Despite the federal minimum wage stagnating in many large cities, state minimum wage has increased to $15 an hour. But laws aren’t the only reason companies raise wages for their employees. With the rising cost of living, many companies realize they need to pay their employees more to help them make a living.
Along with helping employees pay the bills, there are several other reasons many companies are raising worker salaries.
Higher Pay Attracts Better Talent
Jobvite’s 2015 Job Seeker Nation Survey found that 61% of workers moved to a different job because of the pay increase compared to the job they left. Benefits can be attractive, but alone they aren’t enough to attract skilled workers. If you’re having a hard time placing good talent, it might be time to reevaluate what you are offering for the work you require.
Higher Pay Increases Employee Satisfaction
You’ll be hard-pressed to find a worker who doesn’t need more money. 71% of households are concerned about having enough to make ends meet. All of that worry about how to meet financial obligations takes a toll on worker health and performance. Increasing your employees’ salaries helps them breathe a little easier and feel more valued for the work they do. When they don’t have to worry about what they’ll put on the table that night, they can put their full focus and energy into doing a better job for your company.
Better Pay Improves Your Company’s Reputation
Increasing pay before it’s federally required will make your company look good to your customers. You can show them that you’re doing it because it is right instead of because it’s a requirement. While struggling to make ends meet, 75% of working Americans support increasing minimum wage. Many of them still support it even if it means they have to pay more for products. Happy employees help foster happy customers. And a happy customer is a repeat customer.
Better Pay Helps Your Retention Rate
If a worker realizes they can get more money by doing the same job at another company, you’ll be hard pressed to keep them working for you. It’s more cost-effective to increase the pay of your current workers than it is to find replacements. After all, when hiring new talent, you have to spend time placing job ads, going through interviews, and possibly working with a recruiter to find someone who meets your criteria. And during that entire process, you have to manage the same amount of work with less manpower to get it done. It’s estimated that it costs 6-9 months of an employee’s salary to replace them. Increasing an employee’s pay by 5-10% is much less expensive than paying an additional 6-9 months of their salary just to find someone else.
Increased Salaries Help You Keep Up With Competition
Your customers might not notice, but if your employees realize competing companies are paying more for the same job, they’ll expect you to do the same. While some employees might not leave your company to go work for a better paying position, they may start to resent you for not paying them what they are worth. If you find your competition is giving competitive pay raises, consider doing the same.
There are many reasons why increasing salaries at your company makes sense. Your employees will be happier, more productive, and more likely to keep working for you. It can also help you avoid the headache of higher turnover and finding workers to replace the ones you might lose to better paying jobs. Increasing pay rates is a win-win situation for everyone involved.