Minimum wage continues to increase in many places

The minimum wage continues to rise in a number of places. Effective next year,81 jurisdictions will see tangible increase to amounts already above the nationwide minimum wage. Per a USA Today article yesterday called “Minimum wage is about to rise in 21 states, 35 localities as more embrace $15 an hour,” the national minimum is of less importance in more places.

A few paragraphs from the piece follows, with a link to the entire article below:

Twenty-one states and 35 cities and counties are set to raise their minimum wages on or about New Year’s Day, according to a report provided exclusively to USA TODAY by the National Employment Law Project (NELP), a worker advocacy group.

Base hourly pay will climb from $11 to $12 in Illinois; from $9.25 to $10.50 in Delaware; from $9.50 to $11 in Virginia; from $12 to $13 for most workers in New Jersey; and from $10.50 to $11.50 in New Mexico.

Since some governments will act later in the year, a total of 25 states and 56 localities – a record 81 jurisdictions – will lift their pay floors sometime in 2022, according to NELP….

Besides California and New York, nine states are headed to a $15 pay base over the next four years – Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, New Jersey, Rhode Island and Virginia. They’ll join 50 localities at or on the way to $15, including Chicago, Minneapolis and Washington, D.C.

All told, by 2026, about 40% of the U.S. workforce will be covered by $15 minimum wage mandates, NELP figures show.

Separately, at least 100 or so mostly large companies already have raised their pay floors to $15 or higher, including Best Buy, Costco, Wayfair, The Container Store and Southwest Airlines, according to the NELP study.”  

With living wages for individuals, two-person and greater families at a higher rate than the national minimum wage, it is good to see these jurisdictions and employers recognize this. Right now, retailers, restaurants, customer service jobs are available. Just check out the signs for hire when you walk in the door. People have been voting with their feet doing other jobs instead. Some have decided to do a compilation of independent contractor jobs to get by, rather than work on someone else’s schedule.

Having worked as a volunteer to help working homeless families, these wages increases are good to see. Too many of our clients were working at insufficient wages at multiple jobs to meet the rent demands. The demand for workers is also good to see as people will have more choices. With any job, but especially a customer facing one, do yourself a favor and make yourself valuable. Do these things and you will see some success – show up, show up on time and show up dressed with a helpful attitude.

US CEO Pay has reached epic differential

As reported in The Guardian today, US CEOs now make in pay 339 times the pay of the average worker according to a Bloomberg study of 225 companies. In retail companies, the ratio is 977 to 1 on average. Let that sink in a little.

A quote from the article entitled “‘CEOs don’t want this released’: US study lays bare extreme pay-ratio problem” by Edward Helmore is very revealing:

“According to a recent Bloomberg analysis of 22 major world economies, the average CEO-worker pay gap in the US far outpaces that of other industrialized nations. The average US CEO makes more than four times his or her counterpart in the other countries analyzed.”

Some people may push back and opine that US CEOs may be worth 4X that of their non-US industrialized nation counterparts. If that were true, it would mean US company performance is 4X that of non-US companies and there would be a huge flight of capital to the US.

In my years as a consultant, I have seen CEO pay ratchet up over time, rewarding CEOs with stock grants and options. What happens is a competitive totem pole exercise, where the competitive pay analyses are upward elastic and downward inelastic (they go up more easily than they go down) over time.

I have also observed the 80/20 rule applies to CEOs as well, with 20% of the CEOs earning their keep. I have worked with egalitarian CEOs, benevolent dictator CEOs and some of the greediest SOBs you will ever meet. Seeing CEOs who realize the teamwork involved in the company making money is admirable. On the converse, seeing CEOs who are imperialistic is off putting. As I write this, I am thinking of the handfuls I worked with and some who were notorious over the years for their greed.

