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It would be a pretty rare employer who would be able to keep this year’s salaries raising at the rate of inflation. But increasingly they are under pressure to come close.
The Society of Human Resource Management quoted a new survey about what workers expect:
A survey of 5,000 U.S. workers conducted earlier this year by Grant Thornton LLP, an audit, tax and advisory firm, found that among the respondents:
40% expect pay increases of greater than 6% this year.
31% expect more than 8%.
21% anticipate receiving more than 10%.
The firm said in its April State of Work in America survey report that the top reasons workers took a new job were higher base pay, improved work/life balance, greater opportunities for advancement, better benefits and increased autonomy.
Regarding pay, 40% of workers said they left their job for a company that offered them a raise of 10% or greater. Within that group, 13% said they received a salary increase of 20% or more.
The HR Managers say the pandemic profoundly changed workers’ mindset.
A survey of more than 1,000 U.S. workers conducted March 3-11 by staffing firm Robert Half found that:
- One-third (34%) said they have not had a raise in 12 months.
- Another 16% had received a raise but were disappointed with the amount.
Nearly two-thirds (62%) of surveyed workers plan to ask for a raise this year, with the top reasons being:
- To adjust for the higher cost of living (30%).
- To reflect current market rates (23%).
- To account for additional job responsibilities (22%).
If workers don’t get a raise:
31% will ask to revisit the salary conversation in a few months.
27% will look for a new job with higher pay.
23% will ask for more perks.
Employers say they are increasingly having a problem trying to be sure that new hires and current employees are being paid equitably. The problem is that employers are having such a hard time hiring new employees that they pay the new hires more than some people already doing the job.
Who is doing well during a high inflation cycle?
A New York Times piece points out that some people are fortunate enough to profit from high prices. For example, if you own your home, you likely have seen the value of the home rise faster than the rate of inflation. The Times called it a “piggy bank.”
To the Times’ point, it might help to occasionally recall where the Dow stands today, not compared to a few months ago — but go back a decade or two and the market takes on a different complexion.
- (Yahoo Finance)
The Times story puts it this way:
More than 4.5 million workers voluntarily quit in March, the highest number since the government started keeping this statistic in 2000, the Bureau of Labor Statistics reported last week. A few years ago, the monthly total was between three million and 3.5 million.
“Maybe it’s easier to focus on the negative, but a huge number of people, maybe 40 million households, have been doing pretty well,” said Dean Baker, an economist who was a co-founder of the liberal-leaning Center for Economic and Policy Research. “You’d have to go back to the late 1990s to find a similar era. Before that, the 1960s.”
This widespread wealth throws light on why the number of workers who say they expect to be working past their early 60s has fallen below 50 percent for the first time. It accounts for the abundance of $1 billion start-ups known as unicorns — more than 1,000 now, up from about 200 in 2015. It offers a reason for the rise in interest in unionizing companies from Amazon to Apple to Starbucks, as hourly workers seek to claim their share.
And all of that is hard to digest if you are hoping to own a house someday, if you do not have a retirement account saved up and if you are buried in student or medical debt. In fact, CNBC notes:
Even with rampant inflation and rapidly accelerating interest rates, household borrowing climbed to start 2022 and hit a new record, the Federal Reserve reported Tuesday.
Consumer debt and credit rose 1.7% in the first quarter to $15.84 trillion, a new record.
The increase, which stemmed largely from housing debt, came amid surging inflation and rising rates.
Student loan debt climbed by $14 billion in the first quarter, bringing the annual increase to 6.5%.
According to research from Oxfam, more than half of single parents make less than $15 an hour. CNN reported that that is putting a particular squeeze on those families that are running out of ways to cut spending.
That has left many single parents skipping meals so their children have plenty of food, providing less healthy meals for their families, and culling expenses to the point where any unforeseen cost could mean more debt — or worse.
For these families, whose finances often have slim-to-no wiggle room, inflation — coupled with the end of federal relief efforts like enhanced child tax credit payments — is compounding the financial strain.
