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  • Raising the Minimum Wage

    Published on Tuesday, March 5, 2013

    What does it mean to set a wage below which a person’s hourly pay can not fall? The idea of a minimum wage says that as a society we are choosing to indicate the minimum amount of money that needs to be provided to someone for his or her time and contribution at work. This hourly wage represents the value we accord to a certain amount of effort. It follows from the idea that a person’s contributions to the work of a group, organization, or community should be valued highly enough that that person can live decently. No one will get rich off of a minimum wage job, yet in the abstract, the idea is also that no one should live in poverty if they are working at the amount of time and effort deemed reasonable in our society.

    Unfortunately, right now many people earning the minimum wage are living in poverty. The minimum wage is currently too low to fulfill the abstract argument that full-time work should enable you to live above the poverty line.

    There are a number of factors that can contribute to someone falling into poverty – such as poor public schools, lack of health care or health insurance, and natural disasters that deplete savings. Yet not having a chance right from the start to be able to weather the ups and downs of life because you are not paid a reasonable minimum wage is a major factor in pushing people into poverty or preventing them from getting out of poverty. The problem is real.

    In a recent spate of news attention to the minimum wage, Paul Krugman wrote that “…the current level of the minimum wage is very low by any reasonable standard. For about four decades, increases in the minimum wage have consistently fallen behind inflation, so that in real terms the minimum wage is substantially lower than it was in the 1960s. Meanwhile, worker productivity has doubled.”

    Given that CEO and senior executive salaries have more than doubled since the 1960s – just using worker productivity as a justification for wage increases – doesn’t it make sense to raise the minimum wage? A recent report by the Economic Policy Institute affirms that while the trends in high CEO salaries relative to worker salaries has moderated, “the CEO-to-worker compensation ratio in 2011 of more than 200-to-1 is far above the ratios prevailing in the 1960s, 1970s, 1980s, and mid-1990s.” So perhaps there is something about raising the minimum wage that everyone should consider seriously and thoughtfully. Especially people in Washington who have the ability to change the law.

    In many great workplaces hourly and low-wage workers are currently paid more than the minimum wage. They are also provided with benefits and working conditions that help to create and reinforce a culture of respect and support for all employees. This means that in these great organizations, the experience of being a low-wage or hourly worker is more positive than it is for their peers in other organizations. Employees in these companies not only earn a bit more, they also are seen as full members of the organization so benefit from the organizational support that is provided to people in times of need. An hourly wage is an important part of the process of keeping people out of poverty, yet full membership in society is also important. Seeing people as valuable regardless the money they may earn or control is important.

    Why do leaders in great workplaces choose to pay people more than the minimum wage? Leaders in great workplaces not only say “people are our most important asset”, they believe it and act on their belief. If people really are the most important asset in an organization then their work will be fairly recognized and rewarded.

    At Ohio Health, a regional health care provider based in Columbus Ohio, employees are provided with a ‘reasonable minimum wage’ that is currently higher than both the state and federal minimum. What benefit does Ohio Health receive for providing a higher wage than they are legally required to? Ohio Health is one of the 100 Best Companies to Work For and they have been for many years. They have lower turnover, higher patient satisfaction, and more engaged employees in their organization than can be found among their peers.

    Is it all due to the minimum wage? Of course not. Yet it is due to the philosophy held by leaders that guides all the policies and practices, including the policy of paying a reasonable minimum wage. As they indicate, “OhioHealth maintains a "reasonable" minimum wage to assist associates in lower-paying positions to improve their overall quality of life.”

    Another health care organization, Baptist Health South Florida, also provides employees with a minimum wage above the federal requirement. “Baptist Health created its own minimum wage that is $1.50 over the federal minimum wage and $1.08 over Florida's minimum wage. The minimum wage also provides an important community benefit: By raising the standard of living for our employees, we provide an important financial and economic boost to the neighborhoods in which they live.” Baptist Health South Florida is also a 100 Best Company and has been for many years.

    These are not the only healthcare companies that recognize the importance of paying people fairly yet they are two excellent examples.

    Another company with a unique and equitable approach to pay is Radio Flyer, one of the Best Small Companies to Work For. Leaders at Radio Flyer pride themselves on the fact that they have never lost a job candidate because of pay or benefit concerns. This is notable for a small company as many people considering proposals to raise the Federal minimum wage cite the concerns of small employers as reasons to keep the minimum wage at its current low level. Yet at Radio Flyer they already aim higher – targeting the 75th percentile for compensation and merit increases. They provide people with a 401k – with a 50% company match up to 6% of salary – and a profit sharing retirement plan.

    A medium sized organization, Intuitive Research and Technology uses their compensation philosophy to help new employees get off on the right foot on day one of their employment. The goal is to bring people in at a good rate for what they are being hired to do, never trying to see how cheaply someone could be hired. The philosophy also guides the company’s straight-forward approach to what is offered, “We offer what we are going to offer right up front. This eliminates "haggling" back and forth over pay, which can sometimes leave a bad taste with new hires, a bit like leaving a used car lot wondering whether you did well or not.”

    Equating haggling over pay with negotiations over trying to get a better deal certainly paints a clear picture of what some people experience when looking for a job. The unique approach at Intuitive Research and Technology shows that they recognize the cost of haggling or trying to be cheap and avoid it – not just by being straight with base salary information but also by providing notable incentives and benefits to all employees that reward their effort and creativity.

    Wegman’s Food Markets provides people with livable wages that are presented to employees as stemming from their philosophy of collective success and shared rewards. Leaders at Wegman’s care deeply about the well-being and success of every person in the organization, and believe that they will achieve their goals only if they first meet the needs of their own people. When Robert Wegman became president of the company in 1950, he laid the foundation for sharing that is followed today. He raised salaries for all employees and implemented benefits programs, supplementing those later with a 401(k) and a scholarship program. Wegman’s philosophy states, “good people, working toward a common goal, can accomplish anything”. Leaders at Wegmans are clear that their collective success needs to be shared in collective rewards, not individual rewards or bonus systems. As they state very clearly, “We do not reward one for what was achieved by many.” (emphasis mine)

    So, back to the minimum wage. I’ve presented a few examples of companies in a variety of industries, of varying sizes and locations in the country, all trying to find ways to pay their employees fairly and equitably. Some companies specifically target the minimum wage and set their lowest levels of pay higher than what they are legally required to do. Other companies simply find that by following a philosophy of humane and caring leadership that their pay packages are naturally higher than the minimum set by law. All of these companies are recognized as great workplaces, have loyal employees, loyal customers or patients, and are positively regarded in their communities.

    Raising the Federal minimum wage is a step in the right direction that would affirm our country’s philosophical commitment to fair pay and the value of every individual member of our society. It’s past time to take this step, and thanks to the Best Companies there are lots of examples of companies who have already moved forward on this path and done very well.

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