As a man who built a business designing and manufacturing amplifiers, guitar pedals and power supplies, Paul Shedden knows about volume.
So when Shedden, the president of Mission Engineering in Petaluma, Calif., saw gasoline prices exceed $5 per gallon at a local Costco
— a retailer known for cheaper gas — the number spoke volumes to him.
And so he gave a $2-an-hour raise for seven California-based workers who commute every day, including one with an hour-long, one-way drive. Working from home isn’t an option at Engineering, given the hands-on work, Shedden noted.
The raise hit paychecks in early March and will add approximately $4,000 per employee over the year, said Shedden.
“The $2-an-hour raise was reflected in paychecks in early March, and will add approximately $4,000 per employee over the year.”
That’s an estimated $28,000 drag on the small business’ bottom line — all to take some sting out of gas prices that have been breaking records since Russia’s invasion of Ukraine, as well as the months of hot inflation broiling wallets before that.
This comes while the business tried to rebound from a loss in 2021, due to supply chain snags and rising costs, like a 900% increase on a tiny component for an electronic board that went from pennies to dollars.
“To take care of people that you care about, who are good at what they do, that’s a small price to pay, but nonetheless definitely triggered by the increase in fuel costs,” Shedden told MarketWatch.
The raises were first reflected in the staffers’ March 4 paychecks. Days later, average gas prices across the country broke records last set in July 2008. On Thursday, the national average was $4.29 according to AAA, and California’s average was $5.78, the nation’s highest price.
Other companies are also trying ease the pain at the pump. Beginning Thursday, DoorDash DASH said its drivers will be eligible for 10% cash back on gas when using the DasherDirect debit card, and people who drive the most will get bonuses to defray costs. Uber UBER and Lyft LYFT said they are applying temporary surcharges on passengers that will get passed back to drivers.
The Great Return
The higher gas price increases coincide with more employers expecting their staff to return to the office as COVID-19 cases decrease. The omicron variant’s surge from late 2021 to early 2022 toppled some of the best laid return-to-office plans.
Now the question is whether gas prices are a new disruption? And who will shoulder the burden of those higher gas prices?
In some instances, the higher gas prices will put the kibosh in plans, said Ravin Jesuthasan, global leader for transformation services at Mercer, the human resources consulting firm.
“‘Let’s be really cautious about what we ask people to do, because I often say to clients it’s not flexibility if it’s not a choice.’”
In recent talks with clients, “a number of companies have said let’s just pause for now. Let’s pause until we have a better sense of where this is going before we start asking people to come back into the office,” he said. At least one is eyeing a temporary stipend for gas costs, he said.
Back in February, Mercer polled companies on when they’d require all or most of their staff back at work. Employees were already back for nearly 45% and roughly another 20% said they planned to have people back by either March or April.
And if companies insist on a return at this point? Some employers — many of those Jesuthasan has talked to — worry the more expensive commutes will antagonize staff when they cannot afford to lose them in a tight labor market.
With “such a premium being placed on flexibility,” Jesuthasan said the thinking is “let’s be really cautious about what we ask people to do, because I often say to clients it’s not flexibility if it’s not a choice.”
In other words, a work formula like one that sets three days in the office and two at home might sound like a balance, but even there Jesuthasan noted management is still prescribing the rules — and some staff will bristle, and then eye the exit.
A bargaining chip
Working from home at least some of the time is now a bargaining chip for some people. Over half (54%) of people working from home said they’d look for a new job if the remote option stopped, according to Gallup polling released Tuesday. More than one-third of hybrid workers also said they’d eye the exit with a work-from-home option.
Americans commuted an average 27.6 minutes one way in 2019, according to the U.S. Census Bureau’s most recent measure of the time it takes to get to work. Although car travel has risen compared to pre-pandemic levels, according to one mobility data analyst, higher gas prices may yet dampen that increase.
After all, the price of driving to work is preying on people’s minds. Case in point: There’s been a 3,463% increase since March in the number of tweets mentioning gas prices and work commutes in the same breath, according to an analysis from Sprout Social, a social media analytics company.
“There’s been a 3,463% increase since March in the number of tweets mentioning gas prices and work commutes in the same breath.”
In the big picture, employer action to offset worker gas costs may be an effort to bolster morale and retention. For Shedden, “It’s not that we were worried about them walking. It’s the right thing to do.”
Shedden said he was applying a lesson he learned from his father, who ran his own company for years drafting the schematics and technical plans that turn architectural visions into real-life buildings. “My dad taught me growing up, and I totally believe it then and I believe it now, that your staff are probably your most valuable resource,” he said.
The Consumer Price Index hit 7.9% year-over-year in February, and gas rose 6.6% from January to February — and that’s not even incorporating the impact from Russia’s relentless bombardment of Ukraine, economists say.
Even before the raise, everyone’s been on good terms at Mission Engineering, Shedden said. Still, he’s noticed a feeling of “more positivity” and “more energy” on the factory floor since the announcement.
“It might have nothing to do with it,” Shedden said. “But it’s a bit of a coincidence if it’s not.”