That’s right, at least ten of the States have already announced increases to their minimum wage hourly pay rates going into the new 2013 calendar year. If you have workers in any of these locations: Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont & Washington, be ready. Come January 1st of 2013, you’ll be dolling out more coin for employees that have been paid at, or near, the current minimum wage rates. Compensation costs already account for the single largest operating expense for most companies…and those costs are going higher.

The average increase going in to effect is 2.1%, with Rhode Island going up by over 2x that amount (up 4.9%).
Nine of the ten States that will be increasing their minimum wage rates, already have rates that are set above the federal rate of $7.25. With Missouri increasing their minimum wage rate up to $7.36/hour, we will have twenty States requiring wage rates higher than the federal mandate.

Nevada is not on the list to change currently, but they typically announce changes to be effective later in the year if they’re going to move at all.

So what do employers need to do?

• First, be certain that employees are paid the new rates from the first of the year going forward. If you’re worried about the increase costs of having to pay a little more for the hourly rates, just think of how ticked off you’ll be if you get caught paying less. Not at all worth the risk.
• Communicate the changes to both the employees and managers. Find your own positive spin to the message and make sure employees and managers alike know and understand what is happening, when and why. Also, you should be prepared to address questions from others about what is not changing, i.e, if an employee is already earning just over the new minimum wage, will they get an increase too? Organizations generally tend to avoid conversations with employees about pay…here’s your chance to get in front of something that can be a positive.
• If you’re using survey data in any of those markets for lower level jobs, be aware of the potential impact that these changes could have on your normal survey data aging assumptions. Most organizations we work with are applying aging factors between 2-4% which seems reasonable in this overall climate nationally. However, in those ten states, you can bank on the fact that every other employer is going to be increasing their wage rates up for all who are below minimum wage, again, on average 2%. You may need to tweak your aging factor assumption higher to remain competitive.

Happy New Year!