2021 US Wage Overview

Presentation by Mercer US Consulting (David Kopsch) focused on the results of Mercer’s 2021 US Minimum Wage Survey & Overview of Living Wage

Minimum wage earned per hour has been a topic of discussion since it was first created as part of the National Industrial Recovery Act of 1933. For understanding, wage is the money paid to a worker for each hour worked. The federal minimum wage is defined in United States labor law simply as “the lowest remuneration that employers can legally pay their workers covered by FLSA.i. It is important to note that many states have their own minimum wage laws and an employee is entitled to the higher of the two minimum wages.ii

According to the US Department of Labor as of 2019, 82.3 million workers age 16 and older in the United States were paid at an hourly wage rate for work performed. Among those paid by the hour, 392,000 workers earned exactly the prevailing federal minimum wage rate of $7.25 per hour. There were 1.2 million workers earning a wage below the federal minimum wage rate. Together, these 1.6 million workers with a wage rate at or below the federal minimum made up 1.9 percent of all ‘hourly’ wage workers.iii

Since the Fair Minimum Wage Act of 2007 raised the federal minimum wage rate to $7.25 an hour (implementation started in 2009), there have been several instances of legislation by the United States Congress to raise the wage further.

Many states in the Union have not waited and are not waiting for the United States Federal Government to increase the rate from $7.25 per hour. Seven states including Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Virginia, and the District of Columbia have passed legislation to increase their minimum rate to $15 or higher per hour over the next few years.iv.

In the past year, Mercer surveyed retail organizations three times on the topic of paying a $15 wage per hour. While many of the largest retail organizations are offering a $15 per hour wage rate across all its sites in both stores and warehouses and in more locations than California and New York, the market prevalence is to pay minimum wage or slightly above it.

In response, the opposition states that raising the minimum rate would hurt businesses and force companies to reduce their hiring and / or lead to closing their business. One more argument is an employer may resort to replacing people with robots and other digitally enabled ways to meet customer demand on cost.

When thoughtfully researched, analyzed and planned, leading organizations are able to prepare for changes in minimum wage in the same way as managing competitive wage and pay rates. Change is the new normal and the ability to embrace change is a skill to thrive.

Living Wage is a concept and name for locally-determined minimum hourly wages and appeared in the US around 1994. Today, Living Wage is driven primarily by company values and the desire to do the right thing for its employees.

Currently, there is no standard or benchmark for living wage setting or its implementation, as different calculation methods use different factors in the “cost of living bucket” and apply different assumptions and estimations. Setting a Living Wage is both art and science, and wages can very even across counties within the same metropolitan area – just as cost of living varies. Wage is rapidly becoming an area of focus for companies who aspire to provide all of their employees with a wage that covers the cost of basic necessities. Moreover, many global companies are working toward establishing a “global standard” for living wage that can be applied to all employees, regardless of their country or location.         

Speaker Bios:

David Kopsch (Co-Presenter: Minimum Wage)

David leads Mercer’s retail practice supporting clients on a variety of topics including total rewards strategy and organization design for developing a compelling employee experience. He works extensively with clients on developing compensation strategies for the wage-job employee. David is a WorldAtWork member and has their Certified Compensation Professional (CCP) and Global Remuneration Professional (GRP) designations. He has authored whitepapers such as Focus On The Future and Investing In Your Employees. David earned a Master’s degree in Contemporary European Studies from the Universidad Carlos III in Madrid, Spain through the Trans-Atlantic Masters (TAM) program at the University of North Carolina – Chapel Hill (UNC). At UNC, David earned a BA in International Studies for International Economics, Political Science and Spanish. He is native bilingual in English and Spanish.

David Lezotte (Co-Presenter: Living Wage)

Dan has more than 30 years of experience in the fields of Talent Management and Industrial-Organizational (I-O) Psychology, having held positions in consulting, industry, and academia. As a principal in Mercer’s Workforce Strategy & Analytics practice, he leads strategy and analytics projects related to talent acquisition and selection, leadership development (assessment development, validation and implementation), pay equity analysis, diversity measurement, strategic workforce planning, and business impact modeling of HR practices. Dan also services as a consulting expert in matters involving EEOC and OFCCP compliance, with respect to adverse impact in talent acquisition/management processes and practices.

Dan’s consulting engagements have cut across multiple industries including government and public institutions, financial services, technology, transportation, healthcare, higher education, pharmaceuticals, manufacturing, and retail. His prior experience includes an executive management position with a national ligation support and talent management consulting firm and a tenure-track faculty position in the psychology department at the Illinois Institute of Technology. 

Dan received his doctorate in I-O psychology from the Illinois Institute of Technology. His professional credits include publishing and presenting papers and workshops in the areas of compensation/reward systems including pay equity, assessment and selection processes, legal defensibility of HR programs (selection, promotion, pay), and HR analytic methodologies.

Joseph Ziomek

Joe is a Principal in Mercer Talent’s Los Angeles office. He joined the firm in July 2010 after receiving his MBA from UCLA’s Anderson School of Management, where he focused on Strategy and Human Resources.

Prior to business school, Joe worked in fine dining restaurants for five years, including as a sommelier at the world-renowned Alinea Restaurant in Chicago along with two years as General Manager/Wine Director of Quince Restaurant in Evanston. In his role as General Manager at Quince, Joe developed strong interests in organizational structure and behavior, innovative compensation practices, and business strategy, thus creating the foundation for a transition to a Human Capital consulting career.

Joe has completed two rotations in Mercer’s Canada market: a three-month stint in Toronto in 2013, followed by two months in Calgary in 2014. Joe also oversees campus recruiting for Mercer Talent North America and for Mercer Talent’s West Region.

Joe earned his B.A. in Psychology and French from Northwestern University in 2002.i