News > Higher Pay for Low Wage Workers Is Not Enough

Higher Pay for Low Wage Workers Is Not Enough

I’ll just pay employees higher wages, they will stay no matter how they are treated!


The January 2019  jobs report from the US Department of Labor shows the average US worker isn’t seeing much change in wages since the Great Recession in 2009.

The big guys, Walmart, Gap, and Aetna, are increasing worker pay, benefits, and hours as they attempt to  maximize returns on employee recruitment and reduce the cost of employee turnover.

Let’s not get crazy.  First, it remains true that most Walmart employees are still considered low wage workers.   Second, while Walmart is spending millions, this not solving the employee retention problem for them.  Turnover in some places is approaching 75%.

Why?  It turns out, that we actually have to care about people to retain their services in a low unemployment marketplace. Yes, we have to be concerned about their quality of life outside of work to keep them coming to work.  What?!

In 2017, the national average cost per hire was an estimated $3,420, according to the Society for Human Resource Management, a U.S. membership organization for human resources professionals. The per employee cost of turnover was an estimated $3,400 to $8,000.

Even though projected savings from lower turnover make it justifiable in a spreadsheet, paying slightly higher wages doesn’t really impact turnover that much.  It’s not the silver bullet solution.  Drat!  That would be so much easier!

Low wage workers can switch jobs easily and are more likely to do so when they do not have a connection to an employer.  That’s why there is a very clear economic benefit that comes from caring more about the quality of life experienced by low-wage economically fragile workers.

Next week’s blog is titled, “What’s the Opposite of Poverty?”  Do you know? The answer might surprise you.

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