On the bottom end of this exercise are efforts to flatten pay for the average worker. Over time companies will use a variety of rationales and tactics to put lids on pay increases. The salary increase budget may be limited because of the uncertainty in the economy, the company is having some hardship or the company expects to have hardship. Sometimes concurrent with the salary budget, groups of people are laid off. Why is the timing an issue? By moving on lower performers, people whose salary increases would have kept the average percentage increase down are removed from the equation meaning better performers will now get lesser increases.

Coupling this with pressure on not increasing the minimum wage and to diminish the power of labor unions (that is another story), these ratios result. I respect greatly the need for incentives to help reward successful CEOs, but we must not forget who helped them earn those numbers.

We have a poverty problem in this country. We have a middle class where too many are living paycheck to paycheck. Yet, our leaders passed a tax law that benefits CEOs, their companies and the wealthy by a large margin. It would have been nice to have at least obligated the pass through of salary increases or an increase in the minimum wage to a living wage. So, do not expect this ratio to measurably decrease any time soon.

While we were distracted, look what oozed in through the keyhole

On December 5, 2017, the Department of Labor under the guidance of the self-proclaimed populist President offered proposed regulations that would affect tipped employees. The 60 day comment period just expired, so unless the push back was convincing this proposal may become regulation. The proposal unwinds an Obama regulation which prohibits an employer from garnishing tips from workers who make at least the $7.25 minimum wage.

It should be noted that restaurant workers have a lesser minimum wage of only $2.13 which has been in place for twenty plus years. They can be paid an hourly wage this low, provided their tip income brings their total hourly pay to $7.25. As of May, 2017, the average combined wage and tip income for restaurant workers was $11.82 per hour.

In essence, the proposed regulation would allow an employer to garnish the extra tips above a total wage rate of $7.25. Now, the employer could be altruistic and reallocate this tip income to all workers, such as the cooks and buspeople (those that clean off the tables). This could also include the tipped worker who would receive a reallocated portion, but less than the direct tips garnished.

Yet, a very troubling part of the proposal is the employer could keep the tips and not reallocate them to workers. It is noted therein that the tips could be made for structural improvements or to reduce menu prices. Note, this is a low margin business, so it would not be a leap to see more than a few employers not reallocate all or any of the money. This is especially concerning within an industry where some managers exploit all and harass female workers (note read “Nickeled and Dimed in America” by Barbara Ehrenreich on working in minimum wage jobs that perpetuate poverty).

Per an article in The Washington Post (see link below), “‘There is no way to do a good face estimate and maintain the fiction that this rule isn’t terrible for workers,’ said Heidi Shierholz, who previously served as chief economist for the Labor Department, in a conference call on Thursday arranged by EPI.”

Many things concern me about this. If the employer were made to reallocate the garnished tips to other workers including the affected worker, then it would be more understandable as an employment term. A worker could then decide to work elsewhere if they felt they could make more there. It should be noted that in some cities that are phasing up to a $15.00 per hour minimum, some restaurants are going without any tipping, but that is understood beforehand and communicated to patrons.

The troubling part is the employer being able to choose to keep some or all of the money, provided the below market minimum wage is used. Help me understand how this helps those masses of people who voted for a man to make their lot in life better. Coming on the heels of other changes that have been made to favor Wall Street, such as the Tax Bill, this President does not look very much like a Main Street man.

What are your thoughts? Have you ever worked in a restaurant?

A few straightforward suggestions to fight poverty


The above quote comes from the Pulitzer Prize winning book “Evicted” by Matthew Desmond. Its subtitle is also telling – “Poverty and Profit in the American City.” The dilemma is we have a poverty problem that stretches from urban to rural America. Yet, it manifests itself daily in the eviction courts of American cities and towns, whether it is from apartments, houses or mobile homes.

The book speaks of how fragile the rental community is regardless of race, yet the black community tends to have a higher rate of exposure to evictions in urban areas. Unexpected expenses, transportation problems, and tragedies can push people paying a very high portion of their rent over the edge and out the door. Ideally, 30% of family income should be toward housing and utilities. Too many of these folks are paying well above that percentage.

