Advocacy News – May 4, 2022
As the cost of living continues to increase due to inflation, labor compensation costs for private industry workers, including pay and benefits combined, are up — but struggling to keep pace.
The U.S. Bureau of Labor Statistics released its quarterly Economic Cost Index summary on April 29 showing that:
- Compensation costs for private-sector workers rose 4.8% for the 12-month period ending in March, up from a 2.8% increase a year earlier.
Wages and salary costs increased 5% for the 12-month period ending in March 2022, up from a 3% increase a year earlier. The cost of benefits increased 4.1 percent for the 12-month period ending in March 2022, up from a 2.5% increase a year earlier. Inflation-adjusted (constant dollar) private wages and salaries declined 3.3 percent for the 12 months ending March 2022. Inflation-adjusted benefit costs in the private sector declined 4.0 percent over that same period. Employment costs continue to differ between industries. Among private industry occupational groups, compensation cost increases for the 12-month period ending in March 2022 ranged from 4.0 percent for natural resources, construction and maintenance occupations to 7.8 percent for service occupations. For the Detroit-Warren-Ann Arbor census region and metropolitan areas, total compensation rose from 3.1% to 4.6% for the 12-month period ending March 2022 and from 2.5% to 5.1% for wages and salaries.
Rising pay and benefits spending, while significantly higher than the increases employers were familiar with just a year ago, are still trailing the rate of inflation by a fairly wide margin. The consumer price index rose 8.5 percent year over year in March, the highest inflation rate since 1981, the BLS reported on April 12.
Rising employment costs are being driven up by widespread labor shortages, inflation and increased wage demands. Employers are doing everything they can to move the needle: offering higher starting pay, sign-on bonuses and enhanced benefits to recruit new hires and maintain current employees.
There is, of course, no silver bullet solutions to the current workforce and talent crisis, but the Michigan Chamber continues to advocate for multiple solutions, including:
- Job training dollars. The Michigan Chamber is advocating for increased funding for the Going PRO Talent Fund. The fund has been instrumental in providing competitive grants to employers critical to jumpstarting the skill building needed to ease workforce shortages across Michigan, and we want to keep that momentum going for businesses.
- Breaking down the barriers to employment, including state funding for affordable childcare and affordable housing projects.
The Chamber has also put on a series of webinars on workforce issues, which are available on-demand to members for FREE. The full listing of webinars can be found HERE.