Winning the “Vote” of Your Customers

Although the presidential election is still over a year away, the political machine of the election cycle is already revving its engine. Within the last month, four potential Commander-in-Chief contenders have announced bids for their party's nomination. Ted Cruz was the first, followed by Rand Paul about a week later and Hillary Clinton and Marco Rubio shortly thereafter. These four potentials lead the pack of the presidential campaign thus far, but the race promises to be a crowded one, especially for the Republican Party, and more presidential hopefuls are predicted to announce within the coming weeks and months.

As each candidate strives to win the support, loyalty, and ultimately vote of their party members, their campaign announcements can teach companies about how to win the loyalty and "vote" of their customers. Whether you love or love to hate these candidates, each announcement had merits that companies should espouse.

Ted Cruz - Announced March 23
More than two weeks before anyone else had announced their candidacy for president, Cruz led the pack of Republican candidates and declared his campaign to a crowd of thousands at Liberty University, a Christian academy founded by Jerry Falwell. By declaring his nomination before anyone else, Cruz positioned himself as an immediate target for publicity, giving him a platform to speak before other contenders and allowing him to control the narrative before anyone else announced their candidacy. An adviser to Cruz said his speech highlighted his positivity and personal story, which have gotten lost amid his reputation for opposing Senate measures.

Companies should also consider how they can be the first to propose new ideas and stay ahead of the pack, especially as consumers have more and more choices and information about products and organizations. By doing so, companies can highlight optimism and their corporate histories in order to attract customers and win their loyalty and vote.

Rand Paul - Announced April 7
Like Cruz, Paul faces a similar challenge of standing out in a crowded arena. Knowing this, in his announcement speech, Paul focused on how his values and principles differ from not only the Democratic Party but even his own fellow Republicans. In fact, Paul called out his own party for being part of the problem and emphasized how his values and actions would be vastly different from other Republicans who are vying for the nomination.

Companies that want to differentiate themselves from their competition should take a lesson from Paul. Paul criticizes the shortcomings of Republicans and Democrats past and present and offers different solutions than what other nominees broadcast. Organizations should do the same: evaluate the areas in your industry that need improvement with razor-sharp precision and find a way to make your company the solution to those problems. Then, set yourself apart from the competition by highlighting your alternate thinking.

Hillary Clinton - Announced April 12
Thus far, Clinton is the only contender for the Democratic nomination, and although other potentials are predicted to enter the race, Clinton is viewed as the most likely winner; some have even predicted that her nomination is "inevitable." Unlike Cruz or Paul, Clinton did not kick off her campaign with a speech or an event. Instead, she announced on her social media sites with a short video that focused primarily on the people she hopes will vote for her. Rather than resting on an (almost) assured victory, Clinton advertised in her video that she would be "hitting the road to earn your vote." The video focused so much on those people that Clinton does not make an appearance in the video until just after the minute-and-a-half mark.

Companies with name recognition and a strong brand may have a tendency to slip into laziness and rely on recognition more than customer-centric principles. But, like Clinton, these organizations should always hone their focus on others, not themselves, and shift their mindset to serving those that keep them in business.

Marco Rubio - Announced April 13
Closely following Clinton, Rubio announced his candidacy just this week at the Miami Freedom Tower. Rubio is a 43-year-old freshman senator and the youngest contender for a 2016 party nomination; however, he has already made his youth and (relative) inexperience a calling card for his campaign. His background and youth is an immediate contrast to Rand and Clinton, as well as other potential contenders who are likely to jump in, such as Jeb Bush. In his speech, Rubio positioned his youth as a positive that would allow him to make better, clearer decisions not weighed down by outdated thinking.

Like Rubio, companies should not adhere to tradition simply because it's always been done that way. Even if a company has longevity, it should always be invigorated with new and unique innovation, rather than being tied to antiquated methods, procedures, or ideas.

All four of the current presidential contenders have announced their candidacies in unique ways. Each declaration has set the tone for the individual's campaign and each has a specific lesson that companies could adopt.

Readers, who has made the biggest impact with their presidential announcement thus far? Who else do you think will jump in the race?

