Lowe's Becomes Latest Employer To Give Employees Inflation Bonuses

Lowe’s Becomes Latest Employer To Give Employees Inflation Bonuses

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Home improvement retailer Lowe’s is offering employees $55 million in bonuses per hour to offset the stab of inflation, which has remained near the 40-year record all summer, the company announced during an earnings call on Wednesday.

“In recognition of some of the cost pressures they face from high inflation, we are providing an incremental $55 million in bonuses to our frontline employees per hour this quarter,” said Lowe’s CEO Marvin R. Ellison during the phone call. “These employees hold the most important jobs in our company, and we value everything they do to serve our customers and provide a best-in-class experience.”

Lowe’s offers this stimulus even as inflation has eased slightly, with gas prices softening in July from their peaks last month, a welcome sign for policymakers at the Federal Reserve, which has raised interest rates to fight inflation.

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These bonuses will give a boost to workers at a time when costs for food, housing and others remain high, disproportionately affecting the lowest-income households. The temporary exemption also acts as a retention bonus in a booming job market that has given workers the opportunity to quit their jobs and negotiate higher wages.

Steve Salazar, a spokesperson for Lowe’s, confirmed that the bonus would be paid to employees by the hour and taxed on September 9. Lowe’s did not respond to a question about how much each employee would receive.

Lowe’s isn’t the first company to offer its employees an inflation-related pay rise in a red-hot job market where employers are struggling to hire. The financial company USAA gave some employees a one-time bonus of $1,000. Other companies in the United States have offered employee bonuses and gift cards to offset gas costs. A bill in Congress proposes a 2.4 percent inflation bonus for Defense Department employees earning $45,000 or less.

Wage increases, including bonuses, often raise concerns among some economists during inflationary periods about creating a wage-price spiral, where higher wages lead to more spending, prompting firms to raise prices further, in an ongoing cycle that could fuel inflation. worsen.

Still, record wage growth for American workers is not keeping up with inflation.

Chris Hawkins, president of Hawkins Construction in Omaha, offered his 340 hourly workers two one-time $1,000 bonuses this summer after realizing that a 7 percent annual increase could not keep up with record inflation.

“We saw that inflation could affect quality of life,” Hawkins said. “We pay well, but people have to have the quality of life they come to work for. [This bonus] can be the difference between a burger and a steak, or any other birthday present for their child.”

Unlike raises, bonuses are generally less helpful to employees than salary increases because they are a one-time lump-sum increase that does not change their hourly wage and is taxed.

Lowe’s employs approximately 300,000 people and operates or serves more than 2,200 home improvement and hardware stores.

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