Wage-Price Spiral

By Ted Dieck | Employers Intelligence - Compensation | Jan 12, 2022

When all costs go up, companies typically raise their prices.  Employees have the same problem.  Your New Applicants intend to solve that problem.  They will likely follow the pay.

Companies know they have increased costs ahead.  Inflation is pushing up the cost of goods.  Taxes will surely go up.  Insurance providers have warned they will pass on significantly higher costs.  And, as I have said, new employees are highly sensitive to pay plans, bonuses, and promotion potential. 

This is not something companies can work their way out of.  

I have talked to sales people who have already booked all available production for the year 2022.  They have no fear about making the next sale (in 2023.)  The larger concern is the cost of delivering on their commitments.  

Inevitably, companies will add their increased costs into future pricing.  

And that’s what starts the wage-price spiral.  

The Candidate’s View

The people required to fulfill an agreement will be facing higher costs of their own.  Of course, they’ll ask for higher pay to do their work, thus raising the cost of production.  

Higher production costs bump up the sell prices.  And consumers will need more income to make their purchases.  And the fun just keeps on going. 

Candidates must be able to address their financial needs.  It will directly affect where they will go to work next.