The Personality Trap: Why Women Can't Win at Work

Venture capitalists (VCs) are well known for their aggressive and competitive spirits; these traits are necessary to be successful in an industry that is out for blood. But it seems that these same characteristics that make men revered may be less palatable in women VCs ... or women in any workplace.

Last week, Ellen Pao lost her highly publicized suit against her former employer Kleiner Perkins, a venture capital firm in Silicon Valley. Pao alleged that the company passed her over for a promotion to senior partner and then fired her in October due to gender bias. Claiming that she was professionally stunted because of her gender, Pao charged she was penalized and eventually terminated because of her complaints of discrimination.

Much of Pao's case put her personality on trial. When managers or superiors gave feedback about her performance, she was both criticized for being "passive, reticent, waiting for orders," while also having "sharp elbows" and being too "pushy." Although most women now face less overt gender discrimination at work, they must deal with more subtle sexism instead. Women are often trapped in performing the balancing act of the "double-bind" at work: be highly competent, but don't step on people's toes; take on leadership roles, but don't be too aggressive; advertise your success, but don't come off as arrogant. Nobody is perfect in the workplace – but women take on more of a burden for not being so; their personalities are regularly judged and found lacking even when their performance is high.

A recent study revealed the harsh discrepancy between the types of criticism that men and women receive in the workplace. In the analysis, both men and women voluntarily submitted their performance reviews for scrutiny. The study found that only 2.5% of the critical reviews received by men mentioned any negative comments about their personality, while 76% of critical reviews received by women did so (Fortune, 8/26/14). In the reviews, "abrasive" was used 17 times to describe women, but never to describe men.

Like Pao claimed for her own situation, women are judged much more frequently and more harshly on their personality at work than men. In a cutthroat industry, Pao said she was both criticized for being a wallflower and not contributing enough at meetings, but also frowned upon for speaking up, demanding credit, and positioning herself for success. In male-dominated fields especially, women are encouraged to "man up" and exhibit more masculine qualities: competitiveness, aggression, and confidence. A university study found that women who emphasize "male" qualities were more likely to be hired, but then these same qualities penalize them later in workplace reviews (University of Michigan, 8/7/14).

Another example can be seen in STEM. Women are 45% more likely than men to leave the field within a year, though 80% of those women said they love their work . So why are they abandoning the industry? Because of biased environments, prejudiced evaluations, and a lack of female mentors and leaders (Center for Talent Innovation, 2/12/14).

Although Pao lost her case against Kleiner Perkins, other women may be successful where Pao was not. A former Twitter employee is suing the company alleging that promotion opportunities are denied to women and based on arbitrary promotion policies that favor men (Tech Crunch 3/22/15), and a former Facebook employee is suing the company for sex and race discrimination (CNN Money, 3/19/15). Women in all workplaces, not just tech, face the double-bind dilemma, and more are starting to illuminate the subtle sexism that is easy to see but hard to prove.

Readers, do you think that women in the workplace face a double standard when judged on their personalities?

March Jobs Report

The first quarter of 2015 ended with a stumble, as indicated in the March Bureau of Labor Statistics' (Employment Situation Summary). The U.S. economy added 126,000 jobs, the lowest monthly gain since December 2013, and the unemployment rate stayed steady at 5.5%. Economists cited several reasons, including the harsh winter in the Northeast, as the cause for the slowdown.

There was some good news, albeit only slight improvements. The number of long-term unemployed persons ticked down slightly to 2.6 million, accounting for 29.8% of the total unemployed. Also, average hourly earnings rose 7 cents an hour to $24.86.

Still, several sectors did see upward trends, including professional and business services (+40,000), retail (+26,000), and health care (+22,000). Temporary help services rose by over 11,000 jobs, a 0.4% increase over last month.

What to Expect (at Work) When You’re Expecting

Last week, the U.S. Supreme Court ruled in favor of a pregnant worker's right to sue her employer for not offering reasonable accommodations when she was pregnant. Peggy Young, who had worked at UPS for four years as a part-time driver, became pregnant in 2006. Her job had required her to lift more than 70 pounds; however, her doctor ordered light lifting restrictions and told her not to lift more than 20 pounds. When Young asked UPS to accommodate her request for light lifting, UPS denied her and instead forced her to take an unpaid leave of absence, during which she lost her medical benefits. Young sued UPS, claiming that the company violated the Pregnancy Discrimination Act (PDA) by refusing to accommodate her temporary medical condition.

