As the COVID-19 pandemic continues to wreak havoc in the U.S., employers should understand their options for employee wages. The economic impact of the virus has been substantial; companies shut down or limited production as counties issued shelter in place orders. For a time, only businesses deemed essential were even allowed open. Now, as we enter the summer, our efforts to gradually reopen have hit a snag as illness has again begun to spread. How are companies finding workers when our employees are worried about contracting illness? Does minimum wage even fly when workers are receiving additional unemployment benefits?
The State of Minimum Wage
CNBC reports that nearly half of U.S. states raised their minimum wage last year. It’s ironic, but that didn’t seem to slow the economy, which was booming up until the COVID-19 pandemic. It may be hard to recall, but we literally went from not being able to find enough workers to millions unemployed in the space of a few months in 2020.
At the beginning of 2020, there was a push by lower-income workers that was gaining steam. In fact, while pay growth overall was sluggish in 2019, CNBC reported low-income workers received the biggest gains as we entered 2020, when nearly seven million workers received a pay raise. Companies like Amazon and Bank of America increased pay to $15 or higher per hour. Other companies like Chipotle and Papa John’s kicked in for college tuition for employees.
But big changes were ahead as COVID-19 caused a complete reversal of the unemployment market practically overnight. It grew more complicated for employers, whose “essential workers” — whether on a hospital cleaning crew or in the back of a warehouse — were potentially exposing themselves to a deadly virus if they showed up for work. Work itself, outside of the home, is now possibly dangerous for workers. How should employers compensate employees while still keeping them as safe as possible?
The Brookings Institute, a research and policy think tank, took a look at the issue of compensating workers over the minimum wage mark as an incentive during these dangerous times. They found that many essential workers earn what most would consider low wages, with 4.3 million earning less than $10/hour and 23 million earn between $10 to $20/hour.
But should employers compensate workers at a higher level as an added incentive during COVID-19? Amazon thinks so. In March, they announced an additional $2/hour and overtime rates for workers. Almost anyone in logistics, warehousing, and transportation are feeling increased pressure to respond to a rise in e-commerce orders.
For companies to attract workers and keep them showing up for essential services like ringing up groceries, driving buses, or working in warehouses, companies need to increase pay in the same way they should increase worker health protections. Providing PPEs is important, but so is offering employees higher pay to help offset their risk in continuing business as usual. This, along with offering some flexibility in scheduling for light industrial employees, will go a long way toward letting your employees know you care about their health and wellbeing. It will also help you attract more reliable workers at a time of great stress in our nation. Finally, Millennials, who play such a big role in today’s workforce, are more interested in the immediate gratification of a good hourly rate.
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