In March, about 30% of single parents surveyed by Morning Consult said their household finances were worse than average, versus just over 22% of all adults.
During the 12-month period that ended in March 2022, single-parent households say they made about 16% less than adults overall per month and spent about 8% less per month, according to Morning Consult data.
What is ‘your’ rate of inflation?
The Consumer Price Index posted today by the Labor Department tells us the general rate of inflation at the consumer level, but the amount of inflation you incur really has a lot to do with how you spend money. For example, if you bought a used car, if you use a lot of gasoline, if you buy a fair amount of meat or if your rent rose by a lot this year, your inflation rate could be higher than the next person’s. The New York Times built a calculator that can help you figure out how you are doing so far this year. When I put in my data, the calculator said I was experiencing a 7% inflation rate.
But the same me who bought a used car and paid for daycare would have experienced a 9.6% inflation rate this year. If you are a vegetarian, your rate will fall a little. If you heat your home with oil, it will rise.
Bloomberg tells the story of restaurants that are putting stickers on their menus with the latest prices because costs are going up so fast.
And your rate of inflation depends a lot on where you live. Look at the wide difference in Tuesday’s gasoline prices, some of which were records, according to AAA.
NPR’s “Planet Money” recently explained that inflation, especially food inflation, hurts lower-income people the most. Wailin Wong explained:
As inflation erodes the value of a dollar, people with more dollars are more able to weather the shock.
“Planet Money” explained that, counterintuitively, premium products like fancy mustard or organic produce tend not to increase as much as the regular stuff. The premium foods are already priced with a nice profit built in. The common stuff is priced with a lower margin. “Planet Money” said the organic produce has dropped in price partly because an increasing number of farmers are producing products that get labeled organic.
All of this matters because SNAP benefits, which you might know as food stamps, are based in part on the Consumer Price Index. The Consumer Price Index, some experts argue, underestimates the impact of inflation on people who don’t buy the high-end fancy stuff.
What is in the CPI?
The CPI represents all goods and services purchased for consumption by the reference population (U or W). BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups (food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services). Included within these major groups are various government-charged user fees, such as water and sewerage charges, auto registration fees, and vehicle tolls.
In addition, the CPI includes taxes (such as sales and excise taxes) that are directly associated with the prices of specific goods and services. However, the CPI excludes taxes (such as income and Social Security taxes) not directly associated with the purchase of consumer goods and services. The CPI also does not include investment items, such as stocks, bonds, real estate, and life insurance because these items relate to savings, and not to day-to-day consumption expenses.
Golf is hot again
The National Golf Federation says that after years of decline, the sport is growing again.
Back in 1999-2000, about 4.8 million Americans took up the game partly, the NGF says, because of Tiger Woods. NGF says:
Over the past two years, the number of beginning golfers in the U.S. is higher than it was back when Woods was at his most dominant. Almost 30% higher. In 2021, a record 3.2 million Americans played golf on a course for the first time. This after 3 million newcomers picked up golf in 2020 as the pandemic unfolded and people sought out safe, outdoor activities that could provide a sense of normalcy with friends and family.
- (National Golf Federation)
But the National Golf Federation says there is a big difference between the era two decades ago and now.
A funny thing happened around the turn of the century that isn’t talked about much, though. As overall participation increased, the average number of rounds played per golfer decreased. What that suggests is that many of those who gave the game a whirl at the time – perhaps because Tiger made it look cool – didn’t play very much.
By comparison, the average number of rounds played per golfer today continues to increase. Yes, it’s largely being driven by longtime, committed participants, but recent beginners are playing more often than in the past too. For the past four years, extending back to pre-pandemic days, newbies have averaged more than 12 rounds annually. Among beginners, this is an increase of more than 50% compared to just a decade ago.
Are we currently experiencing a Covid bubble? Time will tell, but early indicators suggest otherwise.