For months, American businesses have had difficulty finding and maintaining employees, as the unemployment rate decreased from 3.6% in June to 3.5% in July, and there are more positions than job seekers, according to the Labor Department.
Businesses have been aiming to draw and keep employees by raising hourly wages relative to inflation by 0.3% in the fifth sequential month. Nonetheless, there are still calls for higher compensation — hourly earnings after adjusting for inflation have only gone up 1.1% in the last year during the most serious inflation in four decades.
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Increasing Wages By 3 Percent: CEOs Of The World
At a variety of companies ranging from banks, movie theaters, to transportation services – CEOs have implemented layoffs, technology advances and other cost-saving measures in response to increasing labor expenses, several key business leaders stated on recent Q2 earnings calls.
The other day, HireQuest CEO Richard Hermanns was in Minneapolis and witnessed a restaurant in the middle of the airport closed due to a lack of staffing. HireQuest is a company that provides temporary personnel services. During a Thursday second-quarter earnings call, Hermanns stated that wages are still being pushed higher due to a lack of available workers. He added that the shortage of workers is consistent.
In an earnings call on Tuesday, UPS CFO Brian Newman reported that the company decreased compensation and benefits by $205 million in the second quarter by eliminating 2,500 managerial positions annually. He added that this was done to offset the 6.5% growth in average union wages that resulted from recent labor negotiations.
The Teamsters leadership had a demand to bring up wages quickly, and according to UPS CEO Carol Tome, this was something they were happy to oblige with. This agreement puts a bit of a strain on the profit margin.
Tome declared that there will be some difficulty over the span of the following twelve months, from June to August, though inflation will be kept under control.
At a quarterly earnings call on August 1st, 2023, Alain Bedard, CEO of TFI International, revealed that the transportation company had achieved a 15% decrease in their year-over-year shipping expenses. As a result, an average 3% annual salary raise was agreed upon for the next five years.
At a Tuesday earnings call, Donald Bassell, CFO of ARKO, a convenience store operator, reported that personnel costs had increased 6.5% in Q2 compared to the same period the previous year.
Bassell noted that, similar to other sectors, they have experienced wage increases. “Our overtime has significantly declined,” he added, “which is beneficial for people’s quality of life, as well as the utilization of temps.”
He indicated that the most unpredictable factor will be labor, expressing his sentiment.
During the quarter, CFO Melissa Hayes Thomas reported on an Aug. 4 earnings call that Cinemark Holdings, the operator of cinemas, experienced a year-over-year 12% increase in global salaries and wages. Although these costs rose, they decreased by 1.6% when compared to total revenues due to higher attendance and measures to streamline operations.
She stated that although there is still some wage rate pressure, this is largely due to increased minimum wage requirements in certain states and not due to a “labor market dynamic.”
The principal financial group, an insurance provider and manager of retirement assets, has seen great performance due to the rise in salaries and retirement savings at many firms.
During the July 28 earnings call, Principal CFO Deanna Strable remarked that they are ideally placed to gain advantages when inflation affects wages, which would eventually bring in revenue.
Strable remarked that Principal has been affected by the labor market environment, which has necessitated salary increases in order to remain competitive in the war for talent.
The use of technology in the educational system has become increasingly popular in recent years. More and more schools have been incorporating tech into their lesson plans and classroom activities. It is now commonplace to see students working with computers, tablets, and other digital devices. This trend of utilizing technology in education has been beneficial, providing students with more opportunities to learn and engage with the material.
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