Can retailers afford NOT to pay $15 an hour, should be the question. There’s no doubt that a $15 minimum will put pressure on all retailers, but as more big brands move in this direction, the harder it will be for others to not pay the minimum. I do believe that wage increases will continue to be a contentious issue, especially post pandemic where the opportunities for workers will be even more plentiful.

Effectively the market is raising the minimum wage without the government. I don’t believe there are a ton of people waiting to apply for jobs solely because of unemployment benefits. I think most of the good employees already have jobs. The key is getting those parents who have had to stay home back in the workforce and, for now, looking at enticing people who have a job to take on a part-time job because of the wage increase. The pressure on all retailers to make margin should mean they will train those people they are paying $15 to create an exceptional experience and not bemoan the state of hiring right now. Business is good. Pay what you need to. Train them and hold them accountable. No Excuses.

With many retailers increasing their minimum wage to $15 and the current challenge to find new employees, most retailer will need to match the wages that other retailers offer. While the federal minimum wage hike may not get approved for some time, the marketplace will be the driving force for retailers to increase minimum wages.

There is a shortage of labor. Almost every retailer I’ve spoke to in the past month has a load of vacancies and is simply unable to fill them. They are offering perks, better pay, and bonuses to remedy this. Ultimately, better benefits and higher opening wages may be the only way to recruit and retain. However if this is the case it kind of negates the need for a federal minimum wage because the market is taking care of it without the need for government intervention.

Today the biggest hindrance is unemployment payments, which make it expensive to go back to work. In the near future, when these payments stop, it will become a “what is the going wage” issue. If every employer is paying $15/hour, you’ll have to pay that too. If lots of employers are paying less, then it won’t be a necessity. For now, labor competition is not being driven by wage levels per se but by government spending.

One of the issues retailers face is they are competing for employees that in many cases can earn as much or more by collecting unemployment. Over the past couple weeks, I have talked with retailers and c-store industry consultants who talk about the difficulty in recruiting even when offering wages at or close to the “magical” $15 hourly rate.

In almost every case they talked about having no issues in getting people to complete an online application, but it is a different story when it comes to prospective employees showing up for an interview. One example given to me was that a retailer received 100+ applications but only two people showed up for an interview. Retailers’ belief is people are using their application to verify that they are seeking employment to allow them to collect unemployment.

First, let us not be taken in by the companies that tout paying an “average” of $15 per hour versus a “minimum” of $15 per hour. Next, let us agree that setting wages is a complex model with multiple factors affecting the outcome. Retailers today are battling the stimulus package. When those benefits end there will be downward pressure on the minimum wage. Conversely, in the customer-centric environment in which we claim to be operating, retailers need better quality (trainable) and loyal (longer-term) employees to service those customers. Geography, the local economy and the basic cost of living also affect determination of wages. Not to be forgotten is competition against other retail companies in the operating neighborhood. It will have a further effect on determining wages. Finally, the impact of wages on net profit may well determine the wages or how lean a retailer wants to operate. These factors all have to be weighed.

Labor shortages were at work before the pandemic but worker pay is the elephant in the room. Now, as retailers attempt to flex workforces up en masse, labor shortages are hitting hard. For a long time, retailers said they couldn’t afford to raise wages until they did. Now fast food restaurants are having to compete with the better wages that some retailers are offering. The hard truth going forward is that if you can’t afford to pay workers a living wage, you don’t have a viable business model. As more retailers step up, pressure will mount to fall in line. Sometimes competitive pressure takes care of complicated problems.

I think we need to start paying associates a living wage. We need to make retail a career and not a transition to something else. You can’t afford to raise a family on $7.25 an hour. I believe full time associates earning a living wage with benefits and a chance for advancement will increase retail productivity and profits. Costco is a perfect example of retail altruism being a win for the customer, the associate and the company. This may be the perfect time to introduce technology like RFID. Many retailers are implementing RFID for inventory management but we are at an inflection point where RFID costs have dropped to pennies per chip — and many top suppliers are embedding them in the factory and the price of people is going up. Many RFID use cases at store level are now possible to speed up checkout, protect product from theft, speed markdowns, etc. So for wages, retailers are at the mercy of macroeconomics, but one of their key options for counterpunching is at the micro level:… Read more »

26 percent of the U.S. workforce will be 55 years old and older, compared to only 14 percent in 2002. That means that those retiring (approximately 10,000 per day) are leaving the workforce at a faster rate than those entering. The U.S. needs workers. With the growth rate hovering around 0.5 percent, the only answer is to increase immigration. Economic growth in mature countries is directly related to the population growth.

