Businesses Are Budgeting Big Raises for 2022
It doesn’t look as if the competition for talent will be ending any time soon.
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Here are today’s highlights:
Amazon continues to emerge as the de facto setter of wages and benefits.
Does anyone still think remote work is a passing phase?
A startup banking app caters to migrants.
The 54-day delay of just one cargo ship had an enormous impact on more than 100 businesses.
SELLING THE BUSINESS
One of America’s most entrepreneurial restaurateurs is selling a minority stake to a Fortune 500 company: “Aramark and Starr Restaurant Organization, both based in Philadelphia, announced a collaboration that will expand founder Stephen Starr’s brands and meld his ideas into the wide-ranging businesses of the food and facilities-management giant. Aramark will acquire a minority ownership position in Starr’s restaurant company. Starr will be given national visibility, far beyond his more than two dozen restaurants in four states from New York to Florida, including 15 in Philadelphia. Aramark, a Fortune 500 company valued at $9 billion, says it serves 100 million people a year nationwide at its facilities in colleges, businesses, sports and entertainment venues, convention centers, and cultural attractions.”
“In effect, Starr is returning to the entertainment field, where he started in the mid-1970s as a concert promoter booking such unknowns as Jerry Seinfeld, Larry David, and Pat Benatar.”
“Aramark manages the food service at more than 150 sports and entertainment venues, including Citizens Bank Park and Lincoln Financial Field in Philadelphia.”
“The agreement also creates an exclusive licensing agreement for Aramark to operate designated Starr concepts and brands across multiple venues. As an example, Starr said, Aramark could put Jackass Burritos, a ghost kitchen created by Starr, into college dining halls, stadiums, and arenas.” READ MORE
Businesses are budgeting big raises for next year: “A survey by the Conference Board set for release Wednesday finds that companies are setting aside an average 3.9 percent of total payroll for wage increases next year, the most since 2008. The survey also shows that companies are planning on raising salary ranges, which would result in higher minimum, median and maximum salaries. That suggests pay raises could be broad-based and affect workers across a company’s pay scale. The results are a sign the recent acceleration in private-sector wages is likely to carry over into 2022.”
“On Friday, the Labor Department reported that private-sector hourly wages rose 4.8 percent in November from the year before, on par with October. Wages have risen by more than 4 percent year-over-year for five consecutive months.” READ MORE
Amazon is emerging as a de facto wage-and-benefit setter for a large pool of low-skilled workers around the country: “[Paul] Verst recently gave employees a $3-an-hour raise to compete with Amazon. Starting pay now ranges from $16 to $19 an hour. He said his family-owned company aims to retain employees by connecting with them personally. He signs a birthday card for each worker. Tenures for many workers have averaged 10 to 15 years, he said. Still, the company has lost a handful of employees to Amazon, which has advertised pay of $20 or more an hour and $1,000 sign-on bonuses in the area. ‘It was for economic reasons that they left,’ he said.”
“[Amazon] is planning mock fulfillment centers in high schools to plant the seeds of future careers, sending recruiters to local fairgrounds and bombarding job boards with promises of large sign-on bonuses and pay—in some cases nearly triple the federal minimum wage.”
“‘Amazon is the standard-bearer,’ said Zach Pasquariello, a former Chewy area manager in the region. ‘Chewy was always following in Amazon’s footsteps and trying to do what Amazon does, but we were always a little bit behind.’”
“‘If they are not leading [a wage increase], they are reinforcing it,’ said Lynn Reaser, a professor at Point Loma Nazarene University and longtime economist at financial institutions that include Bank of America Corp. ‘Everyone is comparing job offers, and they always have Amazon as a benchmark.’” READ MORE
One way to cope with the Great Resignation? Try offering a career path: “Many workers leave because they can’t see a career path that doesn’t involve quitting. Only 1 in 4 employees say their organization makes it easy for them to find job opportunities that match their interests, according to consultant Gartner Inc., and just 37 percent of bosses encourage their direct reports to explore other roles. Among people who are fed up with their job, almost half say it’s because of a lack of advancement opportunities instead of reasons such as salary, a survey from staffing agency Robert Half found.”
