Loading

Aon Media Center

72% of Organizations with Minimum Wage Employees Do Not Pay Workers Above Minimum Wage
New Aon Research: Employees and Consumers Expected to Feel Cost Impact of a Minimum Wage Increase

LINCOLNSHIRE, Ill., Nov. 4, 2015 /PRNewswire/ -- Despite recent reports showcasing organizations that are increasing employees' pay above the minimum wage, new research from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), reveals that 72 percent of organizations with minimum wage employees currently do not have a plan to pay those employees above the mandated rate. Additionally, of those organizations, 59 percent reported they will not address any changes until minimum wage increases become law. In the interim, they plan to adjust wages, as needed, through current salary review cycles.

Aon Hewitt's survey examined responses from 135 major U.S. organizations that employ labor at minimum wage, and was developed to better understand how employers are likely to address the impact of a government mandated increase to minimum wage rates.

"The majority of employers are taking a 'wait-and-see' approach, and do not plan to make any changes until new regulations are issued and they assess the actions of their competitors," said Ken Abosch, broad-based compensation practice leader, Aon Hewitt. "Organizations are very sensitive about increasing one of their largest fixed costs and overall expense categories, and many of them simply don't see any advantage to increasing their labor costs at this time."

The remaining 28 percent of organizations that are taking actions before the required regulations expect doing so will position them as having a competitive advantage in attracting new workers (77 percent) and lowering turnover or increasing retention (76 percent).

Impact on Employees and Consumers
Whether organizations decide to voluntarily increase minimum wage, or wait for the government to put forth and pass a law, according to Aon, if minimum wage increases, the way compensation is administered will be impacted across the organization. Surprisingly, 49 percent of organizations reported they will adjust only those currently at minimum wage. Just 33 percent of employers say they would adjust those currently at minimum wage, as well as the positions above to continue to appropriately differentiate between levels, and minimize compression.

"Regardless of their approach, it is clear organizations will be faced with the challenge of having to counterbalance for the additional fixed costs that increasing wages will incur," said Abosch. "What organizations will choose to do will vary, but employees and consumers will likely feel the greatest impact. Nearly half (47 percent) of the actions organizations are actively considering to offset increased costs may actually undermine the value that an increased minimum wage was supposed to deliver to low income workers."

When asked how organizations are dealing with the cost impact resulting from increases in minimum wage, most responses revealed that organizations will push the burden down to employees by reducing or eliminating overtime (36 percent) or increasing prices (30 percent) for consumers.

What employers are doing

What employers are not doing

Increasing prices of goods or services (30%)

Shutting down or relocating operations (99%)

Lowering headcount (12%)

Decreasing bonus targets or funding (96%)

Using automation to replace work (14%)

Decreasing PTO (99%)

Hiring more part-time employees (19%)

Decreasing 401k contributions/matches (99%)

Redefining work (23%)

Outsourcing activities/jobs (98%)

Reducing overtime worked (36%)

Shutting down or relocating operations (99%)

About Aon
Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 69,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit: http://aon.mediaroom.com.

Further information 
For further information, please contact the Aon Hewitt PR team: Roxanne Pipitone, 847-442-1317 or Maurissa Kanter, 847-442-0952.

Follow Aon on Twitter: https://twitter.com/Aon_plc
Sign up for News Alerts: http://aon.mediaroom.com/index.php?s=58 

Aon plc (http://www.aon.com) is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 69,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit: http://aon.mediaroom.com.

Logo - http://photos.prnewswire.com/prnh/20100719/AQ37264LOGO

 

SOURCE Aon plc



If you elect to comment or engage with our content via third-party social media websites, you authorize Aon to have access to certain social media profile information. Please click here to learn more about information that may be collected when using these tools on Aon.com


email Email   print Print   rss