Should You Pay Employees the Minimum Wage Just Because You Can?

Dennis Miller LRI’m pleased to present the first post from one of our newest board members, Dennis Miller.  Dennis is Chief Employment Officer of the Cal Poly Pomona Foundation and has had a long and varied career as a human resources professional.  Read on to hear his take on minimum wage legislation.

“Just because you can, doesn’t mean you should,” is a quote by Susan R. Meisinger SPHR, JD, from a book I recently read (and one you might have heard of) titled, “It’s All About Bob(bie): Strategies for Winning with your Employees.”

While the entire book was interesting and thought provoking – kudos to the Workforce Institute board members who contributed a chapter – this particular quote genuinely resonated with me as a human resources practitioner.  I have been in many discussions with senior managers and CEOs over the past three decades where the underlying message related to this quote often escapes their mindset.  This can happen for many reasons and, in most cases, senior managers just need someone to explain this message in simple terms and link it to the manner in which it can facilitate meeting business objectives.

For example, in Los Angeles County there is a new county ordinance increasing the Minimum Wage over the next 4 years to $15 per hour for those areas that are “unincorporated” within the county.

While 65% of LA County is unincorporated, there are about 1 million residents in that area.  With about 10 million residents living in LA County, the new ordinance does not apply to about 9 million people.  Stated differently, about 10% will be subject to the new ordinance and about 90% of the residents will be exempt from its direct and immediate impact.

For those businesses who are not strictly subject to the new ordinance, the key question to consider is how to make it work for their business.  If we were to apply the quote from Ms. Meisinger to this situation, it would look something like this: “Just because you can avoid paying the new minimum wage, it doesn’t mean you should.”

For those businesses that are not required to implement the new ordinance, one way to make it work on a voluntary basis is to have a rigid performance based model that encourages improved performance and ties the increase to the minimum wage schedule.

If we can provide a direct link to improving business outcomes and/or enhancing the customer experience in a measurable way even with unskilled workers (and its my view that most are definitely capable of “more” with the appropriate training and pay), doesn’t that outcome make good business sense?  Why not “raise the bar” for low skilled workers and thereby increase their pay using the same schedule used by LA County for the minimum wage increase?

As noted in the book, others have already proven this type of model can and does work…so the question begs to be asked – should you pay employees minimum wage just because you can?

 

 

2 thoughts on “Should You Pay Employees the Minimum Wage Just Because You Can?

  1. I suspect it was Jeff Pfeffer who pointed out that in America there is a certain stream of thought in management that “you can never pay employees too little or the CEO too much”. I don’t know if anyone has that as a poster on the wall but many companies behave that way. There is much to be said for paying workers more. It’s morally correct; it’s good for the economy and combined with a high-involvement workplace (see Ed Lawler or Pfeffer) / good jobs strategy (see Zeynep Ton) it results in improved organizational performance.

    Thanks Dennis for raising the point.

  2. Dennis, I’m glad we’re like minded. I worry that the corporate mind-set of “just do the minimum” is part of what’s left us where we are with a growing income inequality and a restless, unhappy electorate. It’s a short-term strategy that’s eating away at our long-term success.

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