Multiple macro forces have converged to create this scenario. First, and maybe most significantly, the labor market remains incredibly tight, as the pandemic-sparked trend of rethinking work shows no sign of slowing. In September, 4.4 million people quit their jobs, a record figure. A hot job market with 11.2 million vacancies is one motivation for quitters, along with burnout and retirement pushing some out of the market altogether. 

Second: Inflation recently hit a 31-year high, with overall prices across consumer categories 6.2% higher than last year. It’s unclear how bad this will get or how long it will last, but rising prices in sectors from gas to groceries are here, and they’re hitting many rank-and-file workers squarely in the pocketbook.

Photo-Illustration by Selman Design

Given that fact, the third macro trend might seem counterintuitive. Despite inflationary pressures and supply-chain shenanigans, one recent analysis of FactSet data found a solid majority of large U.S. companies are actually reporting increased profit margins—in some cases seeing those margins jump 50%. Partly this is because firms have simply passed on their higher material, labor, and other costs to consumers. And partly, demand for many consumer goods remains so robust that strong brands have reduced the usual discounting tactics. Overall retail sales were up 1.7% in October. 

The upshot of a tight labor market and flush companies seems pretty clear: Employers are being pushed to, can afford to, and should raise wages and improve benefits.

This can’t be just a token gesture. Rising prices mean that if you haven’t gotten a raise this year—and many if not most workers haven’t—you’ve effectively taken a pay cut, as buying power shrinks. You might be losing money even if you did get a raise: The typical raise received in 2021 comes in at around 3%, well below the current rate of inflation. That means the average “raise” was, in spending power terms, still a net cut.

There has been piecemeal evidence of change to address this disconnect: Target, Chipotle, CVS, Walmart, and others have raised their minimum starting wage to $15 an hour, and some are bettering that in certain markets or circumstances. 

But merely treading water and keeping up with the cost of living doesn’t add up to a Great Raise. Companies will have to take bolder action in the face of a labor force feeling a kind of leverage it hasn’t felt in recent memory. In particular, recent survey data indicates that lower-wage, frontline workers are particularly likely to quit, whether because of better opportunities or simply because they’ve decided to opt out for now. Plenty have been startled, and on some level offended, to discover unemployment benefits actually paid better than their draining jobs. Thanks in part to government pandemic-response efforts, savings rates are way up over the past two years, giving some chunk of the potential workforce more time to hold out for the right offer. 

Moreover, many frontline service jobs have simply gotten worse, as flight attendants and restaurant workers have been forced into the role of COVID-19 protocol enforcers, with abuse being the predictable result. In many cases, that means jobs that were once simply thankless are now close to intolerable. Recent survey data found that 37% of workers in the hospitality and retail sectors are considering quitting, and close to half of lower-wage workers cited inadequate pay and benefits as a problem. Quitting has been normalized, and one result, as Fortune recently discovered, is that even the likes of Starbucks and other major chains are trimming opening hours because of staffing shortages.  

And now seasonal demand for retail workers will add to the crunch. Employers from Amazon to Walmart to Macy’s are getting attention for offering higher hourly rates and even signing bonuses and other perks, hoping to attract hundreds of thousands of workers. With this holiday shopping season predicted to generate gangbuster sales, adequate staffing is crucial to minimize burnout of staff that’s already overworked. 

Elaine Chao, who was transportation secretary in the Trump administration and labor secretary to George W. Bush, recently made the less-than-empathetic argument that workers sitting on the sidelines should get back on the job because it is their “patriotic duty.” 

This is exactly backward. As long as workers feel empowered by a tight labor market, it’s up to business to make changes, and better pay is the obvious starting point. Maybe it is companies that need to get “patriotic”—and can benefit from doing so.  

While the demands of knowledge workers and other white-collar types get much of the attention, government data shows quit rates are highest in sectors like hospitality and nondurable goods manufacturing. Moreover, that data suggests one reason those workers are quitting is simply to take better paying jobs, either in the same field or a new one—because the easiest way to score a higher wage is to take a new gig from a more desperate employer. At some point it’s more efficient for businesses to confront this trend head-on and give workers a raise to keep them in the fold, rather than recruit and train newcomers.  

This is where longer-term thinking, and perhaps an opportunity, comes in. As noted, many of the workers who could benefit most from a Great Raise are at the lower end of the wage spectrum. It’s no secret that massive pay disparities between frontline workers and C-suite executives have exploded in recent decades, and income inequality has become a societal problem that everyone recognizes and no one addresses. Just two years ago, the nearly 200 big-time CEOs making up the Business Roundtable declared that “the purpose of a corporation” transcends shareholder value, and now means delivering value to “our companies, our communities and our country.”

While that usually signals environmental or social justice concerns, equitable wages are an area in which companies can lead the way—hiking wages and being noisy about doing so. The upside would be not just holding on to workers but also delivering in a tangible way on the idea that business builds value for society in general. (The Congressional Budget Office found that a $15 national minimum wage would ease poverty at the expense of some jobs, but that was before this historically tight labor market.)

The downside, of course, is the potential impact on profit, shareholder payoffs, and perhaps even C-suite salaries. And given that we live in the real world, those are huge hurdles; maximizing returns to shareholders is still seen by many as the singular business of business. 

But even this pragmatic crowd might be persuaded to consider whether a Great Raise that uplifts a huge swath of workers might be good for the economy in the long run. And after all, if your profitability depends on paying workers less than a living wage, then maybe it’s time to rethink your business model.

A version of this article appears in the December 2021/January 2022 issue of Fortune with the headline, “The Great Raise.”