“State Your Case” – Raising the Federal Minimum Wage: Part II
February 26, 2021 Business, General, Human Resources, News, Social, Technology, Uncategorized 1 comment

“State Your Case” – Raising the Federal Minimum Wage: Part II

Samantha Badr

 

Welcome to Part II of “State Your Case”. In Part I, the potential benefits of raising the federal minimum wage were discussed. Now that we’ve heard the prosecution, it’s time for the defense to cross-examine the “potential benefits”. Make sure to click on this post and leave a comment to share your testimonies!

As mentioned in Part I, raising the federal minimum wage could increase employee retention and reduce turnover. However, it might be more difficult to retain employees if half of their co-workers are let go or replaced. If the government rules that businesses must pay more per worker, it could force businesses to let go of workers, or avoid hiring people altogether. The unemployment rate could increase – resulting in employees competing for fewer jobs.

A 2019 report by the Congressional Budget Office estimates that raising the minimum wage to $15 an hour by 2025 would result in the loss of approximately 1.3 million jobs. Although employees would enjoy a pay increase, businesses will have to foot the bill. Companies might be forced to outsource and move their facilities to countries with lower labor costs. Since robots can perform simple service tasks and even tasks in food preparation, health care, etc. – the demand for service-industry jobs will also plummet. Reduced employee turnover could be from employees fearing to lose their jobs in a scarce job market, rather than increased employee retention.

Another potential benefit that was previously discussed was economic growth. Even if that was the reality, an increase in federal wages could raise the cost of living in some areas. Landlords could raise rent knowing that employees will have more money to spend on housing, creating inflation. Additionally, the cost of goods and services could increase. A 2015 Purdue University study found that raising the federal minimum wage would result in higher prices for goods and/or reductions in product size – claiming that fast-food restaurants could have hamburgers that are much smaller. Another study by NBC News found that the price of a cup of coffee went up by 10-20% in California after a minimum wage increase. How could we possibly survive if our morning fuel suddenly doubled in price?

Economic growth might not be the case. Raising wages has the potential to put more money in the hands of consumers but what if their hands are still empty? The Federal Reserve Bank of Cleveland found that even if low-income workers see increases in wages, their hours and employment decline. The higher prices are, the smaller the demand for goods and the workers producing them. If people don’t have the money to spend on consumer goods – our economy, and our people, simply cannot flourish.

The defense rests.

Now that the prosecution and defense have presented their cases – what does the jury think? President Biden’s relief package might not happen tomorrow or next week, but many have speculated that it is likely to pass. Whether we agree with an increase in the federal minimum wage or not – the government wheels will keep on turning. As for the HR professionals of the world, it’s our job to make sure the pros always outweigh the cons.

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“State Your Case” – Raising the Federal Minimum Wage: Part I
February 12, 2021 Business, General, Human Resources, News, Social, Technology, Uncategorized 1 comment

“State Your Case” – Raising the Federal Minimum Wage: Part I

Samantha Badr

 

Another week – another new blog! Since we’re all in the mood for something different, I wanted to introduce a new mini-series I like to call, “State Your Case”.  In this series I will research controversial topics and state the case for each side of the argument.

In the beginning of February, President Joe Biden introduced his $1.9 trillion relief package in hopes of helping the economy recover from the pandemic. If approved, part of this package can include raising the federal minimum wage to $15 an hour, as opposed to the $7.25 rate established in July of 2009.

To understand the federal minimum wage is to understand the Fair Labor Standards Act (FSLA). According to the U.S. Department of Labor, the FSLA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Although the federal minimum wage is set at $7.25, some states can still pay their employees less, with certain exceptions. In Georgia, for example, the current state minimum wage is $5.15. Essentially, if a Georgian business owner has less than $40,000 in sales annually, or five employees or less – they can pay their employees $5.15 hourly. Otherwise, under FSLA, employers must pay a minimum of $7.25.

Currently, states can determine their minimum wage and if they want to pay the federal minimum rate or higher. For reference, I have computed the average minimum wage by states per region, based on Department of Labor statistics. For the Northeast region the average rate is $10.99. In the Southeast, the going average is $7.62, while the Southwest has an average of $9.28. As for the Western region, the average minimum wage rate is $9.80, and for the Midwest, the average is $8.42. With cost of living in mind, what benefits could arise from a $15.00 an hour federal minimum wage across the map?

For starters, increasing the federal minimum wage can increase employee retention and decrease turnover. If employees can cover the cost of living, morale increases – in turn, increasing productivity. It’s common knowledge that employees want to be compensated fairly, so if their wages increase, they are more likely to show up to work. Industries with high turnover rates will benefit the most from the increase in minimum wage.