“‘A lot of folks working at big, diversified corporations are not made to feel they could have different careers inside the company,’ says Melissa Swift, a consultant at workforce advisory firm Mercer. ‘Organizations haven’t thought about this issue in a detailed way.’”
“Six in 10 employers say they’re struggling to retain staff, vs. only 15 percent who said so last year, according to consultant Willis Towers Watson.”
“‘Instead of dangling huge sign-on bonuses, companies should spend more time ‘cooking with what’s already in the kitchen,’ Swift says.” READ MORE
Still think remote work is going away?
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Majority, a banking app aimed at migrants, has raised $27 million: “Majority also announced today that it is rolling out a feature allowing its users to sign up for a bank account without a Social Security number, allowing them to use government ID from any other country along with proof of a U.S. address instead. The new feature will allow migrants to bypass onerous identity verification requirements that can bar them from accessing banking services for months at a time, the company says.”
“[Founder Magnus] Larsson himself is a Swedish migrant to the U.S. who served as CEO of one of Sweden’s largest telecom companies before launching a previous venture to provide low-cost cross-border calling.”
“He is currently awaiting visa approval so he can move from Stockholm to Miami to build out Majority’s marketing and brand efforts. The company is also looking to scale its risk team and back-office functions, which it runs out of its Houston location.”
While the app’s core banking services are available in all 50 U.S. states, its advisers are only on the ground in Texas and Florida today. These states are hubs for some of the main communities the app already serves, Larsson said.” READ MORE
In New York City, businesses are trying to figure out how to deal with the mayor’s surprise vaccine mandate: “The owner of a flower shop in the Bronx applauded New York City’s new vaccine mandate for private employers. A worker at a tire shop in Brooklyn said she was not ready to get vaccinated. Major companies like News Corp that currently require vaccination or weekly testing were considering how to implement the measure. The day after Mayor Bill de Blasio announced a vaccine mandate for on-site employees at all private businesses — the most far-reaching local measure in the country — workers across the city were figuring out what it would mean for them.”
“Randy Peers, chief executive of the Brooklyn Chamber of Commerce, described the mandate as ‘virtually unenforceable’ and said it would mean more pain for the city’s economy.’”
“In the Bronx, Chris Blanis, the owner of Mount Eden Florist, said the mandate was a good idea that would help keep New Yorkers safe. He and his only employee, his son, are both already fully vaccinated.”
“‘We want to live — we don’t want to die,’ Mr. Blanis said …” READ MORE
How just one ship’s 54-day delay hurt more than 100 businesses: “In late August, a small container ship called the A Kinka left Hong Kong loaded with, among other things, 50-inch Roku TVs, aluminum cookware and Fender guitars, as well as about 26,000 backgammon and chess sets destined for a small toy company in California. It arrived off the coast of Los Angeles on Sept. 12, according to marine tracking data, steaming right into a traffic jam of dozens of ships. It floated in the Pacific Ocean for 54 days before it finally got a chance to unload its cargo. ... More than 100 companies needed cargo on the 574-foot-long ship, including giants like Amazon.com. But for smaller businesses that were waiting for just one or two containers, the delays have taken a heavy toll, leaving some with disgruntled customers and significant financial pain.”
“John N. Hansen Co., a Petaluma, Calif.-based toy manufacturer and distributor, had two containers on board. One held about 26,000 chess and backgammon sets destined for small toy and game stores.”
“‘The mom-and-pop stores are going to bear the brunt of it,’ said John Hansen III, president of the 16-person company. ‘A lot of the big guys knew this was coming—and secured goods as early as they could.’”
“‘It’s too late now for this year,’ Mr. Hansen said.” READ MORE
THE 21 HATS PODCAST
Are You Playing Offense or Defense? This week, Paul Downs, Dana White, and Laura Zander talk about the lessons they’ll take from 2021 and what they’re hoping to accomplish in 2022. Paul thinks he’s found an alternative sales channel that will lessen his dependency on Google. Laura, who built Jimmy Beans Wool on ecommerce, is planning a renewed emphasis on brick-and-mortar retail. And Dana White is working on building the team that will help her pursue her remarkable opportunities with franchising and the military. Plus, how comfortable would the owners be showing up at work in a brand new car?
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