There is a lot of talk around minimum wage lately.
Many opinions about what it should be, or why it’s hard to fill jobs at minimum wage, and a myriad of other topics.
One observation is clear. Minimum wage is relative. Regulatory bodies see it as relative to a living wage. As a firm, you must see it as relative to your ability to timely capitalize on opportunity, achieve corporate operational goals and achieve financial results.
The minimum wage you should pay for specific work/jobs is relative to the unique economics of your firm’s perspective.
Regardless of what the dollar amount of a regulated minimum wage is, or should be, it is true that a work role, or assignment, is what really drives a minimum wage.
It’s simple supply and demand.
Managers staffing general labor positions often miss this point. Consider this typical scenario.
- Production goes up, and ~20 new general labor temps are needed to ensure objectives are met.
- Manager’s ask HR to engage with a staffing firm to find the labor to keep operations at capacity.
- Demand increases indicate profits will go up based on volume.
- Shortsightedness suggests setting wages for these roles at government-regulated minimum wage, because they can.
- Some of the labor is found, only partially filling the operational demand setting the initial goal of ~20.
- The struggle goes on, while turnover prevents the full goal of ~20 temporary workers to be achieved.
- The firm’s customers realize their orders won’t get filled, so they explore other suppliers canceling volume with your firm.
- The word gets out, and your sales force loses new sales to that competitor that can deliver.
- You notice that many of the temps you hire, are finding work across the street.
- That company (maybe your competitor) offers $0.25 more an hour than you do for similar work.
- They are meeting their operational and fiscal objectives, while you miss goal after goal.
- Orders decline, and opportunity passes.
- Someone blames the temporary staffing agency for logical economic decisions temporary workers make.
In reality balancing a $0.25 per hour increase in pay is what attracts the employees, and retains them. The relative factors for your firm to free up investment in proper minimum wage for the business you are in may have dramatic downstream returns. It takes leadership to avoid this trap and manage forward to achieve returns orders of magnitude greater than a small increase in labor cost.
Firms that are faster, better, smarter and understands this scenario and relationship wins.
The firm that fills its labor demands, will fill its operational and customer demands. Ultimately, this means that firm will fill its fiscal goals, faster, as well. As a result, it will retain its customers, and get repeat orders for additional volume. The small investment in a relative wage up front has enormous financial implications downstream.
There is no perfect number for minimum wage for the work your firm does. Your finance specialists must put the spreadsheet together, and find the balance point. It is relative to the work and what competitive similar jobs are paying across the street. The payoff in terms of production is real. The additional payoff in terms of brand, and attractiveness of your firm as a place to work will increase likelihood of sustained business results.
More and more, workers are mobile. job tenure has little meaning in a performance-based labor market. As the demand for temporary workers grows, and the utilization of temporary workers by firms increases, supply and demand economics will determine success and final outcome. Finding workers that can do the work is only half the challenge – the other half is retaining those workers incentives that make them want to stay.
Quality staffing firms like Barton Staffing Solutions put considerable effort in learning what the temporary workers will be doing and the environment they will be working. Listen to your staffing firm. Barton Staffing Solutions want to help you achieve corporate goals for production and financial results. The temporary worker wage you pay is going to be relative to a variety of real business factors and Barton Staffing Solutions can help you discover this.
Don’t make the mistake of assuming government-regulated minimum wages is what you should pay – it may increase risk through turnover, and other relative costs that eventually erode financial results. Call us today to learn more.