Inflation has been in the news, but so has the shortage of employees. Seth Morgan, MLA President and CEO discussed this recently on the Jimmy Barrett Show on NewsRadio 740 KTRH-AM in Houston, Texas. The conversation included pressure on businesses from the difficult labor market and Jimmy asked Seth what MLA advises on employee retention.
The relationship between inflation and employee demand is often not well understood. Higher prices for consumers mean the money you are paying your employees doesn’t go as far. And the shortage in the labor market means other employers are aggressively trying to hire your employees away. Understanding the relationship between inflation and employee retention provides valuable insights for your business.
Below is an edited version of Seth’s segment, and a transcript of the conversation:
Let’s take a look at the business environment. There are some businesses that will struggle more than others
There’s some businesses that are thriving in these conditions, even in the inflationary setting where they’re doing well and their customers are doing well and the money is still flowing. But everyone is complaining about the shortage of people. That’s also an inflationary effect.
Businesses are in business to make money. They are going to recoup that money somewhere. That doesn’t mean some businesses won’t fail, unfortunately,
because they don’t plan correctly or their competitor takes advantage of it. But whether it’s because of inflation, taxation, or even regulation, there’s a point where people stop taking a capital risk.
But as long as we haven’t reached that point yet, businesses are going to make money. So they will take any increase in price, whether that’s in the material they buy or the people they hire, they are going to pass that along eventually to that consumer.
Click here to see the other segments. Click here to hear the entire interview and show. Seth’s segment starts around minute 48.
Seth underscores that businesses need to make money, so the rising costs of materials and labor will inevitably drive up prices for consumers. Understanding your costs and managing cash are essential tools to weather the double effects of this economic storm.
A clear understanding of how labor costs fit into your overall costs is an essential place to start. MLA provides costing analysis and proven advice on retaining key employees. Contact us to learn more.