It’s no secret that workers’ income is not keeping up with inflation. Analysis from the Brookings Institution thinktank found that although some big companies had increased total compensation, those increases were less than half the going rate of inflation. And inflation at that time was about 7% – it’s since jumped to 8.6%. Other studies have shown that one in five American workers are living paycheck to paycheck. Overall hourly wages, according to the US government, have increased about 6% over the past year, a healthy rise, but still not enough to keep up with the cost of living.
Now, a new study released in Pride month from the insurance company Nationwide finds that one group of workers appears to be hit harder by inflation than others. That group are members of the LGBTQ+ community.
According to the report – which surveyed 1,000 nationally representative adult US consumers and 1,000 members of the LGBTQ+ community in late April – almost two-thirds of LGBTQ+ Americans said that they were living paycheck to paycheck “most of the time” and that figure jumped to 72% for Black LGBTQ+ people. LGBTQ+ survey respondents indicated they were less knowledgable than the general population about important financial topics, including retirement planning (by 13%), estate planning (12%) and investing in the stock market (8%).
Nationwide says that as many as two-thirds of LGBTQ+ Americans reported facing “unique” financial challenges that most non-LGBTQ+ people do not. These challenges include having their careers being “negatively impacted” by their gender identity or sexual orientation, as well as higher than average healthcare and health insurance costs than non-LGBTQ+ workers. These individuals also report higher healthcare costs and more difficulty starting a family and finding housing. The country has come a long way in protecting the rights of people who identify as LGBTQ+, but obviously there’s still more progress to be made.
All this affects small business owners. Why? Because small businesses employ more than half of the workers in this country. And – besides inflation – our biggest challenge is finding and retaining good workers. Being more sensitive to the needs of this demographic can have a big impact on our workforce, if only we were to pay more attention. So what steps can we take?
The first, and most obvious, is offering higher and more competitive compensation. This is easier said than done. Most of my clients are struggling to stay profitable in these times of higher material costs and a slowing economy. But one of the main reasons why so many businesses have been hit by the “Great Resignation” is that workers are shifting jobs simply for higher wages, not only because they need to in order to keep up with inflation but also because … they can. Larger companies and smart business owners have realized this need, shifted their compensation levels up, made other changes in their cost structures to accommodate (including raising prices) and have benefited for the long term by being able to attract and retain better workers.
Second, if your company hires hourly workers – and if your cashflow can accommodate – consider offering same-day pay. This type of compensation arrangement has seen significant growth over the past few years and it’s no wonder, considering how many workers are living paycheck to paycheck. With a same-day pay program you can offer as much as 50% of a worker’s earnings on the day they work, with the balance being paid at the end of the payroll period. The calculations are complex thanks to taxes and other withholdings, so it’s best to use a service like Paychex or DailyPay to help administer the program. But once set up it can be a great recruitment tool and a big help towards keeping your existing employees happy.
The Nationwide survey does make us aware of the particular issues surrounding our LGBTQ+ workers, who make up approximately 7% of the population as a whole (about 23 million people). That’s a big number. And a big concern. Some of my very best clients know that the happiness of their workers is essential to the success of their business, so they make a special effort to pay attentionwhen there are potential problems. This is not just an LGBTQ+ issue. It’s a profitability issue.