HR Glossary

Wage Drift

What is Wage Drift?

Wage drift is the gradual increase of an organization’s average wage rate above the rate necessary to retain its current workforce. Wage drift can be caused by a number of factors, including inflation, collective bargaining agreements, and market forces. If left unchecked, wage drift can lead to increased labor costs and decreased profits. To prevent or mitigate the effects of wage drift, organizations can use a number of strategies, including performance-based pay systems, wage freezes, and layoffs.

Why do you need a Wage Drift Policy?

A Wage Drift Policy is important for a company because it can help to ensure that employees are paid fairly for the work that they do. It can also help to prevent employees from being underpaid or overpaid, which can lead to confusion and discontent among the workforce. Additionally, a Wage Drift Policy can help to ensure that the company is in compliance with any applicable wage and hour laws.

What are the main components of a Wage Drift Policy?

There are a few main components of a Wage Drift Policy. One is that it should outline how the company will handle wage increases. This includes how often the company will review wages, how large the wage increases will be, and how the increases will be distributed among employees. Another component is the company’s policy on overtime. The policy should state how often employees are allowed to work overtime and how much overtime they are allowed to work. The policy should also outline the company’s policy on vacation days and sick days. This includes how many days employees are allowed to take and how much notice they need to give. Finally, the policy should state the company’s policy on employee termination. This includes the notice employees are given before they are terminated and the severance pay employees are given if they are terminated.

Which companies have a Wage Drift Policy?

There are a number of companies that have a Wage Drift Policy. Some of these companies include Walmart, Target, and Costco. These companies typically have a set wage for employees, and if the employee’s position changes, they may receive a raise or a decrease in their wage, depending on the new position. Other companies, such as McDonald’s, have a policy where the wage is based on the position and the experience of the employee.

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