What is a Living Wage? How Much is it in Minneapolis?

In our tight labor market, many companies are raising their wages to attract and retain employees. The issue of wages, however, goes much deeper. Regardless of a low or high unemployment rate, what are ethical wages? Is complying with state-mandated minimum wages enough? Should companies consider living rather than wages minimum wages?

For example: in Minneapolis, the minimum wage, as of 1/1/18 is as follows

• $9.65/hour – Large employers (annual gross revenue $500,000+).
• $7.87/hour – Small employers (annual gross revenues <$500,000).

On the other hand: Minneapolis’ living wage ($/hour necessary for a worker to support themselves – and dependents, if any – a basic, but a decent lifestyle) is calculated from for $11.96/hour for one a one-working adult household to $19.88/hour for each adult in a two-working adults/3-children household.

At first glance, raising entry-level wages from minimum to living suggests a considerable cost for employers, but don’t jump to conclusions. Employers in many industries have discovered that paying the minimum wage is counter-productive while the ROI for upping their entry-level positions to a living wage is quite positive. They consider the cost of higher wages an investment in the health and success of their company, rather than an expense. Why?

A Higher Labor Budget

Consider these 5 benefits of paying a living wage-

1. Increased employee motivation:

When employees are paid fairly for their work (and anything less than a living wage falls short of fair), they have a heightened sense of self-worth in aligning with the company mission. Good pay says their job matters, which increases their motivation to do it well.

2. Increased attraction of skilled workers:

Job seekers take note of companies who pay entry workers in line with real-life expenses rather than the minimum requirement. It not only builds their confidence in the potential to move upward if hired, but it also increases their respect for a company and their desire to work there. The result is higher quality workers.

3. Higher retention rate:

A vital pillar of job satisfaction is the ability to support themselves and their families on their wages. Another essential is the self-respect that comes from employee valuation. Living wages are a significant contribution to both components. Yes, it costs more to pay higher, but the savings in lower turnover more than makes up for it.

4. Decreased negative employee issues:

From absenteeism to disciplinary problems, the amount of issues, as well as the need to monitor your employees’ actions and attitudes goes down. Satisfied employees are happy employees. Happy employees show up – on time – and get along with each other better. Production increases and the company is healthier overall.

5. Boosts the Economy:

When workers earn more money, they spend more money. This stimulates the “big picture” of both regional and national economy, which increases opportunities for everyone.

How does a company implement a living wage policy?

In an excellent consciouscompanymedia.com post by Irit Tamir, Policy and Advocacy Manager at Oxfam America, she offers the following steps.

• Benchmark your current wages against the living wage in states and localities where you operate.
• Determine if you are now paying a living wage to your employees and contracted workers.
• Be sure to assess conditions for contingent workers. While many employers take advantage of the convenience and cost-effectiveness of using firms, these contractors may leave workers with little security, low pay, and few benefits.
• Calculate the gap between CEO pay and the average pay of employees – match this gap against the company’s values.
• Consult employees (and, if appropriate, unions) -this is an opportunity for employees to engage, collaborate, and improve the organization.
• Engage your board and create both short-term and long-term plans.
• Commit to both transparency and consistent reviews.
• Look at sourcing strategy – giving preferential treatment, including long-term contracts, to suppliers who are also committed to living wages, overtime policies, and reasonable benefits.

Offering living wages to your entry-level employees is a business opportunity. It is ethical, makes business sense, and helps to build a thriving economy and society.

Whether you have already joined the ranks, or are just starting the move toward living wages, consider a partnership with Award Staffing. We value our community economy, workforce, and job seekers, as well as the ultimate success of our clients. For this reason, Award only works with companies whose pay rate begins at $12/hour. Which is one of the reasons, were named Star Tribune’s 2018 Top Workplace in Minnesota! Contact us today.