ST. LOUIS — Given the fever pitch of 2021’s labor market, employers knew they were going to have to plan for larger raises in 2022.
That led companies to budget for average raises of 3.8%. Those budgeted raises may have outpaced historical averages, but they aren’t keeping pace with inflation or, in many cases, with the going rate for a new hire.
The latest data from the Bureau of Labor Statistics shows median weekly earnings rose 4.2% in U.S. metro areas between April 2021 and April 2022.
In the St. Louis area, wage growth was slower than the national average, with median weekly earnings up 3.3% in April 2022 from a year earlier. Meanwhile, according to the Council for Community and Economic Research, the cost of living rose nearly 5.5% in St. Louis between the first quarter of 2021 and the first quarter this year, and 7.7% since 2019's first quarter.
That combination of factors means what would have been a traditional raise two or three years ago may not cut it for many employees — especially when it's far from what they could fetch on the open market.
Experts say the issue is posing several challenges for companies.
Carol Schmidt, senior director of human resources at Morgan Hunter Cos., said what she’s seeing in 2022 is unprecedented.
“We’ve never seen the pay-rate increases that we’ve seen over the past year,” said Schmidt, senior director of human resources at Morgan Hunter. “And candidates keep getting it because there are no other options.”
It’s a trend that’s straining small businesses that are feeling the squeeze from soaring inflation on multiple fronts, and experts say the pace of growth isn’t sustainable. It's also causing several headaches — particularly when companies pony up for new hires and existing employees believe they are losing out by being loyal.
Read the full story on the St. Louis Business Journal website.
