Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Pressure for "Cost of Living" Wage Increases Predicts ERI Economic Research Institute

05.06.2008
ERI Economic Research Institute (ERI), a leading provider of salary survey, cost of living and executive compensation data, says that recent rising prices will build employee expectations of wage increases that at least maintain their purchasing power.
Drivers are reeling from gas prices of $4 per gallon, and the federal government's most recent April 2008 Consumer Price Index has caused concern:
  • From April 2007 to April 2008, consumer prices rose at an annual rate of 4.2%.
  • Energy costs are up 15.9% over the past year.
  • Food costs are on the rise - bread prices were 14% higher than last year, milk up 13.5%.

"These numbers indicate some troubling economic trends," stated Dr. David Thompson, ERI president and founder. "When the CPI starts to show rapid increases each month, the expectations of salary increases at least equal to the 'cost of living' also grow. The recent CPI increases represent a significant change from the pattern in recent years, and the pressure will be on to grant salary increases based on these changes in CPI."

But there are reasons why wage increases sometimes don't match the CPI.

"What you spend -- your specific cost of living -- depends on how you choose to spend your money. And what you earn depends on what you do for a living and where you do it. The reality is that different people have different expenses, even though cost of living is often discussed as if it were a single discrete universal number," added Linda Lampkin, ERI Research Director. "The federal government tries to measure the changing prices of a fixed market basket of goods and services over time, but there is no one single cost figure that accurately measures individual expenses. The real 'cost of living' is based on decisions by individual consumers on how to spend the money they have."

On the cost-of-living side of the equation, increasing costs may cause consumers to make different choices - for example, take the subway to work rather than drive. Then commuters using public transportation will minimize the impact of the increasing cost of gasoline. Obviously, CPI is useful as a measure of changing costs in the economy, but does not really represent what most consumers actually experience.

On the cost-of-labor side, companies pay what they do because that's what the labor market for a specific skill requires. In recent months, the labor market has weakened from the point of view of employees. A report by Challenger, Gray & Christmas Inc., just found that firing announcements increased in May 2008 to the highest level since December 2005. Similarly, the Bureau of Labor Statistics reported that the figure for median duration of unemployment among those out of work in April increased to the highest it has been since June 2005. The consequences of wrong pay choices are serious. If companies don't pay enough, they lose good people and can't hire new ones. If they pay too much, the prices of their products or services won't be competitive.

According to the ERI 2009 Salary Increase Survey, employers are currently expecting to give increases for 2009 of around 4%, but what is received by any individual employee may be very different, based on what a person does and in what industry. While employees may be feeling the pinch of increased costs and may feel entitled to at least an increase that keeps them even with the "cost of living," employers must face the reality of setting pay levels based on the demand for labor and the goods and services that they produce.

Basing a salary increase on the increase in the cost of living just doesn't really work. Although such an across-the-board increase is easily understood and appears equitable, companies realize that increases must reflect the market for labor in their industries or they won't be in business for very long.

ERI provides information on living expenses in various geographic locations for families with different characteristics (income, size of the home rented or owned, number of family members, number of automobiles and miles driven) in its Relocation Assessor, so employers can compare living expenses between different cities and determine if a geographic differential is needed to attract and retain workers. ERI created the Geographic Assessor to evaluate how pay varies at different income levels at over 7,000 locations. In addition, information on competitive wages for different jobs (over 5,700 titles) can be found in ERI's Salary Assessor, searchable by specific industry, geographic location, and size of employer.

For more information on ERI and its research on competitive salaries and cost of living data, visit www.erieri.com or call 800-627-3697. For questions on the information in this release, please contact Research Director Linda Lampkin at 877-799-3428.


About ERI Economic Research Institute

ERI Economic Research Institute, Inc. is a leader in compensation and job content information. With data gathered from online surveys and an extensive survey library, ERI's staff of 60 researchers provides subscribers with assessments of salaries, relocation cost, cost-of-living comparisons, and executive compensation. ERI's compensation databases contain 20 years of collected data, covering the United States, Canada, the United Kingdom and other countries throughout Europe. ERI subscribers include the American Red Cross, Alaska Airlines, Monster Worldwide, Aon Consulting, Honda, Amtrak, Adidas America, Inc., the IRS, CIA, and United Nations. ERI's products include the Salary Assessor®, Geographic Assessor®, Relocation Assessor®, Executive Compensation Assessor®, and Nonprofit Comparables AssessorT software and Occupational Assessor, eDOT®. For more information about ERI and its products, visit www.erieri.com.

Linda Lampkin | ERI
Further information:
http://www.erieri.com

More articles from Business and Finance:

nachricht Corporate coworking as a driver of innovation
22.11.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

nachricht Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Long-lived storage of a photonic qubit for worldwide teleportation

MPQ scientists achieve long storage times for photonic quantum bits which break the lower bound for direct teleportation in a global quantum network.

Concerning the development of quantum memories for the realization of global quantum networks, scientists of the Quantum Dynamics Division led by Professor...

Im Focus: Electromagnetic water cloak eliminates drag and wake

Detailed calculations show water cloaks are feasible with today's technology

Researchers have developed a water cloaking concept based on electromagnetic forces that could eliminate an object's wake, greatly reducing its drag while...

Im Focus: Scientists channel graphene to understand filtration and ion transport into cells

Tiny pores at a cell's entryway act as miniature bouncers, letting in some electrically charged atoms--ions--but blocking others. Operating as exquisitely sensitive filters, these "ion channels" play a critical role in biological functions such as muscle contraction and the firing of brain cells.

To rapidly transport the right ions through the cell membrane, the tiny channels rely on a complex interplay between the ions and surrounding molecules,...

Im Focus: Towards data storage at the single molecule level

The miniaturization of the current technology of storage media is hindered by fundamental limits of quantum mechanics. A new approach consists in using so-called spin-crossover molecules as the smallest possible storage unit. Similar to normal hard drives, these special molecules can save information via their magnetic state. A research team from Kiel University has now managed to successfully place a new class of spin-crossover molecules onto a surface and to improve the molecule’s storage capacity. The storage density of conventional hard drives could therefore theoretically be increased by more than one hundred fold. The study has been published in the scientific journal Nano Letters.

Over the past few years, the building blocks of storage media have gotten ever smaller. But further miniaturization of the current technology is hindered by...

Im Focus: Successful Mechanical Testing of Nanowires

With innovative experiments, researchers at the Helmholtz-Zentrums Geesthacht and the Technical University Hamburg unravel why tiny metallic structures are extremely strong

Light-weight and simultaneously strong – porous metallic nanomaterials promise interesting applications as, for instance, for future aeroplanes with enhanced...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

See, understand and experience the work of the future

11.12.2017 | Event News

Innovative strategies to tackle parasitic worms

08.12.2017 | Event News

AKL’18: The opportunities and challenges of digitalization in the laser industry

07.12.2017 | Event News

 
Latest News

Plasmonic biosensors enable development of new easy-to-use health tests

14.12.2017 | Health and Medicine

New type of smart windows use liquid to switch from clear to reflective

14.12.2017 | Physics and Astronomy

BigH1 -- The key histone for male fertility

14.12.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>