It should be noted that there are other drivers of fragility. Some have opioid and other dependencies. Some are fragile due to too many children that stretch the budgets of even the best planners. Some are in downward spirals with unsupportive landlords. And, many of those unexpected expenses that arise are healthcare related.

What are some suggestions to remedy these issues? Based on my experience as a volunteer Board member helping working homeless families and my reading, I would like to throw out some ideas for consideration.

First, we need to talk more about it. America has a huge disparity in distribution of wealth which is not talked about enough by leaders. Where and to whom one is born are greater predictors of success as the American Dream  has waned for too many.

Second, we need to fund more family planning efforts not less. There is a high correlation between poverty and large families. When family planning is funded and birth control access and education are increased, poverty declines, system health care costs decline and abortions decline.

Third, more mechanisms to reduce evictions need to be in place and funded. Crisis assistance funds show success in helping keeping the electricity on and, when funded, reducing the number of evictions. Stopping homelessness (or fragility) before it starts can make a huge difference and will have a positive echo effect.

Fourth, we must invest in impoverished  areas making them more suitable for families both with opportunity and resources. In their absence, crime and other poor influences fill the void.

Fifth, while I have concerns about the new Tax law with its impact on debt and heavy emphasis on the wealthy and corporations, a huge opportunity was missed when we could have added an increase in the minimum wage tying it to automatic increases due to wage inflation. I worry that less money than expected by the law’s drafters will end up in the hands of workers.

Sixth, we must address our opioid crisis in America. To be frank, cutting access to healthcare and mental care insurance benefits are not the answer. We must stabilize access and cost of healthcare, yet opposite measures have been taken in the past few years under the guise of political gain.

There are many more ideas, but these will help. On the investing front, many locations have seen success with using historical tax credits leveraging private money. There is a concept called ABCD (Asser Based Community Development) which shores up or repurposes an deteriorated asset creating jobs.

But, first we need to talk about this real and pervasive problem.




Our declining middle class – an International Monetary Fund perspective








Significant support passed laws for minimum wage increases in four states

On Tuesday, a few successful ballot initiatives were drowned out by the reporting of the Republican victories. Yet, some of the initiatives that passed are noteworthy due to their bipartisan support and magnitude of victory. In particular, four more states and one major municipality passed significant minimum wage increases beyond the federal requirement of $7.25 per hour.

– In Alaska, voters approved an increase in the minimum wage to $8.75 in 2015 with over 68% of voters favoring the increase.

– In Arkansas, 65% of voters passed an increase which will phase up to $8.50 in 2017.

– In Nebraska, 59% of voters passed an increase that will phase up to $9.00 in 2017.

– In South Dakota, 55% of voters passed an increase which will increase the minimum wage to $8.50 in January and index it with inflation.

– In San Francisco, the minimum wage will phase up to $15.00 per hour in 2018, becoming the second US city to pass a phased-in increase of that magnitude.

There are now fourteen states with increases decided in 2014 that will take the minimum wage beyond the federal minimum. I should add that Illinois received approval from voters to come back with a ballot initiative on a minimum wage increase. According to the Business Journal, 29 states have minimum wage rates higher than the federal level. These majority of states have done this due to the gridlock in Congress that has prevented them from acting on a recommendation by the President. There are two links to articles below, the first on the votes noted above, and the second which summarizes the fourteen states who passed such laws in 2014.

I have been personally advocating for an increase in the minimum wage for several years. The national living wage for one adult varies by location per an ongoing study by the Massachusetts Institute of Technology (MIT), but nationally is just over $10 per hour. This is the reason for the use of the number $10.10 per hour in several states and is consistent with what the President proposed for the new federal requirement and what he put in place for federal employees.

In my work with working homeless families, we observed that the median salary for our families was $9.00 per hour. We had several with an hourly wage over $11.00, but with a family, that cannot cover what is needed. For an adult with one child, the living wage is in the $19.00 per hour range. It should be noted that a single working mother family is the fastest growing homeless group. Many of our homeless working mothers are victims of domestic violence, divorce or having children out-of-wedlock.