The lower courts in Virginia threw out Young's case; however, the Supreme Court agreed in a 6-3 majority ruling that Young should be able to bring her case against UPS in court. Her suit will now go back to the lower courts, and she will be able try and prove that she was unduly discriminated against because of her pregnancy and has been treated differently from a large percentage of non-pregnant workers who were offered accommodations.

The Pregnancy Discrimination Act, which amended Title VII of the Civil Rights Act, prohibits sex discrimination "be¬cause of or on the basis of pregnancy, childbirth, or related medical conditions." The second clause of the PDA requires employers to treat "women affected by pregnancy the same for all employment-related purposes as other persons not so affected but similar in their ability or inability to work." UPS claims that it did not violate the PDA as it has a pregnancy-blind policy. UPS only offers accommodations for three classes of workers: those injured on the job, those who have lost their Department of Transportation driving certification, and those who have a disability under the Americans with Disabilities Act. UPS argues that the PDA does not require pregnant women to be treated the same as workers with disabilities, only that pregnant workers not be singled out for discrimination, and that their "pregnancy-neutral" policy did not violate the PDA.

Young, however, asserts that the company is required by the PDA to treat pregnant workers the same as others "similar in their ability or inability to work." Young claims that because UPS offered light lifting accommodations to some employees, but not pregnant workers, it was in violation of the law. Last October, UPS changed its policies to make accommodations for pregnant workers; however, the company insists the change is independent of the lawsuit and that it did not discriminate against Young during her time at the company.

Although the Supreme Court did not rule on whether Young was actually discriminated against or whether UPS' policy violates the PDA, Young is now able to have her day in court. The vague wording of the PDA and varying interpretations of the law have led some lawmakers to advocate for Federal legislation that would provide clarity. The Pregnant Workers Fairness Act would cover all women and make clear the standards employers must meet and the rights that pregnant workers possess. The bill however has been stuck in the Senate since 2012.

Young is only one of many women who have faced discrimination. In 2013, there were more than 5,000 pregnancy discrimination charges filed to the EEOC and local Fair Employment Practices agencies, showing that many companies are still not making accommodations for pregnant workers (Fortune, 7/15/14). The Pregnancy Discrimination Act was passed in 1978, and there was not been additional guidelines or clarification about the interpretation of the law for more than 30 years. In 2014, the EEOC finally offered new guidelines, which make clear that refusing to give reasonable accommodations to pregnant workers is illegal under Federal law. The EEOC passed its new principles after Young had begun her case against UPS.

The EEOC's guidelines also make it illegal to demote or fire a woman for becoming pregnant; however, many women in the workplace still find themselves passed over for promotions when they announce they're pregnant or return to a hostile work environment when they come back from leave. With ¾ of women who enter the workforce predicted to become pregnant at least once while employed, companies need to start evaluating whether their environment is biased against pregnant workers and become fully compliant with the PDA and the EEOC's new guidelines. Low-wage women are especially vulnerable to discrimination as they typically work in environments that would require temporary accommodations, such as sitting on a stool rather than standing, taking more frequent bathroom breaks, or not lifting heavy objects.

Once women become mothers, many continue to face blatant and subtle prejudice in the workplace. Women with children face biased evaluations of both their competence and commitment to a job; they are also less likely to be hired and more likely to take a pay cut. Men on average earn 6% more when they have children, while women face a 4% decrease in pay for every child they have. Even when adjusting for hours, experience, and education, the motherhood penalty persists. The bias is the most extreme for low-wage workers, who can least afford it. Low-income women who have children pay the highest price: on average they lose 6% in wages per child (The New York Times, 9/6/14). Women in low-wage jobs are also the least likely to have flexible schedules or other benefits such as paid parental leave or paid sick leave.

Accommodations to pregnant workers are temporary and typically not a burden on employers. Although Young's victory in the Supreme Court is a strong win for women and workers, many companies are still struggling to accept that the clear answer is "Yes" when faced with the question "Should we provide accommodations for pregnant workers?"

