High impact policy

Wages

Wage Gap

Issue: The gender wage gap is present in every occupational sector, at every level of employment. For low wage workers, the gender wage gap alone could pay for groceries for a family of four for a week. Workers of color experience an even greater disparity.

Possible Solution: Conduct an internal wage-gap analysis to uncover inconsistencies in pay. Work to close wage gaps for individuals whose performance, education level, skill and length of tenure are similar to higher paid individuals in the same role. For more information about this issue and possible interventions, visit our Pay Equity Resource Guide.

Salary History

Issue: When employers determine pay for new employees based on their pay from previous jobs, low-wage workers have less opportunity for wage growth.

Possible Solution: Use market averages rather than prior earnings to determine starting pay in that position. A best practice is to remove this question from the job application.

Emergency Costs

Issue: Low-wage workers can be derailed by one emergency cost, resulting in absenteeism which means lost pay for the employee and lost work for the
employer.

Possible Solutions: Allow employees a one-time borrowing of $500 against their paycheck. Explore working with local credit unions to co-sign on a loan with the employee, then take a set, affordable amount from their paycheck each week to put against paying back the loan.

Physical Paychecks

Issue: Some low-wage workers don’t have bank accounts, so they rely on checkcashing companies to cash their paychecks. Check cashing companies charge high percentages for their check cashing services, meaning that low-wage workers have to pay to get their wages.

Possible Solution: Consider partnering with a bank or credit union to assist new employees in setting up bank accounts for direct deposit. Negotiate with the financial institution for no fees or low fees on such checking accounts. Refer employees with negative banking histories to a workforce coach for assistance in improving credit. It is also possible to set up direct deposit to a re-loadable debit card or pay card that is not tied to a checking account. This is a good option for those employees who would find the fees associated with an account cost-prohibitive.

Wage Increases Only During Review

Issue: Workers see little advantage to gaining new skills if they do not translate into near-term increases in pay.

Possible Solution:

Consider small incremental raises of $0.05 or $0.10 given outside of the review period, on a quarterly basis or consistent with   development of new skills and increased productivity. Since turnover is frequent in low-wage roles, providing rolling opportunities for wage increases throughout the year incentivizes workers to stay. Alternatively, consider bonuses in lieu of salary increases. They do not add to the salary base for related employer costs and gives a concrete and immediate reward to the employee.