The Rising Tide of Minimum Wage By BLAIR AND BRUCE JOHANSON
Coastal dwellers are very familiar with rising and falling ocean tides. Those making a living or accessing the ocean for pleasure boating keep an eye on the factors that impact incoming and outgoing tides. Local coastal news and websites provide daily ocean tide levels on a 24 hour basis. Human Resources and compensation professionals are experiencing rising tides associated with local, regional and national employee pay minimums. These professionals are staying tuned to several factors mentioned below that are raising the tide of minimum wages. Federal, State and Local Minimum Wage Legislation One of the leading drivers for increasing minimum wage is legislation initiated by the Biden Administration on April 27, 2021 which requires federal contractors to be paid a minimum of $15 or more per hour. There are approximately five million individuals representing the federal contract employees. Employees at the minimum before this Executive Order was enacted were being paid $10.95 per hour, so an increase to $15.00 per hour represents an increase in annual wages of $8,424 per employee. More than 25 states have or will have minimum wage increases during the calendar year of 2021. There are 18 states paying the $7.25 Federal minimum wage and two states paying $5.15 unless the employer is subject to Fair Labor Standards Act (FLSA) and must pay the $7.25 Federal minimum wage. The remaining 30 states and Washington, D.C. have a minimum per hour wage that ranges from $8.75 to $15.20. It is probably no surprise that Washington, D.C. is the winner of the highest per hour minimum at the $15.20 level. California employers with over 26 or more employees are paying $14 and this figure drops down to $13 with 25 or less employees. The next highest two states are Washington and Massachusetts at $13.69 and $13.50 respectively. The states at $8.75 include Montana, Nevada, and West Virginia. The average per hour rate for all 50 states and Washington, D.C. based on the 2021 calendar increases is around $9.30 per hour. Throughout the U.S., there are also several local minimum wage ordinances that exceed their statewide minimum. Private Sector Minimum Wage Initiatives Beyond federal and state minimum hourly wages, the next big sector raising the minimum wage tide is the corporate and business sector. Several industry leaders are taking the initiative to raise minimum wages to $13, $15, $20 and more. The following are just a few examples of many. • Bank of America March, 2020 $20 per hour minimum and $25 per hour minimum by 2025 • Thomas M. Rutledge, CEO Charter Communications $20 per hour minimum in 2021 • Amazon - Starting average more than $17 per hour • Best Buy August, 2020 $15 Minimum and average hourly wages of $17.67 • Costco $16 and Target $15 16
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• Virginia C Drosos, CEO Signet Jewelers, $15 Minimum (Kay Jewelers and Zales) • Chipotle Mexican Grill $11 to $18 starting wage • McDonalds May, 2021 Average wage $13 per hour • Eugene I. Lee, CEO Olive Garden. January, 2022 $11 Minimum and January, 2023 $12 per hour. Average tipped employee earns greater than $20 per hour • Walmart $11 minimum per hour - Pickers $13 per hour • Marvin Ellison, CEO of Lowe’s - 2019 to 2020 $1.4 Billion investment in incremental wages - one of the highest wage retailers for hourly associates • Kevin R. Johnson, CEO Starbucks - Fairly significant increase in wage and benefits Skilled Labor Supply and Demand Another area where pressure is pushing the minimum wage has to do with supply and demand for various trade positions including master electricians, plumbers and journeymen as well as CDL drivers. With the mass retirements going on with the baby boomer generation, several of these positions have been slow to back fill with the younger generations, thus creating a shortage. As with any shortage, wages tend to increase and there is no exception with these positions. A March 18, 2021 Business Wire article covered the shortage of skilled trade workers based on a study completed by PeopleReady Skilled Trades organization. The following quote about supply and demand issues for skilled laborers was noted in the Business Wire article. “The skilled trades are in dire need of workers right now, with a particularly high demand for apprentice-level and skilled labor positions. These are steady, well-paying jobs that hold a bright future, even in an unpredictable economic climate,” said Jill Quinn, executive leader of PeopleReady Skilled Trades. “For the millions of Americans who are struggling in their job hunt right now, our message is simple: Consider a career in the skilled trades.” Public and private organizations and businesses are offering higher wages to attract and retain competent staff. In addition, they are offering internal and external trades training and education to move entry apprentices into journey level and even master level technicians. Most of these organizations and business are covering the cost of the training and education and encouraging employees to take advantage of these benefits so they can meet critical skills needed by the employer to sustain their operations and services. For some of our municipal clients, an employee entering a skilled trades position can increase their base pay by 15 to 30% from apprentice to level three technician jobs.
