The Time for a Wage Increase is Now
With employers suddenly caught on their back foot by The Great Resignation, now might be the time for your clients to seek out (and get!) the compensation they deserve for a job well done.
Hello, Talking About Money Community, I am thinking of you. 💭
In this post I want to talk about your clients and their ability to earn more income. I think that it is important to have a frank conversation about this topic because as financial counselors, educators, and coaches, you know what you say to your clients about balancing a budget – they can:
Increase income
Decrease expenses
Do both
Do you say this in your workshops and one-on-one sessions? I know that I do!
After establishing that your client understands these three rules to balance a household budget, what do you tend to focus your time on? Say it with me now: You focus your time and energy on decreasing expenses. I know you do that because I do it too. But you may have also heard the other adage that “you can’t spend your way out of poverty” (I tried to figure out who to attribute this quote to, but Google decided not to help me out with this one). Try as we might to cut costs to bring a budget into alignment, sometimes what we need to do is to increase income.
How as financial capability professionals can you lead a discussion on increasing income? I believe that first and foremost, you want to be able to believe that you are giving good advice. If you are like me, you may have hedged on encouraging people to earn more income because you don’t see a path for them to do so. You might think that they don’t have the skills to earn higher wages, or that higher-paying jobs simply do not exist in your community and therefore your clients will need to get by with whatever jobs they can get.
But one of the fallouts of the Covid 19 pandemic has been what experts are calling The Great Resignation, with 4.3 million (or about 3% of the workforce) Americans quitting their jobs in August 2021 alone. There are many speculations why this is happening, from stimulus payments being sent directly to households creating a cash cushion, to the dearth of available childcare slots leaving moms to fend for themselves in providing care and therefore not participating in the labor force, to simply burnout from working fraught jobs during a global pandemic.
Videos of people quitting their jobs are going viral across the internet, and you might have witnessed your own clients following suit with their “I quit!” stories. You may now have clients who are looking for a job that is better than the one before (either in compensation, a flexible schedule, values alignment, or a combination there of).
What advice can you provide to assist them in increasing their income going forward?
Ask for a raise
If your clients are basically happy with their jobs but wished that they made more money, the time might be ripe to simply go to their boss and ask for a raise. More and more employers are having to raise their base wage to attract new workers, and if your client and their boss get along, then they may be willing to give your client a bump in pay to ensure that they will stick around.
Anna-Louise Jackson of Money.com recommends that workers “ask for a 5% raise right now.” She makes the case that with the costs of basic goods rising as an alarming rate (think your grocery bill or your gasoline receipt), employers should follow the lead of the Social Security Administration and raise wages among their workers at least 5%, if not more.
How can your client navigate this tricky (and sweaty palms inducing) conversation? Indeed.com has tips and tricks (with scripts!) to help facilitate this important talk with a boss. The good news? This is a rare point in history when workers have more leverage and therefore a higher likelihood of success. According to the Brookings Institution, 10 million people are needed to fill vacant jobs, yet only 8.4 million Americans are actively searching for work. In the third quarter of 2021, worker wages were up 1.5%, with an increase of 8.1% for restaurant workers and 5.9% for retail workers.
Find a new job
If your clients simply don’t want to do the same job that they have been doing anymore, you may be able to support them in finding a new job. According to Abigail Johnson Hess of CNBC, “Of the roughly 50% of employed Americans who intend to make career changes because of the COVID-19 pandemic, 41% are seeking flexible and/or remote work, 39% desire a raise and/or promotion and 33% are interested in changing industries.” Your clients might be interested in doing something new, trying out an emerging skill set, or performing work that is more in line with their personal values.
According to Michelle Fox of CNBC, January may be one of the best times of the year to look for a job, since companies with calendar-year budgets tend to post new jobs at the beginning of the year. In the weeks before the new year, the time is ripe for your clients to reflect on their recent work accomplishments, set goals for skills that they want to learn, and update their resume.
One thing is for sure: if your clients can handle it, advise that they look for a new job while they still have their current job, or at the very least, only quit if they have enough emergency savings to keep them afloat for 3-6 months. (As I write this I’m reflecting on the realities of your clients and their emergency savings. Advise them to look for a new job while they have an existing job – that’s more realistic.)
Start a small business
As a self-employed person myself, I am usually the last person to encourage someone to embrace entrepreneurism (friends, this path is hard!). But for some, now is the time to recognize a problem in their industry or community that they have the skills to solve, and then go make it happen.
Before your client starts cashing in their life savings or running up their credit card balances in order to start a business, it’s good for them to seek out some reputable education and advice from others who have mentored other aspiring entrepreneurs. Programs are available from myriad sources, from community-based nonprofits (such as organizations belonging to the Association for Enterprise Opportunity), to local, state, and federal government agencies (such as the USDA, Office of Refugee Resettlement, or HUD).
These agencies may have opportunities for small-scale grants or loans as well, such as SBA’s grants for community organizations that serve micro-businesses, so that your client is not risking their life savings on their endeavor. For another example, in December 2021 the SBA announced $1.1 million in grants and contracts to promote Native American-owned businesses.
