Over the past two months, minimum wage increases have either been signed into law or enacted in states from coast to coast. With many more locales still considering changes, management and legal authorities recommend employers of all sizes and industry revisit their pay structures.
On July 1, the great state of California, which boasts a labor force of roughly 18.6 million, raised its minimum wage to $9 per hour. And on June 26, Massachusetts Governor Deval Patrick signed into law a new act to restore minimum wage and unemployment insurance reforms; the states hourly minimum wage is slated to increase from $8 to $11 over the next three years.
Overall compensation has been a vital benefit to consider when attracting and retaining talent. Most HR and benefit decision makers know this, and have adapted to the changing times in hopes of attracting those individuals that can make a tangible difference to their workplaces, and bottom lines. Mike Aitken, vice president of government affairs at the Society for Human Resource Management, notes that most employers may have already adjusted their pay structures, but that others may also feel the hurt.
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I think in some instances these efforts to increase minimum wage are not going to have a direct impact for companies that have higher revenue margins than others, Aitken explains. He notes that SHRM remains neutral in the minimum wage debate currently raging in state and national legislatures. But its certainly going to impact some of the companies and organizations particularly in retail and in some of the restaurant and service areas where they operate on a tighter margin, he adds.
According to the National Conference of State Legislatures, there have been nine states, and District of Columbia, that have enacted increases during the 2014 legislative session. On the national level, President Barack Obamas executive order in February proved to establish a minimum wage for federal contractors at $10.10; the wage hikes are set to kick in Jan. 1, 2015.
Meanwhile, right now, depending on an employers base of operation, wage increases may be coming down the pike. For instance, 38 states have considered minimum wage bills, and 34 states are considering increases to state minimum wage levels in 2014, the NCSL states.
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In other certain industries and certain geographic locations, it could certainly mean the matter of life and death for the organization in terms of being able to compete for employers, but being able to stay in business and I think youre seeing some of that play out, explains Aitken.
But Gap Inc., a global retailer offering clothing, accessories, and personal care products, has taken a proactive approach to the wage argument. In February, the San Francisco, Calif.-based company said it was raising its minimum hourly rate to $9 in 2014 and $10 in 2015 in its U.S. stores for all its brands, including Gap, Old Navy and Banana Republic.
Gap spokesperson Paula Conhain disclosed to EBN that its first stage of increases went into effect last week for approximately 31,000 employees. She confirms that the additional $1 per hour bump in pay will occur in June 2015, at which time, about 65,000 employees (about 71% of its U.S. workforce) will bask in the higher compensation benefit.
Contrast that with Massachusetts largest city, where the top employers are situated within health care and social assistance, finance and education industries, according to the Boston Redevelopment Authority, and retail and accommodation and food services account for just 9% of the citys jobs.
Nevertheless, Michael Rosen, a partner in Foley Hoag LLPs Boston office, explains that the argument for wage increases is a direct result of citys economy and cost of living.
I think theres a recognition that Massachusetts is an expensive place to live, and that the minimum wage is not really a living wage, he says.
Rosen, who represents employers across the full spectrum of employment law matters, says his clients have been more focused on unemployment changes rather than the minimum wage discussion. But he adds that this wage surge can certainly be significant for certain categories of employers and certain industries in the state.
I think the argument that has started to carry the day nationally, although the federal wage hasnt changed yet, is that the government ends up having to step in in indirect ways as a result of employers that dont pay minimum, Rosen explains.
