesterday, the current reality is a geologic age from just 3 or 4 years ago.
As we’ve chronicled, in a few years we’ve gone from the depths of depression to a wave of euphoric prosperity propelled by factors beyond just economic activity. The massive ongoing tsunami of baby boomer retirements will continue to leave many employers high and dry when it comes to talent.
Another factor that doesn’t get much play in the press, and is also one of the major reasons for the current boom, is years of “quantitative easing” that pumped enormous sums of money into the economy. The chances are the press will remain quiet about this at least until the election is over.
Regardless of whether or not the press chooses to talk about it, the fact is mountains of new money are chasing a relatively stable supply of goods like housing. As an example, anyone paying attention to rents in the Bay Area has noticed increases of 50% or more since 2009.
As confirmation, we need only look to the local political adventurers capitalizing on this new reality with the same old cynical crusades for rent controls.
It’s not limited to housing either. Anyone buying meat, especially beef, has seen prices for Costco rib eye steaks go from $7.99 to $10.99 per lb. in just a few years.
Whether or not the press trumpets it or the Feds acknowledge it, inflation is here and it’s taking it’s customary toll.
What that means to employers is pretty clear, if you want to keep your current talent on board and want to land the best new hires you need to keep up with competing salaries or risk sailing an abandoned ship.
We’ll be following this with some ideas to keep your pay competitive and your company in the games.
Stay tuned. For now, best wishes for the holiday weekend!