Today I’d like to offer a short post encouraging you to plan for increased labor costs. We have entered an employee’s market, and wages are everywhere on the rise. There are a myriad of factors contributing to wage determination, but two of the more prominent reasons for rising wages, especially in unskilled labor, are low unemployment and the ready availability of ‘work when you want’ jobs such as driving for Uber or Door Dash.
We have been recommending our clients stress test their books by running their numbers with an added 15-20% allotted to their unskilled labor expense. Skilled labor increases are likely to follow. In fact, I recently spoke to an employer in the tech sector who told me he has already had to add 30% to salaries to be competitive in hiring new talent. Labor increases for existing talent will soon follow as existing employees are exposed to more and more opportunities for increased salaries elsewhere.
Don’t get caught off guard. Your labor costs are rising.