As we continue the new year with the expectation of slowing economic growth and continued high inflation, we want to take a closer look at the relationship of inflation and the workplace — and how commercial property trends will change as a result.
Inflation and Expending
As we know from our own personal finances, people tend to change their spending habits when inflation drives prices higher. We may buy fewer name-brand products, eat out less frequently, and cut back on luxuries like vacations. To manage our expenses long-term, homeowners may even choose to downsize to a smaller house.
Businesses are no different. Inflation and the workplace relationship forces businesses to also make more prudent buying decisions, spend less opulently and manage costs aggressively.
For businesses, however, there is an additional complicating factor. Inflation and the resulting increase in the cost of living often necessitates higher pay for workers. As companies attempt to manage costs, this presents a significant challenge in any inflationary year. Further confounding the matter in 2022 is the nation’s tight labor market, in which competitive pay will be vital to attracting new employees and retaining existing ones.
Can Workplaces Navigate Inflation?
With pay cuts presumably off the table, how will employers contain costs while remaining competitive in the marketplace? One of the most obvious cost-cutting measures is to reduce operating costs like rent and utilities. This can be done in one of two ways: either by moving to a less costly facility or reducing the amount of space they own or lease.