If the minimum wage increases, then what?

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As a long-time advocate of paying employees a living wage I should be happy that Seattle’s new mayor, Ed Murray, has issued an executive order to “begin the process of raising the minimum wage of the city’s employees to $15 an hour.”

But a Seattle Times article this month announcing Murray’s action has one short sentence that nicely sums up what makes me cringe: “The city hasn’t finished an analysis of how much it would cost to raise wages or whether bumping up the lowest-paid city employees would have a snowball effect on other city wages.”

I am quite sure raising the minimum wage to $15 an hour would affect employee pay right up the wage ladder. I am equally sure the cost — when a detailed analysis has been completed — will be greater than expected. Rough estimates are always optimistic.

My reaction to Murray’s announcement is that of an old human resources professional. Never, ever make an announcement about pay based on hope and good intentions. Don’t phrase an announcement about a possible pay increase as if it is definite. It is clear what Murray wants to do; what is missing is the how, when and why $15?

At his news conference, Murray could have presented the process and timetable detailed in his executive order. He could have talked about the possible need to phase in a wage hike. Instead he declared that he plans to implement a minimum hourly wage of $15 for city employees.

Low-wage employees are going to want to know how much of a raise they will get and when they are going to get it. They are going to pester their supervisors for answers, and their supervisors will be begging the HR staff for answers.

Even if the mayor gets all the support and cooperation he needs to make this wage hike happen, demands on the HR staff will not ease up. Employees will be squawking for many months. Some employees will complain their pay increase was too small, or a co-worker’s increase was too big. And the guy who received no increase will want a good explanation. Supervisors will not be happy if a subordinate’s pay is now too close to their own. Whether Murray’s proposed wage hike happens or not, his announcement has made this one tough year for his HR staff.

After reading Murray’s campaign material on the issues related to income inequality and his executive order on the pay hike for city employees, I think he sincerely believes his good example will influence private sector employers to loosen their purse strings and change their pay practices. Could this action by the city influence the private employers in King County to improve the wages of their low paid employees as Murray hopes?

Once again, I am reacting like a cynical old HR professional. I have spent years of my life talking with business executives about employee pay. Pay levels are determined by what an executive sees in his employees. Are they a liability or an asset? Are they an investment that will help the business succeed or an expense that must be kept as small as possible? Does the exec want to see his employees able to pay for the necessities of life? Does he care about their ability to handle an unexpected car repair bill?

The Puget Sound area provides perfect examples of how a CEO’s pay philosophy and view of his employees impacts their wages — and increases or diminishes income inequality. Starbucks and Costco pay exceptionally well — and they provide good benefits to part-time employees. They have been leading by example for many years.

Amazon’s management is well aware of what Costco pays their warehouse employees — but Amazon has decided to pay a much lower wage. Not because it can’t afford to pay better wages and not because there aren’t good examples of the benefits of a happy, stable workforce — but because Amazon’s CEO is comfortable paying a low wage.

The CEOs of Costco and Starbucks readily talk about how important their employees are to their businesses success. They can provide detailed examples of how each job impacts the customer and the business. And when they talk about their approach to employee pay they both make the welfare of their employees a top priority. They want their employees to be able to live a decent life with some sense of financial security. How a CEO or business owner views his employees is at the heart of the income inequality problem.

There’s a lot that needs to change in how employees at the bottom of most organizations are treated and paid. I applaud Mayor Murray’s optimism and hope he has the management skills, perseverance and creativity to make rational changes to Seattle’s compensation program. And I hope he doesn’t mind if I watch closely and am very thankful that I am not on his staff.

Virginia Detweiler, based in Walla Walla, provides human resource services and management training to businesses in southeastern Washington with her firm HR Partner on Call. Contact her with comments and column ideas by email at hrpartneroncall@gmail.com or phone at 509-529-1910. Because of job and employer sensitivities, care is taken to protect identities.

Comments

PearlY 3 months ago

If Ed Murray succeeds in raising minimum wages for city employees, he will get the employees' approbation and the city's dwindling taxpayers will get the bill. (Between 2000 and 2012, Seattle lost 4% of its jobs while gaining 8% in population.) Private employers don't have the luxury of passing the bill off to others.

Ms. Detweiler attributes Costco's higher compensation levels to its CEO's good heart, by inference suggesting Amazon's CEO lacks that. Possibly both are good-hearted, with Costco's focus on higher wages and Amazon's on broader employment opportunities. More likely good-heartedness has nothing to do with either company's employment models, and that elephant in the room that Ms. Detweiler ignores - the law of supply and demand - is what most influences both models.

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