GM Pay Raises For The People

Pay Raises for the People

The Fiscal Year 2025 National Defense Authorization Act, when it reaches its final form this fall, will include pay raises for uniformed and civilian members of the defense workforce. Raises will range from 2.5% to 19.5%, with the very highest raises awarded to the most junior uniformed pay grades.  After getting inflation indices wrong, and late, for the past two years, it’s no surprise that during an election year, we see a serious effort to catch up.

Looking more broadly at the defense industry, wage increases from 2022 to the present average of 7-8%. The US Consumer Price Index (CPI) records that inflation peaked at around 9.1% in June 2022, the highest in four decades. Defense contractors continue to adjust all aspects of compensation to cope with inflation, including incremental raises, shifting bonus structures, timing of incentive vesting, and continuous tweaking of benefits. 

Inflation in the US remains around 3-4%. The Federal Reserve projects inflation rates to stabilize around 2-3% by late 2024, assuming the ongoing monetary policies and global economic conditions remain favorable. Let’s not forget the Chairman of the Federal Reserve previously, and incorrectly, predicted two years ago that inflation would be transitory.

Indicators in the UK suggest global inflation is, in fact, beginning to ease, with the UK CPI decreasing from 11.1% in 2022 to less than 7% by the end of 2023.

US wage increases are forecasted to be in the range of 4-5% annually for the next few years as part of efforts to adjust to the post-inflation economic environment.

The broader economic recovery is expected to continue, with GDP growth forecasted to rebound.

Reduced inflationary pressures will likely lead to a more stable economic environment, encouraging investment in defense and related sectors.

Our distorted monetary policy gave US citizens and C-suite executives a false sense of the cost of money for nearly the last 20 years. Today, a 30-year home mortgage might run 7%, and this is stalling the housing market for first-time buyers. By comparison, my “low-interest Stafford student loan” for college in the 1981-1982 timeframe was 7%. At the time, a car loan was 16%!!

Recently, NVIDIA stock, the company behind the power of AI, has grown by the equivalent of Australia’s GDP in a single month. The US stock market continues to break records. Ironically, those incredible stock market headlines reflect improvements in the personal lives of those who likely least need it. The top ten individual wealth holders in the US have more personal wealth than the bottom 200 million Americans.

I point out some of these disparities only to suggest that how well-off someone feels is quite personal and specific. One size does not fit all when describing economic conditions or how your people feel with respect to compensation.

I have yet to work with ANY company at the strategic level where personnel issues are not an issue worthy of C-suite attention—regardless of the economic or business cycle. Personnel issues and benefits packages are never static. At the tactical level, when one-on-one with the individual, the conversations surrounding benefits can be uncomfortable. You can remove some of the emotion from the conversation when you’re able to apply measures and data to share with your employees. Most employees frustrated with compensation lack data but know they don’t feel good about their situation. Providing meaningful information in a useful format can make a difference.

Things some of my most successful clients incorporate:

  • Industry-relevant data specific to skill sets
  • Additional insurance options for health, dental, life, and disability
  • Access to personal and home loan options
  • Quarterly pay bonuses tied to corporate performance
  • Geographic data specific to costs of living
  • Equity opportunities
  • Staggered long-term vestments
  • Training to increase the employee’s skill set
  • Recognition programs (they usually cost NOTHING)
  • Milestone celebrations
  • Feedback loops

No solution suits every company.  Help your employees understand the economic conditions in which your company is operating and disarm the conversations with facts. What you think is open communication during an all-hands call is the tip of the iceberg. It may take five or six mentions of the good things you are doing to adapt before it’s “heard” by everyone.

During my Meet the Ringmasters seminars, I like to help leaders bring the headlines into their workplace. Can you link the economic conditions to an individual’s role, as I’ve shown you here?

For a copy of my book, Pitching the Big Top: How to Master the 3-Ring® Circus of Federal Sales, and more information on federal sales, visit Capitol Integration.

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