The January 1, 2019 looming deadline of a minimum wage increase to $15 / hour has people on both sides of the pay cheque debating the merits of this increase and the potential unintended consequences of moving so much so fast. We have the employer discussing the impact to their bottom line as any increase in expenses directly impacting profit. On the other side of the paycheque we have social leaders advocating the positive economic impact that this wage increase will have on both the individual employee and the greater economy.
As with many public debates we have individuals and organizations debating the symptoms of the problem rather than defining what the problem is and creating solutions that will get to the root issues in society. At the surface we appear to have a widening gap in our society between those that have sufficient funds to live and those that struggle every day making financial choices that both impact their short-term health along with financial choices that impact their families future through education and opportunity.
While there has been and will remain debate on the cause, there is little doubt that we have a component of our society who are currently not generating a living wage. There are many ways to calculate this, however the basic fact remains that one cannot find a part-time hydro bill, no landlord will accept part-time rent, however we seem satisfied with providing people with part-time jobs. This leads to what is now being termed as precarious employment.
This part-time employment should not be confused with those who actively participate in the growing ‘gig’ economy. Many individuals with portable talents and a desire for personal freedom, choose to move from gig to gig, knowing their personal value and creating a living that services their personal goals.
We are talking about those individuals and families who cannot generate sufficient income to satisfy their basic monthly needs while also saving for the future and those emergencies that will definitely happen. This is where we as employers need to start playing an active role in the solution and January 1st should act as a demarcation point in the way we evaluate roles, hire people and help individuals thrive in an environment of continuous learning.
As employers we need to reevaluate every role where we are prepared to pay the minimum that the government regulations will allow, ostensibly telling our staff that we would pay you less if the government allowed us. We need to equate the value of the amount we pay for the role to the product and/or service we expect the employee to deliver. We are talking about understanding the economics of each and every role within our companies. For example in a small format retail store where the sales professional would typically be in a client facing role for 50% of the day, what is the gross profit directly attributable to that role. Once that calculation is understood, one then knows what the value deficit is for the role and can then understand what other duties and responsibilities can be added to reflect, at a minimum, $14 per hour of value. As an employer we then have a responsibility to provide training to the employee so they can fulfil the economics of the role.
As employers we have a fiduciary responsibility to run a profitable business as there would not be employment without profit. However this does not always mean running a business at the lowest possible labour cost. A better understanding of role economics will provide greater meaning to work, allow an employer to increase wages and go a long way to reducing the number of working poor we have in our community.