Readers, have you seen or experienced discrimination against pregnant workers?

Should Starbucks Have Asked Us to #RaceTogether?

Last week, Starbucks introduced their now infamous Race Together campaign. Tom Schultz, Chairman and CEO of the beverage goliath, started the initiative and announced it at an internal company meeting. Starbucks then broadcasted it to the public on their website. The campaign encourages baristas to write "Race Together" on customers' cups in order to "start a discussion about race in America." Starbucks emphasized that the decision to engage was voluntary and should not prohibit timely customer service.

Starbucks claimed that the campaign started with "one voice," that of Schultz, who "didn't remain a silent bystander." The Starbucks patriarch has not been shy in the past about taking a stand on public issues. In 2013, he asked that no customers bring firearms into the stores; that same year when an investor complained about Starbucks supporting a bill that would legalize same-sex marriage in Washington State, Schultz advised the investor to sell his shares and invest somewhere else.

This move to insert himself and Starbucks into an intractable public debate has garnered Schultz and his company a storm of public backlash. Most critics are baffled at the initiative, asking how Schultz expected this campaign to play out. Did he really imagine that customers in a hurry for their cup of morning Joe would be open to discussing race relations with their barista? Skeptics also object to the idea that conversations about race should be discussed at the behest of your CEO or your boss, who you have to make happy in order to pay rent and buy groceries.

Starbucks itself claimed that they wanted to start dialogue between people about race in response to the "racial unrest from Ferguson, Missouri to New York to Oakland." If the instigating factors for the initiative were incidents like Ferguson, critics claim that Starbucks is focusing on trying to get everyone to just get along and glossing over the real problem of a myriad of societal institutions and systems that create inequality for racial minorities.

Some applaud Schultz and Starbucks for a bold attempt at tackling an important issue, even if the execution of the campaign was not perfect. Kareem Abdul-Jabbar, former NBA champion and minority-rights advocate, praised the campaign as a "bold decision" but said that Schultz chose "the wrong venue with the wrong audience and the wrong spokespersons." Starbucks may be forced to agree as they ended the cup-writing campaign seven days later. A company spokesperson said that the phase-out is not a reaction to the backlash, but a scheduled transition into the next phase of the #RaceTogether plan: a commitment to hire 10,000 disadvantaged youth within the next three years.

The difference between many of Schultz's past insertions into public issues and the #RaceTogether campaign is that Schultz put the onus of the initiative on employees, many of whom may not have wanted to take part or felt uncomfortable having their personal experiences being discussed and debated around them. A senior vice president of Starbucks blocked users asking about the campaign and then deleted his personal Twitter account after he encountered backlash. This of course only fueled outrage as critics pointed out the irony of asking employees to start a conversation on race, while a high-power executive was unwilling to engage in the topic himself.

Schultz asked his front-line employees to take on his own voice and the voice of the company as a whole and created an uneven power dynamic. Baristas were being asked by their boss to participate in a campaign that involved them engaging with the customers they are obliged to make happy, on a very sensitive topic. As the CEO of a globally recognized corporation, Schultz has a platform to speak out on public issues and even advocate for social change. The problem arises when Schultz asks his employees to do the talking for him.

Readers, do you think that Starbucks got it wrong or right with #RaceTogether? Should companies try and insert themselves into public issues?

Spring Cleaning Your Management Style

The First Day of Spring will (hopefully!) usher in the end of being trapped inside on snow days. The welcome change of weather will prompt many people to start scouring through their closets, garages, and attics to clean the darkest nooks and crannies of their homes. They'll search through the mess and clutter and decide what should be kept and what should be tossed.

Managers should also use this season of renewal to spring clean their own management style by assessing which habits should be kept and which should be discarded. By sifting through practices that may have been forgotten or neglected, managers can determine with a critical eye whether the habit is worth keeping or needs to be tossed in the trash.

Toss: Conducting a once-a-year performance review.
Keep: Giving consistent feedback to your employees.

Squeezing a year's worth of work and growth into one annual performance is a habit that needs to be dumped. Instead, give informal but regular feedback to your direct reports (TradePost, 12/11/14). Meet with your team members individually, ask questions, and offer advice where needed. Most important, make feedback a two-way dialogue that occurs regularly, not a one-way review that keeps employees in the dark about their work and performance.

