This past Tuesday, the city of Los Angeles voted to increase minimum wage to $15/hour. The move, undoubtedly, will have retailers mulling their workforce costs and may even cause panic.
But will this move help or hurt retailers? What impact will it have on employee engagement, productivity and loyalty? The RTP editorial team shares their thoughts:
Debbie Hauss, Editor-in-Chief: More than twice the federal minimum wage of $7.25 set in 2009, a $15 minimum wage could shake up a lot of retail organizations, especially those with large workforces, such as McDonald’s, whose employees gathered 1.4 million signatures to support the recent Los Angeles vote. These increases are set to occur in stages, though. Los Angeles will reportedly creep up to $15 by 2020, for example. There are a lot of political and economic arguments on both sides for this type of initiative, but generally I think if your employees believe they are receiving a “fair” wage they are more likely to become brand advocates.
Alicia Fiorletta, Senior Editor: I’m hoping that retailers will take this move less as a threat and more as an opportunity. After all, research from Gallup indicates that only 30% or so of Americans are fully engaged in their jobs. I could imagine that if broken down, retail employees would be on the lower end of the spectrum, especially given retail’s terrible turnover track record. With the minimum wage increase, I hope retailers will see this as an opportune time to re-engage employees, train them better and empower them to do their jobs more successfully in order to align with the wage boost. However, I think it’s important to note that the overall cost of living has gone up substantially, so I don’t necessarily think this increase means retail employees are living on “easy street” by any stretch of the imagination.
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Rob Fee, Managing Editor: The U.S. Department of Labor hosts a page on its website that debunks many of the traditional arguments to minimum wage increases. For example, a review of 64 studies on minimum wage increases found no discernible effect on employment, according to information on the site. So even though, hiking hourly wages from $9 to $15 in Los Angeles will lead to some sticker shock, retailers will adapt. But I also believe that any positive impacts on employee engagement, productivity and loyalty that come as a result of this wage hike would be short lived. While workers will be thrilled with the pay increases, they also will quickly realize that they would be getting at least the same pay in other jobs. Maximizing employee engagement or loyalty requires more than a salary.
Kim Zimmermann, Senior Managing Editor: My feeling is that if you want people to act in a professional manner, you have to compensate them accordingly. Retailers are asking a lot of their customer-facing employees. How many customers have been lost due to a poor customer experience delivered by someone who had nothing vested in the job?
Glenn Taylor, Associate Editor: Retailers that aren’t used to such a high minimum wage would likely take measures by cutting budgets elsewhere, so that could cause a problem from an employment perspective in Los Angeles. However, I think the vote to increase the wage is certainly the right course of action, and any retailer willing to comply without making concessions elsewhere is proving that they are willing to outdo the competitors when it comes to employee satisfaction. All the brands that pay their employees decent salaries such as The Container Store, Costco and Trader Joe’s have excellent reputations for their working environment, with generally higher levels of happiness.
Brian Anderson: Associate Editor: I feel that the amount an employee is paid affects their work ethic, and $7.25 per hour is definitely not as motivating as $15 per hour. Retailers in Los Angeles will have to prepare for the shift in minimum wage, but what they’re getting out of it is more motivated employees and a happier work environment – which can ultimately lead to happy customers. If the change in minimum wage were more instantaneous, then there would be major concerns. However, I believe retailers in Los Angeles will be able to adapt.
What do you think about the minimum wage hike? How will it impact retailers? Is this an early indication that the minimum wage will increase in other states across the U.S.? Share your thoughts in the comments section below!
