The minimum wage is a workforce issue that impacts all organizations, big and small. And, surprisingly, it affects companies regardless of whether they employ minimum wage workers or not. As a result of all of the media and political attention that minimum wage laws are currently receiving, your employees may be thinking about their own wage and salary level and its relationship to the ongoing debate over minimum wages. In addition, many municipalities and counties across the country, Chicago included, have raised their minimum wage, putting upward wage pressure on local companies. This pressure can directly affect the hiring of entry-level positions and indirectly affect wage levels across the organization by influencing what your employees believe is a fair and equitable wage.
In this article, we look at the three most important things that small business owners and managers need to know about the minimum wage.
Three things to know about how the minimum wage impacts all businesses:
- The upward pressure on entry-level wages is real, and is not going away.
The combination of real changes in the minimum wage in cities like Chicago and the constant media attention to wage and price increases has a palpable impact on the decisions potential employees make in the labor market. When this attention gets added to an already tightening labor market, “wage creep” has become an immediate problem for companies hiring entry-level positions. - Wage pressure affects your entire salary structure, not just entry-level positions.
The upward pressure on entry-level wages has the impact of pushing wages up throughout the wage and salary structure. I see this time and time again with the companies that I consult for. It may not seem fair, but it’s a real phenomenon. And if you are in an industry that is partially unionized, there is the added potential for a union-organizing campaign if you do not address the compression of wages, which results when you raise the entry-level wage. Where there is wage pressure like this, there is also the problem of job-hopping. It’s important to systematically address wage pressure by testing the competitiveness of the whole pay structure. - Productivity and quality is also impacted.
The overall impact of wage pressure at the entry level is that fewer high-quality candidates are available to join your company. The quality of your company’s work may suffer if you don’t broaden the pool of applicants by raising entry-level wages. However, as mentioned in point No. 2, this upward wage pressure creeps up to higher-level positions as well.
If you have any questions about minimum wage laws or other recruitment and compensation issues, please do not hesitate to contact me at fred.crandall@propartnerhr.com or (312) 498-4979.
About ProPartnerHR: ProPartnerHR helps small businesses manage the full range of human resources matters. We assist our clients through the employment life cycle, beginning with hiring, through compensation and employee relations matters, to employee separations and termination. We also assist with regulatory matters and relationships with regulatory agencies.