Many states and localities are increasing their minimum wage, effective this year. January is the popular month for changes.
So, the minimum wage went up in your state or city, like it did in dozens of others. You budgeted to increase the pay of the minimum wage earners. Now the more senior employees are upset.
Those earning the minimum wage are excited because they basically get an unmerited raise as a result of legislation, but their colleagues may not be so excited to see people who may not have the same experience, length of service, proven commitment, etc. get an increase in pay while they do not. After all, they had to “earn” all of their increases.
Now what do you do?
- Consider calibrating your compensation structure so that increases are given across the board to account for the minimum wage increase, not just to the minimum wage earners. The minimum wage is meant to be a floor, a bottom, not a standard or a goal. So, if there are other employees that are a step or two or ten above minimum wage now, consider whether they should still be a step or two or ten above minimum wage when the minimum wage increase is effective.
- Let employees know your decision to calibrate (or not to calibrate) and let them know that you are obligated to pay the minimum wage…not more.
- Educate them as to why the increase is happening. And, to keep it short, it is happening because of the law; but spin it to make the company look good. Let them know how the whole thing works for everyone.
- Consider freezing pay for those getting an increase. If only a few are getting raises, they do not have to get increases at the same pace the others get increases. For example, Employee A goes from the old minimum wage today to the new minimum wage tomorrow when the law is effective. They would be due a raise, say, this summer. They do not have to be given a raise this summer, but their coworkers who did not get a min wage bump can still get their raise when summer comes.
- Tell them this in a meeting and follow up with an e mail.