Higher Minimum Wage & New Overtime Rules – Predictions of Robots, Chaos and Calamity

Posted by Gerry Poe on May 31, 2016

 

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The first minimum wage was $0.25 per hour (equivalent to $4.18 today) and affected about 20% of the entire labor force. In 2012, according to the Bureau of Labor Statistics, there were 74.6 million workers over age 16 who were paid an hourly wage. Of this group, about 4.7% or 3.5 million were paid the minimum wage or lower.

Arguments about the benefits and potential chaos are presented in the news and has become a part of the politicians campaign rhetoric.

Robots are cheaper

“I was at the National Restaurant Show yesterday and if you look at the robotic devices that are coming into the restaurant industry -- it’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries -- it’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe,” said former McDonald’s (MCD) USA CEO Ed Rensi during an interview on the FOX Business Network’s Mornings with Maria. – Ed Rensi

Since Pizza Hut and Mastercard have announced Pepper the Robot has been hired to greet customers and take orders, robots may not be such a crazy idea.

Inflationary

increasing wages by such large amounts would only cause inflation. In order to stay in business, struggling businesses would have no choice but to increase prices so as to make enough of a profit to pay their employees more. The aftermath of these higher prices will only result in more demands to increase the minimum wage. The inflation caused by increasing the minimum wage would be detrimental to all consumers. - Gabriel Karam

Doom and gloom predictions are wrong

Dr. Douglas Kinnear, a professor of economics at Hastings College has been crunching the numbers recently released by the Bureau of Labor Statistics.  Is a doom and gloom prediction related to higher minimum wage accurate? 

This special report tells the story via... KHGI-TV/KWNB-TV/KHGI-CD-Grand Island, Kearney, Hastings

How about a boost to economic growth?

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The conclusion from these calculations are that minimum wage increases, even if completely spent, would not be very significant. Therefore, the economic benefit “argument” is a red herring. – Mike Patton, Forbes Contributor

Minimum wage increase leads to less people on welfare programs

A new study that found federal and state minimum-wage boosts have had no statistically significant impact on working-age adults’ net use of several such programs, including Medicaid and the Supplemental Nutrition Assistance Program formerly known as the food-stamp plan.

The study, partly funded by the Employment Policies Institute, contends a $15 minimum wage is poorly targeted to recipients of these programs. Among those who would be affected by a $15 minimum wage, just 12% are SNAP recipients and just 10% are Medicaid recipients. – Melanie Trottman - WSJ

The CAP report, which was written by University of California Berkeley researchers Rachel West and Michael Reich, is the latest in a line of research highlighting the connection between low-wage work and government support programs.

Last year, a report done by researchers at Berkeley and the University of Illinois asserted that taxpayers are spending nearly $7 billion a year to supplement the wages of fast-food workers, many of whom earn the minimum wage or close to it.

 “What is the best way to make people independent and be able to sustain their standard of living without having to depend on government support?” “It turns out that raising the minimum wage helps make people more independent while saving the government money.” - Michael Reich

THE “OTHER MINIMUM WAGE”

New federal overtime rules will impact the payrolls of thousands of small business owners across the United States.  The Labor Department last updated overtime regulations in 2004, when it set the weekly salary level at $455 a week, or $23,660 annually.

Employers have until Dec. 1 to pay salaried workers a minimum of $913 a week or begin paying overtime. ($47,476 annually)

$913 / week = 30 hours X $30.43/hour

$913 / week = 40 hours X $22.85/hour

$913 / week = 50 hours X $18.26/hour

$913 / week = 60 hours X $15.21/hour

$913 / week = 70 hours X $13.04/hour

The new regulations raise the minimum annual salary for overtime-exempt employees

from

$23,660 annual salary

To

$47,476 annual salary.

The Department of Labor estimates the changes will affect 211,000 small businesses and their 1.8 million employees.

Small businesses with at least two employees and annual sales of $500,000 or more are required to comply with Fair Labor Standards Act overtime regulations. Companies with salaried employees like assistant managers or office administrators now face a tough choice: Meet the higher minimum salary, or switch certain employees to hourly pay with overtime.

Earning more than $47,476 won't automatically exclude exempt-employees from overtime.

Note:

Just because a salaried employee earns more than $47,476 doesn't mean they can't earn overtime pay. Highly compensated employees who pass a minimal duties test are exempt. Under the new rules, the salary minimum for highly compensated employees increased to $134,004, from $100,000.


Regardless

Regardless of how much or how quickly the wages are increased, it has become very apparent that leaping forward with efficiency and productivity must be part of a plan.

Everyone has experienced the frustration of not being able to find specific documents or files with the answer to an important, pending question.

“IDC has estimated that the typical enterprise with 1,000 knowledge workers wastes $2.5 million to $3.5 million per year searching for nonexistent information, failing to find existing information, or recreating information that can't be found.” (Source: IDC)

“The typical enterprise with 1,000 knowledge workers wastes $2.5 million to $3.5 million per year searching for nonexistent information.”

BAE Systems conducted a study that discovered that 80% of employees waste an average of half an hour per day retrieving information, while 60% are spending an hour or more duplicating the work of others. (Source: “Show me the Money, Measuring the Return on KM” Knowledge Management)

With the impending changes in wages that will be dictated by new regulations, our experts believe there is opportunity and more importance than ever to create efficiencies and avoid being a victim of required wage hikes.

Here are simple questions to ask when considering time for administration and documentation:

  • How many people in your organization handle paper documents?
  • How many times does each person retrieve or file a paper document per day?
  • How long does it take to retrieve a paper document?
  • What is the average hourly wage or salary of those staff members?
  • How much time does each person spend making copies per day?
  • How many paper copies are generated per day?
  • How much time does each person spend filing per day?

For off-site storage

  • How much do you spend on off-site storage per month?
  • How many hours are spent per month accessing this offsite storage?
  • How many file cabinets do you maintain and could this space be used for other purposes?
  • How much do you spend on filing supplies per month?
  • How much do you spend on overnight delivery services per month?

With an assessment, you can calculate document handling costs and storage expenses, and generate a realistic estimate for your document expenses today.

Using this data, you should be able to compare your current document handling methods with a document management system. Measuring the effectiveness of a document management solution requires that you realistically think about the departments it will impact as well as the number of employees and the value of their time.

After 25+ years of helping small and medium sized businesses tackle these types of issues, create new processes and implement new document management systems. Our team understands that issues can be more complex than what is seen on the surface. We understand the sensitivities of team culture and morale when making changes and consider how to integrate technologies and processes to create win-win-win scenarios.

We partner with Dash Development Group to ensure your systems not only reduce waste and improve efficiencies, we ensure world-class security of your document management system.

Please contact us to learn more about how to avoid becoming a victim of the wage regulations. There is special pricing until June 30th for Dash DDX and we would appreciate the opportunity to show you how it can work for you.

Learn more here.

 

Topics: Paperless Office, Document Management, Government Regulations, News, Productivity

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