$70,000 Minimum Wage

This CEO decided on a $70,000 Minimum Wage: What minimum wage could we provide to our front line that would guarantee a better return?

A recent article in the New York Times highlights a CEO/Owner of a credit card payment processing center in Seattle who is experimenting with a $70,000 minimum wage. He currently has 120 employees. He read an article about how people that make less than $70K a year are more focused on paying the bills which distracts from their performance at work. He decided he would remove the distraction by paying everyone, including himself $70,000 a year.

I have always been an advocate for paying front line employees that engage with our most important asset, our customer, more money. It never made sense to me that the people that deal with our customers, who we supposedly treasure, or at least create the treasure, are entry level and paid the lowest salaries in the company. I started to think about the scenario if we paid our call center, inside sales agents, and customer facing staff a minimum wage of $50K. Some organizations depending on the complexity of the position already make respectable salaries but what about the typical call center employee?

One of the biggest issues in a call center is attrition. We spend a lot of money and resources hiring, training, and onboarding new employees. What if we raised the wage for our specific industry to 30% higher than our competition for employees in the area? Would it reduce our attrition and improve productivity? Would employees be happier, more engaged, and appreciate the fact that they are being paid top dollar in their field? Could the company survive or possibly thrive by attracting the best talent in the industry?

Based on interviews of the CEO in the New York Times article, he is experimenting with this wage increase but I think he may have made a few mistakes. Only time will tell if this works for his company. For example, if everyone makes the same wage no matter how they perform or what they do for the company, how long before resentment sets in from employees that work harder than others?  Will $70K become the expectation and lose its luster? Will people take for granted this generous gesture in time and then expect $90K as a minimum wage. Merit systems were created because over time they were the most effective driver of performance. Maybe things have changed in the workplace market and history and experience are irrelevant in today’s market. I doubt it but I respect the CEO for trying something different.

There are a lot of questions to be answered in this experiment but I think the CEO is on the right track if this is what he believes he needs to do as an owner to grow and maintain his business. I believe people respond differently to incentives and incentives can be used effectively to drive performance, especially sales performance. If we all make the same whether I sell 100 accounts a month or 10, how do you manage that discrepancy.

The increase sounds good, and it will be for the people that just received a huge raise. But what about the person who had earned her way to $75 - $80K; How would she feel?

In the call center I think this idea as a concept would make a great experiment. What do you think?