Toss: Thinking that motivation is all about money.
Keep: Praising and rewarding employees.

Engaged employees who are truly invested in the team and the company are not just working for the money. Yes – compensating employees fairly is an important baseline for happy workers, but motivation is not all about money. A host of other factors contribute to employee engagement: recognition, appreciation, a purpose at work, flexible schedules, and a cohesive work team are just as motivating, if not more than, pay. Toss the tendency to focus on money and instead make sure to praise your team members as often as possible and reward them in unique ways that don't require bonuses (TradePost, 12/18/14).

Toss: Micromanaging your employees' process.
Keep: Monitoring the results they produce.

Scrub away the habit of looking over your employees' shoulders. Micro-managing will only stress out your team members and create an environment of distrust. When possible, let your employees have autonomy in their duties, make decisions, and determine their own process. Maintain accountability by monitoring results and consistently discussing the methods that work and those that did not and mutually agreeing on any needed changes in the future.

Toss: Avoiding discussions on poor performance or bad behaviors.
Keep: Setting clear expectations.

Discard the tendency to avoid a potentially awkward performance discussion. Some employees simply are not performing up to standards, and although you may dread the conversation, it is your job to have it. If you have team members who don't meet deadlines, sport a snotty attitude, or turn in work that is not acceptable, then it's time to give your employees feedback they may not want to hear (TradePost, 8/7/14). If you don't address the behavior, the situation can't improve and might just get worse. Continue to set clear performance expectations with all of your team members, whether new hires or long-term staff. An employee not meeting standards may not even know that they're under-performing if they haven't been given a clear outline of what's expected of them (TradePost, 3/6/14). Without clear expectations, there can be no accountability for behaviors or actions.

Managers, which of your habits could use some spring cleaning? Comment and let us know.

Still Working at 100? Not Going to Happen.

The common vision for retirement used to be plenty of leisure time spent perfecting your golf swing or visiting your grandkids. For many Baby Boomers, retirement may mean not retiring at all but continuing to work well past their 50s and into their 60s and even 70s. The Wall Street Journal has even speculated whether retiring at 100 could be the new normal, and the AARP told a picturesque tale about a 70-year-old woman who came back to the workforce as an HR Director.

However, stories like these may be painting too pretty a picture. Some 53% of workers over 60 are putting off retirement, and 75% of these say that they are staying in the workforce because their finances have yet to recover from the 2008 downturn -- not because they're afraid of getting bored or not knowing what to do with unlimited leisure time. Some 12% of older workers don't think they'll ever be able to retire (Fortune, 2/18/2015). Delayed retirement is less a choice to continue to be engaged in meaningful work and more a necessity to remain solvent and avoid personal financial collapse.

Although the average retirement age has increased over the years, the average age for men has held steady at 64 since 2008, which is not a large leap from the average age of 62 in 1985 (Market Watch, 2/18/2015). Most Baby Boomers are not continuing to work past the average retirement age; only about one third of Baby Boomers over 67 are engaged in the workforce in some capacity (Gallup, 1/26/2015). Those that do continue to work do so out of financial desperation. Near-retirees over 55 years of age, on average, have about $165,000 in their defined-contribution plans (Fidelity, 2/13/2014). And those estimates are optimistic; more dire research estimates that 75% have less than $30,000 (Schwartz Center for Economic Policy Analysis, 7/3/2012). Even 401(k)s at the higher end of the spectrum will not sustain Baby Boomers through 20+ years of retirement. With pensions plans outside the public sector essentially nonexistent and average social security benefits at $1,294 per month, about $15,000 per year and not far above the poverty line (Social Security Administration, 4/2/2014), those considering retirement are finding it increasingly attractive to try and stay in the workforce.

