Low unemployment is great news for the average American worker. But for the company hiring, it means they need to be creative in recruiting talent as well as be competitive in their pay. The cost of employing a worker is rising steadily and faster than it has in over a decade. Workers’ compensation, in the form of pay and benefits, has had the biggest gain since 2008 with a yearly rate of 2.7 percent.
Marketwatch discovered that in the first quarter of 2018, employee wages jumped 0.9 percent and employee benefits rose 0.7 percent. The big picture in this scenario is that wages and benefits increase while the labor pool is shrinking.
The good news for workers is that layoffs are at a 48-year low and unemployment is at a 17-year low of 4.1 percent. However, these numbers force companies to be creative in their recruiting efforts.
According to Robert Frick, corporate economist at the Navy Federal Credit Union:
“If we see wage growth rising well over 3%, and spreading to lower-wage workers, the financial situations of more Americans will begin to improve substantially.”
As good as some of this sounds, too much of a good thing could possibly cause problems. Overheating of the U.S economy could occur, which can cause inflation issues. If the Federal Reserve concludes that rising wages are contributing to the inflation, the central bank could raise the cost of borrowing money in the United States.
For further reading on workers’ compensation, or for legal advice, check out our blog.
