A new report shows that the vast majority of employers with minimum wage workers do not have a plan for how to pay those employees more if they are required to do so by law.
A survey of 135 firms that employ at least some minimum wage workers commissioned by constulting firm Aon Hewitt found that 72 percent of organizations have not charted a course for paying their lowest-paid workers more in the midst of an increasingly vocal national movement in favor of raising the minimum wage.
In addition, the report found that 59 percent of organizations with minimum wage employees do not plan to raise the wage unless mandated by law.
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"The majority of employers are taking a wait-and-see approach, and do not plan to make any changes until new regulations are issued and they assess the actions of their competitors," said Ken Abosch, broad-based compensation practice leader at Aon Hewitt. "Organizations are very sensitive about increasing one of their largest fixed costs and overall expense categories, and many of them simply don't see any advantage to increasing their labor costs at this time."
The report sought to gauge the attitudes of major employers in the wake of a number of big companies, including Walmart and McDonald's, announcing wage hikes. Big box stores and fast food chains, which employ a large percentage of those making minimum wage or near-minimum wage, have faced increasing scrutiny over labor practices.
In the past two years labor groups have led a number of high-profile strikes at fast-food chains across the country in the hopes of unionizing low-wage workers and pressuring local and state governments to raise the minimum wage.
The labor movement has scored some stunning successes. One of the most prominent examples came in Seattle, which is in the process of phasing in a minimum wage increase that will reach $15 an hour for large employers in 2017. And last month, the New York state labor commission approved a plan to raise the minimum wage for fast-food workers to $15 an hour by the end of 2018.
The Aon survey showed that employers who are faced with mandated wage hikes are responding in a number of different ways. Thirty percent say they are considering raising the prices of goods or services, 36 percent say they are going to cut down on overtime work, 19 percent say they will resort to more part-time employees and 12 percent say they will reduce their headcounts.
The debate over the minimum wage is far from settled, with economists disagreeing over whether requiring higher wages helps those at the bottom of the pay-scale or simply leads to job losses and higher prices for consumers.
Abosch's interpretation of the survey is that the wage hikes will not produce their intended benefit to low-wage workers.
"What organizations will choose to do will vary, but employees and consumers will likely feel the greatest impact," he said. "Nearly half of the actions organizations are actively considering to offset increased costs may actually undermine the value that an increased minimum wage was supposed to deliver to low income workers."
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