Another benefit of a federal minimum wage increase is economic growth. An increase in income can lead to consumers spending more money, thus increasing demand and business revenue. The Economic Policy Institute claims that if minimum wage increases from $7.25 to $10.10, it could supply the economy with $22.1 billion and create about 85,000 new jobs.

With more money pumped into our economy, the need for government dependence decreases. According to a Congressional Budget Office report in 2014, increasing the minimum wage to $10.10 could lift 900,000 people out of poverty. If lower income workers earned more money, their eligibility for government benefits, decreases. The government can also reduce their spending on assistance programs by the millions, if the minimum wage increases.

Aside from employer and government benefits, increasing the federal minimum wage can also benefit the employees themselves. If wages increase, workers have more time and money to invest in their education. Working teens are less likely to finish high school or seek higher education if they have to work to help support their families. An increase in their pay can give more students the opportunity to attend college. Further, an educated workforce increases innovation – which is another benefit to employers.

Increasing the federal minimum wage simply won’t happen overnight – but if it’s approved, it could potentially benefit the economy and the general population. Are we for it, or against it? Stay tuned for next week, where potential disadvantages will be discussed. As my jury, it will be up to you to decide after both cases have been presented.

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All You Need to Know About WFH
February 1, 2021 Business, General, Human Resources, News, Social, Technology, Uncategorized 1 comment

All You Need to Know About WFH

Samantha Badr

 

Welcome back to another blog! In this installment of all things HR, I will be talking about the biggest drama of 2021 – working from home (WFH) versus working in the office.

In a time where it seems that everyone is WFH, it’s hard to picture life prior to the pandemic. According to the U.S. Bureau of Labor Statistics, in 2018, only 14% of employees worked from home five days a week. Two short years later, that number tripled. These days employees are able to work a full shift in their pajamas, but how long can this luxury last?

An employee survey conducted by leadership and communications consultancy, The Grossman Group, showed that 48% of employees working from home say they’d like to keep it that way. The consensus among family and friends is that WFH was the only positive of last year, further verifying these survey results. If staying at home wasn’t incentive enough, employees can save between $2,500 and $4,000 on travel expenses if they WFH. However, WFH is not for everyone. For some employees, it makes their job a bit harder. Collaborative projects leave employees relying heavily on technology to keep in touch with their co-workers. While some find that they can work better at home, it’s a distraction for others. If employees are too “laissez-faire” during the workday – it can leave them scrambling to finish their tasks at night, eliminating the barrier between work and home life.

Though the long-term effects of WFH are unknown, some employers are choosing to look on the bright side. In an interview with CNBC, CEO Mark Zuckerberg said that Facebook expects “up to half of their 48,000 employees to work remotely within five to ten years”. Facebook conducted an employee survey and found that many workers indicated an interest in WFH, and Zuckerberg saw the potential benefits of letting employees shift away from their offices. Even if employers are undecided on WFH, shifting to remote work can cut down on real estate costs. A typical employer can save about $11,000 a year for every person who works remotely even half of the time, according to Global Workplace Analytics. If companies can save money by downsizing their offices, they might begin to encourage employees to WFH.

Still, some employers do not agree with keeping WFH permanent. They fear that collaboration between employees suffers without face-to-face communication. Since WFH became a reality, company culture has shifted, and many companies had to find new ways to retain their employees. Another reason some employers do not back WFH is a lack of trust in their staff to complete tasks without supervision. A manager at a customer service agency might find that supervising their employees during the workday ensures they answer more phone calls.

The “Working from Home versus Working in the Office” debate has sparked discussions among employers and employees across the board. I recently had a conversation with two people that had differing opinions on WFH. I interviewed an HR professional, who said that the employees at her organization wanted to WFH, while their employer disagreed. The employees voiced their opinion to their manager, ensuring higher productivity and a safer environment if they WFH for the time being. However, their employer continues to mandate that they come into the office, even when corporate employees remain at home – leaving the rest of the staff very dissatisfied with management.

In another interview, the employees had the opposite viewpoint. They wanted to return to the office, but their boss wants them to WFH. This person had a job that required they have access to hundreds of classified documents. Unfortunately, these documents are in an archive in the main office. The employees are then forced to commute an hour just to obtain the documents they need. When they voiced their concerns to their employer, she stressed that their safety was her number one priority. Even though the staff is made up of only ten employees that have separate offices, their employer still didn’t budge.

Employers should be encouraged to let their employees find where they work best, whether it’s at the office or at home. Surveys say that employee satisfaction has increased or stayed the same since the pandemic started, so should employees have the choice to WFH? Even when offices fully re-open, a lot of employees might start asking to WFH or have partial remote work. If employers start mandating workers to come to the office, employees who are at high risk of contracting the virus may reach out to lawyers to fight their case. Regardless of the outcome – will organizations thrive, or suffer in the long run? Only time can tell.

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