The feeling is not always mutual for employers, however. Many companies blatantly advertise that they are looking for "young," "fresh," "energetic" employees. The tech industry especially is notorious for age discrimination, and many are unwilling to hire "graybeards." Mark Zuckerberg has claimed that "young people are just smarter," and a Santa-Clara-based IT services company recently used the phrase "We Want People with Their Best Work Ahead of Them, Not Behind Them" on their careers page (now removed). Even outside of tech, few companies are eager to higher older workers. Workers in their 50s who are looking for a job are 20% less likely than their more youthful counterparts to be hired; when they are, they earn 15-20% less than in previous jobs (CNN Money, 2/23/2013). In addition, some companies use methods to push Baby Boomers toward retirement; isolating aging workers, cutting job responsibilities or working hours, and denying promotions are all subtle ways to move out older employees.

Employers should think twice though before pushing out their older workforce, and not just to avoid a discrimination claim. When Baby Boomers exit, companies often don't understand the loss until after their tenured experts leave. Retirees take institutional knowledge, influential relationships, and honed capabilities out the door. Losing the intangible expertise of aging workers could come with a price tag of up to 20x higher than the typical hiring and recruiting costs (Harvard Business Review, 12/2/2014). Baby Boomers have maturity and knowledge that younger workers can lack, and forcing them out of the workforce if they want to keep contributing is a costly error on the part of organizations.

Retiring from the workforce may be viewed as a choice, but for many Baby Boomers, age discrimination and illness may force them into retirement and an uncertain financial future.

Readers, is delaying retirement the new normal? Comment and let us know.

February Jobs Report

February continued the trend of strong job growth. The U.S. economy added 295,000 jobs, and the unemployment rate edged down to 5.5% (Bureau of Labor Statistics, Employment Situation Summary). The number of long-term unemployed persons was essentially unchanged at 2.7 million, accounting for 31.1% of the total unemployed. Despite impressive job growth, wages continue to remain sluggish as average hourly earnings gained only 0.1% month-on-month.

In February, job growth saw the most expansion in food services ( 59,000), professional and business services ( 51,000), construction ( 29,000), and health care ( 24,000). Temporary help services saw little change from last month but was 5.2% higher than in February 2014.

The High Cost of Low Wages, Part 2

This is part 2 of our series dispelling the myth that a company's profitability depends on rock bottom pay. To read Part 1, click here.

Since the Great Recession, low pay and stagnant wage growth have been the new normal, but Walmart's announcement that it will be giving a raise to 40% of its workforce hopefully signals that earnings are set to increase. Higher wages are obviously an advantage to employees, but they also benefit the companies that employ them. Organizations that offer paltry pay could be forced to increase wages in order to stay competitive. This trend is already playing out as TJX, which owns a variety of retailers, including TJMaxx, Marshalls, and Home Goods, announced immediately after Walmart that it will raise workers' base pay to $10 by 2016.

Any company offering higher wages is not doing so out of altruism; they have competitive pay because it is profitable for their organization. Livable wages attract more talent, increase worker productivity, reduce turnover, and at the end of the day add to a company's bottom line.

When a company offers higher wages, and especially when they are early adopters of higher pay in their industry, they will attract a higher quantity and quality of applicants. Last year when Gap announced that it would raise its minimum wage to $10 an hour, the amount of applications rose 10% (Bloomberg Business, 6/24/2014). Organizations that offer higher pay are rewarded with an applicant pool that has a higher IQ and with personality scores and motivation that make them a better fit for advertised jobs (Peterson Institute for International Economics, 1/13/2015). Walmart's choice to increase wages before other major companies such as Target and McDonald's positions it to attract and retain more qualified employees from a talent pool that is becomingly increasingly competitive and desirable. The low-wage model may reduce the cost of labor but does not do any good for a company's costs overall. Currently, about 44% of Walmart's 2.2 million hourly staff turns over each year (Bloomberg Business, 2/23/2015). Finding, hiring, and training replacements even for low-wage workers costs about 16% of an employee's annual earnings, and when nearly half of your hourly workforce is jumping ship, those costs quickly add up. With falling same-store sales and two straight years of stagnant earnings, Walmart is being forced to change its business model that is no longer sustainable in a tightening job market.

