Wage Wars: ‘The Defining Challenge of Our Time’

As professionals in the home health care industry continue the ongoing fight for higher wages, so too are those in other industries.

From home health aides to employees at insurance companies, retailers and coffee shop chains, workers — and their employers — are joining the nationwide call for higher wages and benefits.

For some companies, stepping up pay and benefits for low-wage employees has not only benefitted their bottom line but also contributed to a culture that boosts motivation, decreases staff turnover and increases customer satisfaction.

So, as industries grapple with the issue, the question remains: “Can treating low-wage workers well become the hot new business strategy?”

As it turns out, this is the exact question posed in a recent Fast Company article, which highlights the changes some employers are making.

Health insurer Aetna, one of the companies making moves to pay and treat its employees better, recently announced that anyone who earned less than $16 an hour would get a raise, and that they could also choose less expensive health benefits next year.

The pay raise, Fast Company reports, would affect 5,700 of Aetna’s employees, or about 12% of its workforce.

What was the motivation behind CEO Mark Bertolini’s big decision?

“When you look at it you say, wow, we are a Fortune 50 company and we have employees who are on food stamps and putting their kids on Medicaid. Does this work? Is this fair?” he told Fox Business News.

Other companies, including Gap, Starbucks and Wal-Mart, have made similar announcements in the past year.

Home Health Care Workers Join Fight for Higher Wages

The moves come at a time when workers in the home health care industry are organizing a nationwide “blitz” for higher wages, following on the heels of similar strikes by fast-food workers seeking $15 hourly wages and union rights.

This “Fight For $15” has united other industry workers with personal care aides and home health aides, who post median hourly wages of $9.67 and $10.10, respectively, despite ranking among the fastest-growing occupations in the U.S.

But as demand for the workers increases, it seems pay grade remains largely stagnant.

In 2013, the Department of Labor issued a final rule that changed the Fair Labor Standards Act (FLSA), declaring home health aides would be granted overtimed and wage protections. However, a federal judge overturned that ruling in January 2015, stating that the DoL did not have the authority to grant such protections.

The rule would have boosted wages for a substantial portion of the nation’s home care workforce. While it was embraced by worker advocates, it was protested by some home health provider groups and lawmakers, who said that it imposed unsustainable costs on employers.

The debate and its underlying issue poses substantial risks for industry professionals as well as those who are in need of care, some say.

“America is experiencing a home care crisis, and unless home care workers receive higher pay, we won’t be able to meet the long-term needs of either caregivers or our aging population,” said Congresswoman Eleanor Holmes Norton (D-DC), who joined D.C. home care workers last week in their national campaign for higher wages.

In a December speech on economic mobility, President Barack Obama even called growing inequality the “defining challenge of our time.”

“We know that there are airport workers, and fast-food workers, and nurse assistants, and retail salespeople who work their tails off and are still living at or barely above poverty,” he said at the time. “And that’s why it’s well past the time to raise a minimum wage that in real terms right now is below where it was when Harry Truman was in office.”

What Higher Wages Mean For Businesses and Their Workers

As the volley between worker advocates, provider groups and lawmakers continues, those companies that have made the leap to offering higher wages have received benefits in return.

Zeynep Ton, now a professor at MIT’s Sloan School of Management, previously studied efficient supply chains in the retail sector and, in effect, studied companies whose processes worked and didn’t work.

“Retailers find themselves in this vicious cycle because they have this mentality that labor is just a cost,” Ton tells Fast Company in its recent article.

Stores often struggled with high turnover and, therefore, were understaffed or staffed with people who were poorly trained, new or unmotivated, the article states.

“The conventional wisdom is that this is the only way to operate in retail,” she says.

However, this wasn’t true for a handful of small companies that paid, trained and treated workers well.

“Using what she called this ‘good jobs strategy,’ these companies often achieved a ‘virtuous cycle’ of higher customer satisfaction, better employee retention, and other long-term results that increased profits and made up for higher wages,” Fast Company writes.

The takeaway? Even when increasing the costs of labor, companies can benefit significantly from upping the ante on wages.

To read the Fast Company article, click here.

Written by Emily Study

Emily Study

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