Wage Compression – What’s Next?

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At the June Honest Weight Food Co-op (HWFC) Membership Meeting, Member-Owners strongly supported meaningful action to address the issue of wage compression, both in their verbal remarks and in the post-cards they dropped off with designated staff representatives before leaving the meeting.

Wage compression is the unwelcome impact of the new minimum wage for employees and new hires. On December 31, 2018 New York State will require most employees to be paid no less than $11.10/hour in Albany County. (The amount varies across the state – see further information here: https://www.labor.ny.gov/workerprotection/laborstandards/workprot/minwage.shtm).

HWFC’s wage policy has been to pay employees at least $1/hour more than the state’s minimum wage. When the new state wage requirement takes effect, Honest Weight’s minimum wage will be raised to $12.10/hour, in accordance with HWFC’s wage policy. Those employees currently earning less than $12.10/hour will see their pay increased in 2019. However, without providing comparable wage increases for those currently earning more than $12.10/hour, some of whom have been long-term HWFC employees, their wage will be only slightly higher than that offered to new hires.

A higher minimum wage for existing and entry-level employees is a worthy and appropriate benefit.  Without a solution to this problem of wage compression, however, existing staff effectively lose the longevity and performance recognition that their previous wage increases were intended to provide; if they leave due to unfairly low wages, we lose experienced workers and the institutional history that goes with them.

June 2018 membership meeting. Photo by Barry Koblenz | BaseTwelve Photo

Martha Moscowitz, now an Associate in the Bulk Department, presented a reasoned and forceful argument for wage reform at the Membership Meeting, in hopes HWFC can avert, or at least mitigate, the problems of wage compression.  She enumerated the HWFC values that call for a cure and described some ways to move ahead. Ms. Moscowitz’s suggestions included:

  • tiered wages for Deli and Housekeeping to improve employee retention where turnover is highest;
  • a focus on reform for those employees at the lowest end of the pay scale;
  • pursuing the Board’s offer to base bonuses on number of hours worked, not a percentage of salary; and
  • a freeze on upper-level administrative salaries.

During the question and answer period and on post-cards deposited with staff representatives in the room, many additional suggestions were provided by an obviously engaged audience.

Some of these involved more significant wage redesigns, such as imposing a wage ratio (also dubbed “the Ben and Jerry’s approach”). By instituting a wage ratio, a limit would be placed on upper level salaries wherein the top wages could be no higher than the ratio allowed. That is, the highest salary (wage) would be capped at no more than a set number times the value of the lowest wage (e.g., four or five times). As an example, with a ratio of 5:1 and a minimum wage of $13/hour, wages would be capped for top earners just north of $130,000.

Another suggested change would introduce wage transparency.  This can occur in a number of ways, perhaps most commonly by listing the wage for each position in each department.   How such a list is distributed is also done in a number of ways.

All post-card suggestions were collated with the results published in the Inside Scoop.  Here is the share of responses that favored the following alternatives:

  • 58% supported a wage ratio;
  • 75% supported wage transparency; and
  • 71% favored freezing upper level salaries.

To guarantee continuation of any adopted reform, some in the audience suggested Bylaws amendments to codify the new approach.

The most significant challenge in addressing wage compression is how to finance increased wages. A large majority of meeting attendees who submitted post-card responses (over 80%) said they support close scrutiny and re-prioritization of the budget to find the necessary funds to address the issue. Many Member-Owners suggested specific money-saving ideas, including: charging for bags; decreasing coupons; reducing the marketing budget; and eliminating the café renovation and/or the security guard.

A Vision For Member-Informed Reforms

The Co-op Voice agrees reform is necessary and we believe the time to start the reform process is now. But, what to do? Where to begin? More information and informed discussion could point the way.  A task force created by either the Board or the Finance Committee could examine the money-saving ideas we heard at the Membership meeting and look for others. Our thought is that the task force would include Member-Owners and representatives from the Finance and Membership Committees, as well as past GRC members with working knowledge of the Bylaws. Instead of directly participating, Board members would await the task force’s suggestions, allowing a free sharing of all ideas. The task force report should also inform the Board of the likely costs and savings involved for each of the money-saving ideas provided.  A little history would help too. The task force report could explain how other co-ops have managed the wage compression issue, what money saving reforms they have adopted, and whether they have lost customers or if the goal to reduce waste and increase worker wages has won more shoppers. The task force report should be completed in time for its suggestions to be incorporated into budget preparation.

The Co-op Voice hopes the Finance Committee or the Board create the task force and provide it a work plan along the lines described here.  Obviously, looking for solutions to wage compression is a daunting challenge. Getting an early start, however, allows the Finance Committee more flexibility. The New York State-required minimum wage is scheduled to continue to rise to $11.80 on 12/31/2019 and $12.50 on 12/31/2020.  Perhaps we cannot solve this issue completely for the 2018/2019 budget year, but we must initiate actions that help us curb the compression issue sooner than later.

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Mollie Lampi became a Co-op Voice Editor in March 2018. She has worked in the Co-op Plants Department and as a courtesy clerk bagging groceries since 2016 when she retired from a 37-year career as a consumer rights and energy lawyer. She is a past-president of Upper Hudson Planned Parenthood and currently serves on the Board of the Friends of Voorheesville Public Library. She loves writing, gardening, running, reading and travel.