John Bjorklund’s savings account is shrinking. Alex Bonifaz worries about skyrocketing heating oil costs. Rose White is delaying replacing the leaky roof on her house.
All three work for the Boston nonprofit 2Life Communities, where nearly everyone got raises in April — some at higher rates than normal. But soaring inflation has eroded those increases, wiping them away completely in some cases, as it has for workers across the country.
Prices have gone up 8.3 percent on average over the past year, according to the Consumer Price Index, and for some essential items it’s far higher — eggs are up nearly 40 percent, for instance — putting an especially large burden on lower-income workers. The inability to get ahead is further fueling worker frustration at a time when people are quitting their jobs at record rates.
With inflation top of mind, 2Life Communities, which provides affordable housing for seniors on six campuses, used a new approach when it came to increasing compensation for its 165 employees. Rather than giving its customary 2 to 2.5 percent base increase across the board, the nonprofit used a formula that gave the highest share to those who make the least and incrementally smaller percentages going up the income ladder. At the same time, 2Life lifted its minimum wage to $40,000 a year, with workers previously below that amount getting increases of 7 to 17 percent.
“There just is no question that inflation and what’s happening now is just hurting the bottom of the pay scale more, so let’s just be very clear about that,” said chief executive Amy Schectman, who, along with the rest of the senior leadership team, went without a pay bump this year in order to give more money to the lowest earners.
Schectman knows $40,000 is still not enough for people to live comfortably in this expensive state, but as a nonprofit whose revenue comes from government-controlled rent prices, there are limits on what can be done, she said.
“I wish I could give everybody a 30 percent raise,” she said. “One of my biggest sorrows ... is the market dictates different levels of compensation for different kinds of workers.”
“The right thing is no one would suffer, no one would have anything less than a really good living wage.”
John Bjorklund, a maintenance mechanic at a 2Life property in Newton, has felt the sting of rising costs all around him. He rents a house in Natick, where he lives with his wife and adult stepson, and he drives a lot — to work, to check on his 90-something parents in East Bridgewater, to help out his 37-year-old son with cerebral palsy in Raynham — racking up about 300 miles a week. Gas prices have come down recently, but they’re still up nearly 26 percent from a year ago.
He and his wife are also making more trips to Costco than they used to, and trying to shop the sales.
“I’ve never had a lot of money in my life, so I’ve always had to kind of shop around, be cautious about what I buy,” he said.
Bjorklund and his wife, both 62, are thinking about retirement. But their modest savings account has shrunk, and he may have to work longer than planned. His job is physically taxing — turning over apartments, fixing equipment, clearing sidewalks and stairs in the winter. “I can’t see myself plowing snow at 70 years old,” he said.
Bjorklund, who also plays guitar in a rock band, got a 4.2 percent raise in April — more than he normally gets, but less than others received.
“I’m not complaining,” he said. “When they’re saying inflation is like a 7 or 8 percent increase, the 4 percent raise really doesn’t amount to a lot of money. But I’m grateful to have it.”
“I try to be the glass-half-full guy,” he said.
Nationwide, 61 percent of workers got a pay boost over the past year, either by getting a raise or moving to a higher-paying job, according to a September survey commissioned by Bankrate.com, although more than half of them said their incomes haven’t kept up with rising household costs.
But even those whose wages rose higher than the inflation rate are being squeezed. 2Life custodian Alex Bonifaz was bumped up to $40,000 a year in April, a 12.3 percent increase, but rising prices are taking a huge bite. Bonifaz, 64, lives with his two sisters, one of whom is retired, and a niece and nephew in Lynn, and is the only member of the household currently working. Along with paying for gas, he has to maintain his car for his long commute to Newton. He’s noticed the cost of meat and clothing rising, and he worries about paying for heating oil, which is up nearly 69 percent over last year. Bonifaz, who was recently diagnosed with diabetes, is also facing a $700 out-of-pocket payment for two dental crowns.
“That’s a lot,” he said in Spanish, through an interpreter. “Dentists are charging much more money than they were before.”
Hourly workers have seen their base pay rise more than salaried workers’ this year — 6.7 percent on average for hourly employees, who typically earn less, compared to 5.2 percent for salaried employees, according to a new Mercer survey — a more pronounced gap than usual, and bigger bumps for both groups than in 2021.
Raising wages for lower-income workers is a good strategy for both employers and the economy, said Northeastern University economist Alicia Sasser Modestino. Those jobs are harder to fill right now because workers have so many options, she said, and boosting their pay can help convince them to stay put. Focusing on those truly struggling — as opposed to higher earners — will also help employers keep costs in check so they don’t have to increase their prices, and potentially drive inflation even higher.
“If I were an employer, I would be raising wages at the bottom,” Modestino said.
But higher salaried workers aren’t immune to rising inflation. Rose White, a housing finance specialist at 2Life, was shocked to get estimates of $30,000 to replace the leaky roof on her Somerville house — 20 to 30 percent higher than a year ago, she said. “I’ve been terrified to pull the trigger on a new roof,” she said. “Hopefully things come down a little bit in the spring.”
White, 47, has been spending $50-$100 more a week on groceries for her family of four, including a daughter, 12, and son, 14, who play sports and often have friends over to eat. “The volume of food is incredible,” said White, who has been making more trips to Costco — and buying less meat — and recently started growing vegetables to help combat high prices. She also worries about her children’s college fund and soaring electricity costs, and is seriously considering investing in solar panels.
When White and her husband get raises, they usually put the increase into their retirement savings. But White didn’t do that with her 2.5 percent bump this year for “cash flow reasons.”
She didn’t mind getting a lower rate than her coworkers, she said, and is proud that 2Life is addressing pay equity. The message was not that she wasn’t valued as much, she said, but rather: “We value the work that the entire staff has been doing ... and the disparity isn’t right.”