Home improvement retailer Lowe’s is offering hourly employees $55 million in bonuses to help offset the sting of inflation, which has remained near 40-year highs all summer, the company announced on an earnings call Wednesday.
Lowe’s is offering this incentive, even as inflation moderated slightly, with gas prices softening in July from their peak the previous month, a welcome sign for the policymakers at the Federal Reserve, which has been raising interest rates to combat inflation.
These bonuses will give a boost to workers at a time when food, housing and other costs remain high, disproportionately affecting the lowest income households. The temporary relief doubles as a retention bonus in a booming labor market that has afforded workers leverage to quit their jobs and negotiate higher wages.
Steve Salazar, a spokesperson for Lowe’s, confirmed that the bonus would be paid out to hourly workers on Sept. 9 and taxed. Lowe’s did not respond to a question about how much each employee would receive.
Lowe’s is not the first company to offer an inflation-related paycheck bump to its employees in a red-hot labor market where employers are struggling to hire. The financial firm USAA gave some employees a one-time $1,000 bonus. Other business around the United States have been offering workers bonuses and gift cards to offset the cost of gas. A draft of a bill in Congress is proposing a 2.4 percent inflation bonus for Department of Defense employees who make $45,000 or less.
Wage increases, including bonuses, often spark concern from some economists during inflationary periods about triggering a wage-price spiral, where higher wages trigger more spending, prompting companies to raise prices further, in an ongoing cycle that can exacerbate inflation.
Yet record wage growth for American workers is not keeping up with inflation.
Chris Hawkins, president of Hawkins Construction in Omaha, offered his 340 hourly employees two one-time $1,000 bonuses this summer, after realizing that 7 percent annual raises would not keep up with record inflation.
“We saw that inflation could affect the quality of living,” Hawkins said. “We pay well, but people have to have the quality of life they come to work to earn. [This bonus] could be the difference between a burger and a steak, or another birthday present for their child.”
Unlike raises, bonuses are typically less useful to workers than salary bumps because they are a one-time lump sum increase that does not change their hourly wages and are taxed.
Lowe’s employs approximately 300,000 associates and operates or services more than 2,200 home improvement and hardware stores.