Several states have passed new minimum wage legislation for 2019 and beyond. Arkansas passed new minimum hourly rates of $9.25, $10.00 and $11.00 for years 2019, 2020 and 2021 respectfully. To compound the impact of higher minimum wage laws, the employment market is becoming more competitive in certain business sectors and organizations are increasing new hire pay to attract and retain competent employees. Also, the U.S. Department of Labor is considering releasing a new annual salary threshold for exempt positions later this year.
The above factors and several economic factors are pressuring organizations to address employee pay compression issues. We have experienced an increase in the number of client organizations that have asked for our expertise to address systemic and episodal pay compression situations.
Employees with three to five years of employment do not appreciate seeing or hearing of new employees receiving comparable or equal pay. Employees believe that their time with an employer and performance/results should drive compensation above salaries offered to new hires in comparable positions.
Addressing pay compression issues and situations includes research on organizational positions, current pay structure, employees’ time in positions, historical pay adjustments for performance, past increases to pay structures for COLA or market adjustments and other pay related decisions unique to each organization.
Addressing pay compression issues can be like working on a picture puzzle and as each piece is placed, the picture begins to form and eventually, the whole picture is realized and appreciated.