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There is More to Keeping up with Minimum Wage Increases

During the past decade it has been challenging for employers to keep up with all of the minimum wage changes between federal, state and local municipalities.  The federal minimum wage was first signed into law in 1938 by President Franklin Roosevelt, at the height of the Great Depression. It was last increased on July 24, 2009, when it rose from $6.55 to $7.25 per hour, the last step of a three-step increase that began January 1, 2007.  Before 2007, the federal minimum wage had been at $5.15 per hour for ten years.  During the 1990s and 2000s, numerous states raised their minimum wages scores of times in response to federal inaction.  Many states and even some local municipalities have stayed ahead of the federal and have higher minimum wage rates.  Employers are required to pay the federal rat for jobs covered under the FLSA.  In some instances a state or local minimum rate in excess of the federal rate may apply.  WageWatch has researched current minimum wage rates and have posted them at this link wagewatch.com federal state & local minimum wage rates 2013.

It is important for employers to remain in compliance with the current minimum wage rate and ensure that no employees are paid below the minimum wage.  It is equally important, with each increase to the minimum wage, for employers to perform an internal equity analysis to determine if additional employee increases are needed to maintain internal pay equity and to remain competitive with market compensation.  Minimum wage increases most often apply to entry level positions and to employees with less seniority.  When you increase the pay of these associates, it brings their pay closer to more senior associates as well as to their supervisor’s pay levels, creating pay compression and pay inequity.  Performing equity analysis involves reviewing all the pay levels in each job function to determine what increases may be needed in order to maintain internal pay equity as well as competitive pay levels for all your associates.  It is recommended that immediate supervisor pay is also included in the analysis.  Your analysis should include compensation survey data and your listing of associates in each job function should include indicative data such as date of hire and performance rating to help you make internally fair and market competitive decisions regarding pay increases.

The Equal Pay Act is receiving a tremendous amount of attention from the EEOC and the commission has designated pay equity as a top priority in its strategic enforcement plan for fiscal years 2013-2016.  To maintain internal equity and avoid pay compression, it is important to stay current with the market by consulting with professionals.  At WageWatch, our professionals can provide your business with compensation surveys and salary reports to help you establish a budget for your salary increases, bonuses and incentives. Our innovative company is a leader in the collection of data for surveys and salary reports, which allows us to provide services to a wide range of industries in both the private and public sector. To learn more about our compensation surveys, salary reports and other services, please call 480-237-6130 or contact us online.

This entry was posted on Wednesday, April 17th, 2013 at 11:01 AM and is filed under Benefits & Compensation. You can follow any responses to this entry through the RSS 2.0 feed. Comments are currently closed, but you can trackback from your own site.