The economic pulse of the country is far from steady.
Here’s what I mean: In his July 11, 2013 article for the Society for Human Resource Management, Stephen Miller reports that wage increases for 2014 in the United States are expected to average around 3% across all industries while budgets for increases remain stable. Miller also reports decreasing budgets in most emerging markets such as China, India, and Brazil.
This probably isn’t good news for the economy in general. Many may argue that 3% increases in U.S. wages are reasonable, given the relative stability of core inflation at around 1.3% and stabilizing unemployment numbers. I contend that these numbers fail to present an accurate snapshot of the current economic and social conditions in the United States.
Core inflation numbers just don’t illustrate the street-level condition of rising prices. Core inflation strips out the most volatile elements of the economy—food and energy. These numbers have a drastic effect on the spending power of the average U.S. worker and citizen. For an executive who makes $150,000 a year, paying $4 instead of $2.50 for a gallon of gas is far less a burden than it is for an individual making $40,000. The executive’s 3% year over year increase in wage amounts to $4,500 while the $40,000 amounts to $1,200—not half enough to cover a year’s worth of gasoline at $4 per gallon. Meanwhile, grocery carts are far less full for $100 than they were just a few years ago.
Some hold out hope based on unemployment numbers as opposed to rising wages. The same forces that drive any free market economy—supply and demand—drive the wages and labor markets in the United States. Wages aren’t going up, because there are too many laborers out of work to choose from.
Another key factor that skews the unemployment numbers is that the BLS considers only those actively looking for work as “in the labor force.” All those folks who have looked and looked for jobs until giving up the hunt in discouragement aren’t counted as unemployed by the BLS. I contend that great numbers of discouraged workers exist and the unemployment numbers being published do not capture the full picture; furthermore, I work with employers every day, and very few of my clients are actively adding heads.
So what does this mean for the American business? There could be some tough times ahead, but it is not all doom and gloom. It’s a buyer’s market for employers: A business that can afford to add heads can do so at a very reasonable price.
This is the time to prime your business for the future and to refine your staff to get the right folks on the bus at the right price. Many businesses are leaner and more efficient than they have ever been; those efficiency benchmarks can be maintained by hiring right—and right now.
When the economy really does turn around, you could be far ahead of competitors who have done nothing but sit and wait.