Shawnee Love   •   November 18, 2021

Organizations contemplating wage increases for 2022 are faced with incredible pressures.

From an employee’s perspective, CPI is increasing almost monthly with recent news reports indicating 4.4% in September and 4.7% in October.

Compensation research firms who made predictions in the Summer suggested increases of somewhere between 2.7 and 3% in 2022.

However, employers nationwide are struggling to hire. Demand for employees exceeds supply, which is why you now see ads for McDonalds servers (full-time) at $17/hour ($1.80 more than minimum wage in BC). As staff at the entry level end of the workforce make more money, that tends to push up wages throughout the marketplace.

On the other hand, costs have been increasing for businesses at a breakneck pace as well. Insurance, basic staple goods, fuel, and of course taxes and fees (what the government gave in recovery benefits they are draining through increased costs of leaves and red tape) are all going up. BC is contemplating adding mandatory paid sick days after January 31, 2022, and while a welcome respite for many employees, it has to come from somewhere and employers who aren’t government funded are either taking that out of profits or passing costs on to customers. No wonder inflation is skyrocketing.

Regardless, it is the reality, and employers need to be aware that if they plan for wage increases, those increases will be compounded significantly.

Long story short, there is a challenging amount of tension for employers, trying to walk between keeping people and affording to run their businesses.

I am guessing that raises for 2022 will be at least 3%, particularly as living wage proponents push harder for a higher minimum wage which no one can agree on but seems to be somewhere between $16 and $19/hour.

This in turn will push the job values in positions just above entry upwards as well, so I am predicting some operators will need to be in the 4.5-5% increase level for 2022 just to stay relevant.

People in well-paying professions will probably be expecting at least 3% as well.

That’s what my magic eight ball is telling me, although I am interested to see how this actually plays out. If you want assistance with your compensation planning and total rewards programs, we are here for you.