Are you paying your employees enough to retain them?
If you work in HR, you are likely all too familiar with “The Great Resignation.” Since the beginning of the pandemic, Americans have been quitting their jobs in record numbers. While people leave jobs for a myriad of reasons, a recent survey from Flexjobs found that approximately 59% of workers looking to quit their jobs cited low salary as their primary motivation. In a similar survey conducted by ConsumerAffairs, 47% of respondents stated they were seeking better pay. With inflation at an all-time high and cost of living rising across the country, now is an important time assess the adequacy of your employees’ salaries.
To illustrate this point, we researched cost of living versus average salary in three major cities around the country.
Here in Seattle, where Recruit4Business is based, the cost of living is above the national average. A one-bedroom apartment in the city is typically priced around $1,928 a month, almost $500 higher than the country’s average. Coinciding with the higher cost of living, Seattle also has one of the nation’s highest minimum wage requirements at $17.27 per hour. The U.S. Department of Labor reports that the Seattle-Tacoma-Bellevue, WA area had an average hourly wage of $36.62 in May 2021, about 31% above the nationwide average. This equates to an annual salary around $76,000, or about $61,000 after taxes. Smart Asset reports Seattleites need to make at least $66,434 post-taxes per year to live comfortably in the city.
Across the country in New York City, the cost of living is even higher. Earlier this summer, the average rent in Manhattan jumped to the highest price point in history, surging above $5,000. That accounts for all sizes of apartments, but a one-bedroom still clocks in well above the national average at $3,240 per month. The minimum wage in NYC is $15 per hour, and the region’s average hourly wage stood at $35.65 in May 2021. This adds up to a little above $74,000 per year, but after taxes that number dives closer to $59,500. This comes in a bit under Smart Asset's estimate of the $66,214 needed after taxes for New Yorkers to live comfortably.
In the Midwest, many Chicago residents struggle to afford the city lifestyle. Chicago’s rent is comparable to Seattle’s, averaging $1,937 per month for a one-bedroom apartment. The income needed to live comfortably is lower than in Seattle and New York, coming in at $54,202 which coincides with the city’s lower average hourly wage of $29.01. After taxes, this comes out to an average take-home income of $48,483 per year.
As you can see, many Americans are not making enough to live comfortably in the cities where they reside. Lack of financial stability can take a large toll on a person’s health and wellbeing, so it is no wonder so many employees are seeking higher paying positions.
If you are underpaying your employees or have employees asking for increased pay, a change may be necessary. If you cannot afford to pay employees more, consider other retainment strategies. Allow employees to work remotely so they have the option of living in an area with a lower cost of living. Work on strengthening company culture so that employees feel connected to each other and appreciated at work. Give younger staff professional growth and learning opportunities to help them feel motivated to stay with a company. You might also consider boosting benefits or PTO to ensure employees can take time off if they are feeling burnt out.
Unsure whether you are competitive enough in wages? Recruit4Business can conduct Salary Surveys for your current positions and advise you on the going market rates for your employees. We are certified to help with retainment strategies, employee engagement, manager development, and a variety of other HR needs. Don’t let low pay be the reason your team falls apart, connect with us today.