Inflation is real.
SPRCHRGR’s most valuable assets are our experienced people who perform the highly technical work for our clients.
The FAQ below outline how and why we align our staff’s compensation to keep pace with macroeconomic factors outside of our control.
What are Cost of Living Adjustments (COLAs) & how do they work?
Cost of living adjustments help employees manage rising prices for basic staples such as housing, energy, and food. A cost of living raise for employees is not based on job performance or a promotion. Rather, the pay increases are given to counteract inflation and help employees maintain their earning power.
Generally, employers calculate the amount of a cost of living pay increase by using a price index, such as the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index measures the rise in consumer prices for households where at least half of the income is from clerical or urban wage occupations, and at least one of the household's earners has been employed for at least 37 weeks over the past twelve months. This represents about 29% of the U.S. population.
CPI-W has averaged 4% increase per year between 1970-2020, with dips and spikes along the way. Another spike began in 2021, as can be seen in the chart above.
What sources does SPRCHRGR use to track CPI-W?
We rely on the publicly available data is published at the following US government websites to keep tabs on CPI-W on a monthly basis:
How does that affect me, as a client?
Low morale and high staff turnover are far more expensive and disruptive than regularly monitoring and adjusting staff compensation rates to provide them with a competitive wage relative to their job duties and their individual cost of living.
SPRCHRGR needs to periodically increase our billing rates to keep pace with our inflation-adjusted staff compensation rates (aligned with CPI-W, above) in order to maintain a healthy business. If your business was employing our people directly instead of partnering with SPRCHRGR, those people would face the same inflationary pressures which cause their living costs to increase. Therefore, your business would incur the same labor cost increases, regardless.
We’ve interviewed thousands of accounting and finance professionals and hired hundreds for our own business and for our clients’ businesses since 2013. Based on that extensive experience, we believe that our proactive approach to managing COLAs yields the best results with regard to job satisfaction, retention, staff productivity, and overall harmony in the human capital side of every business — yours and ours included!
What, if anything, can I do to protect my business?
Macroeconomic factors are outside of your practical control, and we’re not in position to give political opinions or advice as it pertains to the government’s role in managing inflation in the US. So aside from relocating your staff to places with lower costs of living, the most direct options available to your business to combat rising labor costs are to:
Make corresponding increases to the price of your product or service.
Further streamline your business operations, thereby getting more productivity from every hour of human labor effort.
Consider your staff compensation model to be an investment in the people who power your business — focus on maximizing your return on that investment rather than simply trying to reduce the spend itself.
How can I get help with this?
SPRCHRGR is very experienced in business process streamlining, both by redesigning operational workflows and also by designing/developing/implementing custom software tools that reduce, augment, and automate the manual work performed by humans.
We’re not trying to put people out of work, rather we’re interested in enabling each person to apply their time and brainpower to the highest-level critical thinking and value-added contributions for your business, while leveraging technology to improve accuracy and productivity, maintain data security and integrity, and drive new insights to move your business forward.
We also offer HR Advisory services to design customized compensation plans and provide other valuable strategic support to help our clients manage the people side of their business.
Please reach out to your dedicated SPRCHRGR team lead today to explore these potential opportunities and solutions for your business!