The current minimum wage cannot support an adult, much less a parent. This issue has bipartisan support and several retailers have grasped the need to increase wages. I applaud these states and their voters. Now, we need Congress to take up this issue. It is not just a Democrat issue; it is an American issue.

Monday morning you sure look fine, but Friday I got traveling on my mind

With due credit to Fleetwood Mac, I thought I would borrow a song lyric from Lindsey Buckingham to start off a post of potpourri topics on employment and wages. Here are a few musings from this Old Fart the last day off before your Monday at work that may cause you to think differently come Friday per the song.

Why do people against increasing the minimum wage not earn a minimum wage salary? Over 70% of Americans in a recent polls want to increase the minimum wage and I listen to all the mumbo jumbo about how it will affect jobs, yet none of the speakers are making the minimum wage. There is also data that shows people will turn over less from jobs and productivity will rise. There is a great quote from a CFO in the book “The Rich and the Rest of Us” which notes that companies chase cheap labor. They always have. He notes that if they could get by without employees they would.

Have you ever wondered why companies lay people off later in the fiscal year? It is important to mention this topic next, as companies tend to lay people off when they head into performance review season with a limited budgets. By moving on higher priced people who may not be an A employee anymore and have declined to only a B or C employee, they save money from the salary budget. Plus, by moving on lower performers, they in essence are moving the normal curve of ratings but not the salary budget. What I mean by this is if someone was not performing and deserving a lesser raise, by taking that person out, they are now giving the lesser raise to slightly better performing people.

Have you ever noticed slow but steady may win the race, but usually lose the raise game? This is one of the unfair things in life that does not get talked about enough.The people who tend to get the highest raises are less likely to be the slow and steady workers who show up every day and do a good job, but not a great job. These solid B, B- or C+ employees are the backbone of every organization. They know how to get things done due to a combination of intrinsic and extrinsic experience. Yet, they tend not to blow the doors down, so they do not get rated “Exceeds” are “Far Exceeds” expectations. These latter folks are more marketable and unless opportunity exists internally, they will leave for greener pastures. The best thing the steady Eddies (and Edwinas) can do, is to every once in a while, look for another job for which they would be prepared to leave, and let their employer know it.  Don’t play this card too often, but be sincere and ready to move if needed. Also, be wary, as your employer may have a different sense of your performance than you do.

Have you become aware that it has been the employers who have broken the loyalty contract? Let me close with this observation. We used to work in a world where loyalty to a company mattered. If you worked hard, you may not be able to buy a castle, but you could have a nice roof over your head. Maybe it is just my awareness of this, but beginning around the late 1980s when the information age truly began to heat up, analysts started predicting the profits a company might expect each quarter. My previous post spoke to this, but managing to short-term expectations caused leaders to treat employees more like expenses rather than assets. So, employees would be let go in a heart beat. Now, we are workforce of free agents. My father would have never given me the advice I noted in the previous observation as loyalty mattered and it should matter. Yet, the employers have broken the loyalty contract, so you are in charge of your career now. The employer is not.

So, where does that leave us? My advice is to do the best job you can anywhere you work and make yourself indispensable. Keep a mindset of continual development. But, always keep your resume fresh and listen and look for opportunities to grow yourself or make more money doing what you want to do. Finally, be honest with yourself. Are you good at your job because you know the intrinsic parts of the job (how to get things done in this company) or because you have extrinsic knowledge that will help you in any job? If it is more the former, be careful as you look, as you may be leaving a place where your skills are more valuable.

There is one final caveat to the loyalty equation, which is of most importance. Loyalty is more for your teammates and immediate working group than the company. The companies that are “more than profits” are able to expand this loyalty feeling, yet time and again, people will say after they leave or are asked to leave – “I don’t miss the company, but I miss my colleagues and/ or clients.”  This is an important part of any decision to leave or stay, provided you have that choice.