Many other retailers have already mastered the lesson that Walmart and other companies are just learning. At Trader Joe's, starting pay is $40,000; employees at Costco make on average $21 per hour; and staff at The Container Store make an average of $50,000 per year (USA Today, 10/17/2014). Costco's turnover rate is 17% overall and that number plummets to 6% after one year of employment (Bloomberg Business, 2/23/2015). All of these organizations operate in a competitive marketplace and refute the idea that retailers must pay measly money in order to make profit. Their happier, more productive employees also provide better customer service and more satisfied, loyal clientele. QuikTrip, a Fortune 100 convenience store and gas station chain, pays an entry-level salary of around $40,000; it's turnover rate is 13% (compared to 59% for the top quartile of the convenience store industry), and its per square foot sales are 50% higher than the industry average (The New York Times, 3/21/2014).

It is a myth that companies, especially organizations in low-margin industries, must constrict wage growth in order to remain profitable. Especially as the economy strengthens and competition for talent increases, companies must consider offering better pay if they want a more talented workforce, more loyal customers, and a stronger bottom-line.

Readers, do you think more companies will raise wages as the economy improves? Comment and let us know!

3/23/15 Update: On March 18, Target followed Walmart's and TJX's lead and announced that the company would be raising the starting pay of its workers to $9 an hour in April and $10 an hour by 2016. The decision will affect the pay of 500,000 employees.

4/2/15 Update: Fast food giant McDonald's announced on Wednesday that it will raise wages for employees that work at locations that it owns and operates. The company will raise wages at least $1 over local legal minimum wage for workers, to an average of $9.90 an hour by July 1. The increase in pay will only apply to those workers at the locations under corporate control, affecting about 90,000 employees. The decision does not apply to the 750,000 employees who work for the McDonald's franchisees. The pay increases come even as the company faces sagging sales.

Walmart Raises Wages and So Should You, Part 1

Last week, Walmart announced that it would be giving a raise to 40% of its workforce. About half a million employees will see their hourly wages rise to $9.00 in the next six months and $10.00 by 2016, well above the Federal minimum wage of $7.25 an hour. The company will be spending about $1 billion dollars in increased pay and revised training and promotion programs. Recently, many companies such as Gap, Ikea, and health insurance provider Aetna Inc. have raised wages for their workers, but as the world's largest private employer, Walmart's decision to increase pay will be more closely watched and could have a larger impact.

Over the years, a job at Walmart has become synonymous with rock bottom pay. An unstable labor market and stagnant job creation made it possible for companies, including the retail giant, to consistently fill positions that had low pay and unsteady hours. In 2013, Walmart had 23,000 job applications for 600 jobs, with an acceptance rate of 2.6%; that's twice as selective as Harvard University (The Washington Post, 3/28/2014). In the years following 2008, low wages were an effective method to maximize profits. However, as an increasingly optimistic labor market continues to favor employees and job seekers, companies may no longer be able to sustain low wages.

In December, the percentage of people looking for work hit the lowest level since 2007. The economy has created more than 3 million jobs in three months; the number of available jobs posted by U.S. employers rose to the highest levels in 14 years; and job quits increased to 2.7 million, their highest level in six years, a sign of workers' confidence in the job market. Although the future of job creation looks sunny, wage growth has remained stagnant. Since 2012, pay has shrunk for people at almost all income levels with the exception of the bottom 10%, which have seen higher wage growth due to state-sponsored minimum wage increases (Economic Policy Institute, 2/19/2015). However, any increase in wages does not do much good for workers since inflation is rising faster than the price of labor. The income for a typical worker today buys fewer goods and services than in 2006 (Pay Scale, 1/12/2015).

The trend of frustratingly stagnant wage growth could start to reverse as the economy continues to improve and the labor market continues to tighten. Walmart's move to increase hourly earnings has already turned the spotlight on other retailers who offer similarly low wages, such as Target and Staples. The wage hikes have also put a spotlight on food service companies like McDonald's, which has consistently been singled out as an organization that doles out rock bottom pay. Companies that could once offer low wages may be forced to increase pay in order to stay competitive, attract talent, and reduce turnover.

Raising wages is not just an advantage to the workers it benefits; it is also a boon for the organizations that employ them. Join us next week for Part 2 of our series and learn why all companies, not just Walmart, should raise their wages.the Benefits of Raising Wages.

Readers, do you think that companies should increase worker pay? Why or why not? Comment and let us know!

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