Remember 2008? Barack Obama was elected the United States’ first black president; “The Dark Knight”, “Iron Man” and “Twilight” dominated the box office; Rihanna and Chris Brown were topping the charts and a couple; U.S. swimmer Michael Phelps won a record eight gold medals at the Summer Olympics in Beijing, China; And, oh yeah, the stock market crashed. Big time. Like, global-financial-crisis, worst-since-the-Great-Depression-style crash.
But before the Great Recession of 2008 had us all burying whatever money we had left in an old coffee can in the back yard, for most people things seemed pretty good, especially at work – and most of us were at work, as the unemployment rate was hovering around 4.9 percent… before everything fell apart. And beyond that, back then, wages were rising at about 4 percent annually!
These days, while the U.S. unemployment rate is beating pre-Great-Recession levels, at about 4.1 percent, it’s a different story when it comes to wages.
Right now, wage growth is running around 2.5 percent annually. (At PayScale, we joke that giving a raise of less than 3 percent is akin to saying, “Thanks a latte.” That’s because, for most workers, a 3 percent raise gives them enough additional cash to buy a latte every day… but not much else.)
According to CBS News, “wages and salaries as a percentage of total compensation has been in steady decline falling from a high near 72.5 percent in 2000 to just over 68 percent now.”
And while that may not seem like much, compounded year over year it adds up.
Reports CBS, “Assuming a $55,000 starting salary, the difference between a two percent and a four percent annual raise at the end of ten years is $65,730 vs. $78,282, or a difference of $12,552.”
That’s more than twelve grand you’re missing out on. And twelve grand buys a lot of Rihanna songs on iTunes.
Assuming a $55,000 starting salary, the difference between a 2 percent and a 4 percent annual raise after ten years is $12,552. That’s more than twelve grand you’re missing out on. And twelve grand buys a lot of Rihanna songs on iTunes.
But the economy’s humming along, right? In fact, 2017 was one of the best years ever for the stock market, with the Dow rising 5,000 points in a single year for the first time and the other markets also climbing like mad.
So… why isn’t wage growth keeping pace?
Lack of wage growth may be partly due to extreme employer caution when it comes to labor costs; After the Great Recession, still-nervous organizations want to keep their compensation costs low in case of another financial meltdown. As a result, more organizations are handing out one-time annual bonuses instead of hefty permanent raises.
And you know what else organizations are handing out instead of big raises? Perks. Perks like nap pods, ping pong tables, on-site fitness classes, flexible work schedules, and ‘bring-your-dog-to-work’ days, to mention a few.
Reports CBS News:
“…according to Bureau of Labor Statistics data, the percentage of employees with access to wellness programs has increased from 34 percent in 2010 to near 43 percent last year. These are things like physical fitness programs, stress management courses and nutrition education among other benefits.”
The article’s author admits that the data on availability of perks is sparse, but “what is available suggests a meaningful shift away from a focus on salaries.”
Will Work for Perks
But workers don’t seem to mind. In fact, the article reports that, “Almost 9 out of 10 people said they’d consider choosing a lower-paying job over a higher-paying one if the former offered better health insurance and a more flexible work schedule,” and “Millennials were twice as likely than Baby Boomers to report paid time off as the most important work benefit.”
Perhaps the Great Recession produced an unexpected result; that workers took stock of what really matters in life, and they decided flexibility, work/life balance and general happiness were more important than that 4 percent raise.
Or maybe people just really love ping pong.
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