It is time to raise the minimum wage

The walkout this week by restaurant workers to protest poor wages is indicative of a major problem we have in this country. We have a poverty problem in this country with far too many people living in poverty or paycheck to paycheck. As I have noted in earlier posts, the disparity between the “haves” and “have-nots” has grown wider at the same time our socio-economic class mobility has greatly diminished. Where we are born and to whom we are born are now greater indicators of success than they used to be. To compound the problem, those who are in the upper income echelons are having a more difficult time appreciating the challenges faced by those who are not. More on this later.

In Barbara Ehrenreich’s book “Nickeled and Dimed in America,” she chronicled her efforts and those of her co-workers, in trying to live on minimum or near-minimum wage jobs. Her conclusion is these jobs perpetuate poverty. She notes a variety of factors which include not being able to afford healthcare, not being able to save, poor food habits as fast food was the cheapest and most convenient food, being a slave to the work schedulers, being tied to mass transportation schedules due to gas prices, and having to work more than one job. She also noted in the restaurant jobs, people having to work when they are sick, because they needed the pay. Getting by was the best you could hope for. Getting ahead was quite difficult as you were treated like a commodity. I would add this contention is supported by Dr. Cornel West and Tavis Smiley’s book “The Rich and the Rest of Us.” A summary of the key findings in the book can be gleaned from the attached post.

Currently, the federal minimum wage is $7.25 per hour. In some places, the state or local minimum wage is higher (Illinois, California have $8.00; Arizona is $7.47 and the city of San Francisco is $9.79, e.g.). Yet, a living wage is higher in these locations. A living wage varies by geography and is based on the cost of living to provide shelter, food, healthcare and basic necessities. Attached is a link to a MIT website that will allow you to see the calculation of living wage by area.

Per this MIT website, in my home county in North Carolina, a living wage is now $10.02 for a single adult and $19.68 for a one parent, one child family. In other higher cost of living areas, the living wage can be a few dollars more. As of this writing, President Obama has proposed an increase in the federal minimum wage from $7.25 to $9.00. While not enough, the increase is a tangible step forward. Per a Gallup Poll in March 2013, this proposal is supported by 70% of Americans. The result is even higher for women, Democrats, moderates, non-whites, adults who earn less than $24,000 per annum, and young adults. 2/3 of Americans who are seniors, Independents, and earners between $24,000 and $60,000 support the change. It is only beneath 67% for men, Republicans conservatives,and upper middle class earners and above.

Those who decry this change cite that we will end up with fewer jobs as a result. I have seen data on both sides of this argument. To me, there is a huge cost of turnover in retail and restaurant jobs due to lost productivity of the staff, but also of the department and store manager. The manager has to spend more time back-filling a job or making sure people are on the floor, than focusing on customer service and selling merchandise. Any measure a retail company can do to reduce this churn shows up in better productivity. Per the attached link, Costco seems to believe this, as they pay their people far more than the minimum and are doing quite well.

We have a problem in this country, which will only get worse, if we do not remedy it. This is a key reason I have been a staunch supporter of Obamacare. While imperfect, it does speak to the healthcare insurance needs of those who are now uninsured. And, many of those who cannot afford insurance are working in retail and restaurants. Yet, we must pay people better. Will it cause the number of jobs to go down? My guess is for some employers it might, but for many it won’t. In my consulting work with retail and restaurant employers, I have observed the employers who treat their employees as commodities will never have the productivity and customer service of those who treat their employees as key in their ability to sell products and serve customers. These latter companies work back from how can we serve the customer better.

And, when you hear someone who is doing more than fine financially state that increasing the minimum wage is a poor investment of money, please respond the better off people are, the less they will depend on those so-called hand-outs the well off seem to hate. I do not like to use the term hand-outs, as helping people survive in tough times is an appropriate investment of resources, yet for an audience that tends to use this term freely, it is an argument that might resonate. Plus, the more we all have to spend, the better off the economy will be. Let’s increase the minimum wage. It is time.