Lowe’s, a retailer of home improvement products, said in a Wednesday results conference that it will provide $55 million in incentives to its hourly frontline employees to ease the strain of rising inflation.
Lowe’s CEO Martin R. Ellison said, “We are paying an additional $55 million in incentives to our hourly frontline colleagues this quarter in acknowledgment of some of the expense constraints they are feeling owing to rising inflation.”
These employees do the most crucial duties for our business, and we are really grateful for everything they do to treat our clients well.
Although gas prices and travel expenses have lately decreased somewhat, Americans are still feeling the effects of inflation, which reached a 40-year high this summer, making it more difficult for families to purchase food and other necessities.
In order to offset increased expenses, companies like Microsoft, ExxonMobil, Walmart, USAA, and others have also given their staff bonuses, wage increases, and even gift cards.
But many of the top firms in the country are still failing to pay their employees a livable wage, according to a research from the Brookings Institution earlier this year.
According to the corporate website, Lowe’s employs over 300,000 colleagues, but it has not said how much money each employee would get or how long they would receive it.
Larry Harris, a chaired professor of finance at the USC Marshall School of Business, claims that measures like this one by corporations to raise pay and provide incentives are often taken in an attempt to keep workers.
According to Harris, who spoke to CBS News, “the labour movement is really tight and they’re frightened of losing their employees.” As a result, incentives, extra perks, and potential salary increases are all being offered in an effort to keep employees at Lowe’s motivated.
Companies are seeking for strategies to keep onto the personnel they already have because of the widespread labour shortage we have been experiencing, he said.
According to Harris, there are a number of reasons for this labour shortage.
“Birth rates have been falling for 33 years, and a large portion of the baby boomer generation is retiring. A small portion of those leaving the employment are young adults between the ages of 18 and 25, thus “explained Harris. “COVID, however, did not assist.
Do I truly want to continue working or should I retire sooner? became a common question for many individuals as they recognised how fleeting their lives really were.”
Although the bonus money may benefit Lowe’s employees momentarily, Harris said it is not as beneficial as a pay increase.
According to Harris, “Workers naturally prefer a salary rise over a bonus since a wage increase is permanent, while a bonus is temporary.”
“I suppose Lowe’s and other businesses that provide incentives aren’t quite ready to boost pay yet. Although they would prefer not to, if they start losing personnel, they will be compelled to.”
These additional incentives do not, however, come without drawbacks. According to him, when businesses decide to raise pay or add incentives, it may result in increased sticker prices at the shop, amplifying the impact of inflation.
“They are forced to increase their product pricing when their costs grow. Otherwise, they will incur losses, “added Harris.
“Inflation increases as a result of increasing product prices, which feeds a vicious cycle wherein the value of the salary is reduced. They must thus boost salaries, yet doing so raises the price of goods. And the cycle continues.”