COLA

COLA

There’s a word that compensation consultants of a more recent era have shunned for at least two decades:  COLA

And not in favor of the unCola – in favor of NO COLA.

In fact, the consultants at CHRC have spent a fair amount of time explaining the differences between

Merit Budgets

and

COLA – Cost of Living Adjustments

Until their faces turn an unattractive shade of blue.

The phrase that gets economists animated is “wage-price spiral” … and many are turning an unattractive shade of red believing that the current wage increases are going to take the U.S. to the kind of wage-price spiral that the U.S. economy experienced in the 1970s.

So much to our delight, last week Mitchell Hartman on Marketplace did a story that featured the COLA that we don’t like to imbibe.  More importantly, in addition to economists that are convinced we are headed for the spiral, he featured two that pointed out key distinctions of what separates the current situation from that in the 1970s.

Ross Mayfield of Baird points out that unlike the 1970s, the worker’s demands aren’t driving inflation, supply constraints caused by the war in Ukraine and Covid are.  Economist Joe Brusuelas underscores the statistic that undergirds Mr. Mayfield’s point:

“At that time, labor unions represented approximately 1 in 4 American workers.”

Why were those COLAs so worrisome?  They were built right into those union contracts for years at a time, regardless of market conditions. That was a very large factor in the wage-price spiral

How many Americans belong to a union right now? 

Calculating Woman

Calculating Woman

A is for Ada

And for Algorithm

Algorithm is a word that has gone from the confines of math textbooks to everyday parlance, especially for anyone in computers, finance, or even compensation. 

Did you know that the person credited for creating the first computer algorithm was Ada Knight, Lady Lovelace? 

In a short (1815 to 1852) but rather extraordinary life her passion for mathematics led to a collaboration with Charles Babbage, who many consider the father of the computer. 

Read more about her, her life, her contributions to mathematics, and her rather famous literary parentage.

 

Charting a Course

Charting a Course

Recently, sitting on deck on a gloriously sunny day, gazing across the beautifully calm water, my mind wandered back to grade school math.  Probably the grade school math we all dreaded the most: the story problem.

Why?

Because it dawned on me that the captain probably didn’t have to do much of that story problem math that day.  You remember the problem:  a boat must cross a river Y wide, the current is traveling at X, how does Timmy aim his boat to reach the dock on the other side?

Why did we all hate these sorts of problems so much? Perhaps because in the diagram, or in life, we were always so sure about where that dock was on the other side.  Both sides were stationary, we were sure of where they were.  But a moving body of water? A current that could change speed, or course, or pull you under without warning?  And what if you did all the math, and then somewhere in the middle of the crossing, it all changed? 

Upon reflection, those story problems were great preparation for life.  They made us weed through the words for the pertinent facts.  How often were we reminded to go back and use our solutions to check our work?  These problems reinforced that things were not static; they would not remain in place.  We needed to reassess, recalculate, and rethink.

Solution?

In today’s current labor markets – and yes there are many, even in one location – the currents are irregular indeed.  Many skippers are scared to undertake a journey of understanding, to even test the waters, but test them you must.  Maybe your Great Resignation won’t be because of compensation, maybe it will be because of limited career growth opportunities within your organization, or lack of flexible work arrangements. Maybe your compensation is just fine near the shore, but away from the shore, the currents have shifted suddenly, and you haven’t ventured out that way to investigate?  Your organization needs to know which way the current is flowing.

It is time to solve for X.

We’ve Seen This Show Before

We’ve Seen This Show Before

Lots of the country has been suffering from blistering heat.

Back in the days before most homes had air conditioning there was one really good way to escape the heat.

The movies.

If you weren’t around in 1947, you, too, may have missed “The Best Years of our Lives” which won multiple Oscars that year, including Best Picture and Best Director for William Wyler.  The story begins with the unceremonious way in which three returning WWII veterans must find their way back to their shared hometown, bonding in the process.  As the story unfolds, the viewer realizes that pre-war life didn’t necessarily dictate war-time rank, and that being a hero in one uniform, might not translate stateside. After watching our essential workers, who were called heroes at the height of the pandemic, it was uncanny to watch a wartime hero strive to earn a living wage once the conflict was over.

While there seems to be no excuse for NOT having seen this movie before, watching it now, as the U.S. is emerging from our battle with Covid, seems eerily fitting.

We’ve all been telling ourselves that never before have we had to deal with such a crazy labor market.  That people have never had to readjust after such a life and death struggle; so many have lost loved ones.  What about those that might never be 100% healthy again? How does our society and business world work around that? What about folks that have skills that are obsolete? How are workers supposed to retrain and reskill yet again? 

Whether you are trying to escape the heat, sit out a rainy weekend, or finally understand why everyone raves about William Wyler and his films, “The Best Years of our Lives” will knock your socks off. 

The U.S. has seen this show before, and after watching this movie, you will feel the resolve that we can get through this again, despite all of our collective wounds.

Summer Rerun:  Geographic Differentials

Summer Rerun: Geographic Differentials

Back in May when we first warned of the quicksand that awaited employers flirting with basing pay on where people lived, we approached it from a technical compensation perspective.  When I came across this article last night, I knew we had to revisit the topic from the right point of view—corporate strategy.

I had never heard of this CEO or company before, but looked up both after reading this article.  Ian White has many quote-worthy quips in this article, but up front he reminds ALL employers that:

Companies have a responsibility to pay their employees fairly and on time, but that’s where their control ends.  The manager who chooses to move into an expensive high-rise downtown doesn’t deserve to make more money than their peers who choose to buy a modest home in the suburbs or live with their parents to save on rent.

He echoes many of the sentiments we made back in May, but most importantly he reminds all of something that we often stress—don’t copy a practice that another company is doing if it doesn’t fit with your culture. Read More Here