How an 'inflation bonus' can help employees stay afloat

Employees are preparing themselves for the reality of an impending recession, on top of inflation that's driving prices so high that paychecks can feel like they've been cut in half. To help, proactive employees are stepping in with inflation bonuses.

These bonuses, intended to offer employees some relief from the rising cost of goods, can vary from temporarily increasing employees' compensation — Lowe's recently pledged $55 million in paycheck bonuses to hourly workers — to smaller contributions like issuing gift cards to help workers cover expenses like grocery or gas, prices for which has soared as inflation hovers at 8.2% as of September. 

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"No one really knows how long the inflationary period will exist, so it takes a combination of factors from employers to help their teams survive during this period of time," says David Leeds, CEO of Tango Card, a rewards company utilized by employers. "If employees are paid $50,000 a year they have a certain kind of purchasing power, and as inflation goes up that purchasing power goes down. So now they're able to either buy fewer things, or they just aren't able to afford what they could have been able to six months ago."

Companies like Tango Card are making these kinds of small but significant moments of support possible, and spearheading the conversation around offering reward programs or bonuses. Already, Leeds has seen employers issue gift cards through their platform for everything from food delivery sites to Office Depots so employees can better furnish their home offices, alla direct response to inflation. 

According to SHRM, 73% of HR professionals have indicated  that inflation is a concern at their organization, though support to help deal with inflation is far from uniform across companies and industries. But Leeds estimates that the sentiment is sure to change as employers realize they still need to attract and retain an employee base in the midst of an equally unstable labor market.

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"Almost every single employee at every single company is recognizing and asking their employers, 'How are you going to help me during this kind of peak inflationary time?'" Leeds says. "Companies need to be much more proactive about how they think about two things: first, are they providing a job that people like doing? And second, how are they compensating people to do that job?" 

There's no way to know how long this inflationary period will last and the federal reserve is anticipating another interest-rate hike in November after previous increases have failed to slow inflation. Whether employers' incentives and bonuses help workers weather the storm or not, it's clear that employees will continue to turn to their organizations for financial support.

"Some companies will follow suit out of pressure and some will do it because they think it's the right thing to do," Leeds says. "It's a very effective tool for companies and chief people officers to be part of an overall solution."