For retailers who can’t or don’t want to meet the offers of the larger retailers, they will never get the best and brightest workers. The leverage larger retailers have with wages, education, advancement and other perks may put smaller retailers in an untenable labor bind.

It’s not a surprise that workers are unwilling to return to low-paying jobs that offer unpredictable hours and long and potentially pricey commutes, without affordable child care options. The savviest retailers will respond by investing in associates and doubling down on training. It’s already working for some.

Working in retail is not easy: unpredictable hours; working nights, weekends, and holidays; working on the front lines with a sometimes hostile public. Paying these folks $15 per hour doesn’t come close to paying them what they’re worth – but it’s a step in the right direction.

This issue is incredibly complex, raising wages won’t fix the problem if the end result is seeing too many business fail, and yet today’s cost of living far exceeds wage progression. Low wage jobs were originally designed to offer teenagers and college kids part time income while attending school and living at home. The wage was low because the work didn’t require advanced training or skill and the worker presumably didn’t have to cover their own living expenses. Every QSR, grocery and retail store built their business around this low wage model. Asking them to change their business model overnight can mean bankruptcy — especially for smaller businesses. But conversely, this model is 20+ years old and desperately needs change. We’ve had three recessions and a pandemic, the cost of college has exploded, and more people than ever use low wage jobs as their primary income source to survive. We are going to need a multi-pronged approach to solve this problem. Government funding for businesses to phase in higher wages, more consideration about “can” vs… Read more »

Attractive wages and non-financial perks like health benefits give generous retailers an edge among scarce talent. Labor costs are expensive, especially in tandem with a year of massive expenditures for tech and logistics.

Now a $15 minimum wage is starting to emerge as a necessity to keep leading retailers competitive. More retailers will pay these rates to keep up with rivals, as we witness the corporate equivalent of peer pressure.

Honestly, ensuring that associates have a living wage is only part of the equation. Recruiting, training, and retaining employees needs to be the focus.

That said, if a $15 an hour wage is required — whether government-directed or not — retailers will need to optimize their operation to afford that investment. But again, if retailers cannot recruit or properly train associates, they certainly won’t be retained. This is a major pinch point across the retail landscape. I’m eager to see the creative ways retailers will address this issue.

As the economy grows there will be new opportunities for workers to find employment that provides wages that they can live on. Working three jobs to barely, if at all, be able to afford necessities is no longer an enviable situation. People want to work and they want to afford what they need to stay healthy. Typically that means housing, food and medical costs. I think the pandemic has made many realize how close to the brink many citizens are. Look at the long lines at food banks, for example. As long as the media highlights how people can provide for themselves and their families through employment with companies that wish to sustain their own growth and efficiency, retailers and other companies will fall into line and learn how to be successful while offering their employees the opportunity to manage their life’s needs.

Can retailers afford to keep paying associates less than $15 an hour? No! Here is how that will play out: hire them for less, get lower performance because they know that other retailers are paying $15, and probably will leave – problem not solved! Service will suffer, and eventually most will go to a competitor for the $15 Then where is the retailer afterwards? However with higher wages come larger expectations that staff must understand. Product presentations become part of the staff responsibilities as do generating ideas and always reporting on product and sales issues. Of course, it is all about the responsibilities of their particular role. And store owners: please don’t assume everything is a keystone mark up. You can’t, now with increased wages and other expenses in your world. Can’t easily increase margins? Try this: take products just received, and without telling anyone what the cost is, ask them what they think it should sell for. I’ll bet you’ll you will be surprised. Use your good judgment and focus on margin. It’s imperative!

To attract the best people to work in their stores, the market is indicating that retailers will need to increase their wages and benefits. For retailers with deep pockets, this won’t be an issue. For others, it could be the difference between being profitable, breaking even or losing money. It seems the writing is on the wall for where wages are going, which means retailers on the margins will need to find ways to stay competitive. This means looking for savings in sourcing, supply chains, rent, tech, etc. and increasing foot traffic, conversion rates and sales per square foot.

The $15 per hour wage is the new ante. It is the minimum benefit a retailer can offer. The challenge is, what other benefits beyond a minimum wage can a retailer offer to insure that it has a differential advantage when hiring and retaining staff? Simply paying the new minimum is no guarantee of hiring new employees. Retailers need to concentrate on those non-monetary needs of employees, like time off to attend school, family leave, health insurance, vacation, etc. In addition, the shameful federal minimum wage needs to be increased immediately.