Goldman Sachs CEO had something interesting to say recently and if this firm is having trouble retaining people then what do you think that says about hiring across America? Goldman Sachs had 31% higher compensation costs which impacted earnings down by 13% so we ask again, if Goldman Sachs has this problem then how many firms across America have this problem?
“There is real wage inflation everywhere in the economy. Everywhere,” Goldman Sachs CEO David Solomon told analysts on the company’s fourth quarter earnings call on Tuesday.
Finance Yahoo
The Wall Street Journal is reporting that companies plan on reinstating or increasing their 401k contributions to try to attract employees to their firms. We don’t think the incentives will stop there either as 10,000 boomers continue to retire each and every day, it is becoming a drain on the entire productive labor force across America. The fear is palatable:
“Employers are very nervous about this ‘Great Resignation,’” said Dave Stinnett, head of strategic retirement consulting at Vanguard Group, which administers 1,700 401(k)-type plans for employers. “They have a lot of job openings, and it’s taking longer to fill them.”
Wall Street Journal
The demand for labor will only to continue to climb UP and as boomers retire but have income sources from social security and relatively “free” healthcare from medicare or medicaid, there will be continued demand for goods and services just not enough people to do the work. Boomers are typically the most skilled and experienced people on the payroll and when they leave the work force that knowledge is gone and hard to replace.
We’ve been looking at demographic tables, charts, graphs, projections and other material in the background because we want to know which areas will be hardest hits and which will be able to power through this new disruption and the picture doesn’t look very pretty. If you are wondering what’s in our portfolio, take a look at our defensive portfolio built to hopefully handle inflation and benefit from the boomer retirements but by all means do your own due diligence.
CNBC is reporting that firms are expecting to pay 3.4% raises in 2022 but with inflation running at 7% that seems to be reason enough for employees to bolt to another firm offering higher pay and remote flexibility.
U.S. employers expect to pay an average 3.4% raise to their workers in 2022, according to a Willis Towers Watson survey.
CNBC.com
On a personal note, we have noticed a significant uptick in demand for “work from home” policies and flexibility across the family of companies that we all work for here at the Econonaut. In some instances, higher pay wasn’t the key motivator to retain or hire employees, it was work from home flexibility. Unfortunately, too many companies are living in the past and not offering this flexibility and ‘remote work’ has now become a key metric to include as part of our investment viability when we conduct research on companies. If the company doesn’t offer a remote work option for knowledge workers then the chances are they will have a very difficult time hiring and retaining people. Long term, this will be detrimental to the firm and not worthy of investment in our view but we’ll see how things change over time.
Stay tuned and stay solvent…