CWS 3.0: May 7, 2014

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Feds Fail to Lift Minimum Wage, But Efforts Are Not Dead

Legislation to raise the federal minimum wage to $10.10 in a series of steps was defeated last week in the U.S. Senate. However, some states recently opted to raise their minimum wages, and the mayor of Seattle called for a $15 minimum wage in that city. In addition, a lawmaker from California called for a $26 minimum wage.

Contingent workforce buyers could see higher costs along with minimum wage increases, but that effect may be muted. One reason is a majority of roles filled by CW managers are positions that are already paid well above the minimum wage, said Bryan Peña, vice president, contingent workforce strategies and research, at Staffing Industry Analysts.

“As expected, CW managers are looking at every way to contain costs, but when you look at the actual mix of skill sets purchased — 54 percent are IT, 12 percent are engineering/design — they are all positions that are usually above the minimum wage,” Peña said.

Industrial is the segment that appears most likely to have the most minimum wage positions, and only 19 percent of skills purchased are in industrial, according to the 2013 Contingent Buyer Survey by Staffing Industry Analysts.

Still, a higher minimum wage could also lead to wage escalation over time for all skills, Peña said.

The federal legislation to raise the minimum wage to $10.10 failed after Democrats fell five votes short of the 60 needed to move the bill forward on April 30, USA Today reported. The federal minimum wage is now $7.25 per hour.

However, efforts to increase the minimum wage are not dead.

President Obama in a speech said 10 states and the District of Columbia are moving to increase their minimum wages — including Hawaii and Maryland. Hawaiian lawmakers voted last month to raise the state minimum wage to $10.10 per hour in phases by January 2018. Maryland Governor Martin O’Malley signed a bill this week to raise that state’s minimum wage to $10.10 per hour.

And this month, Seattle Mayor Ed Murray announced an effort to raise the minimum wage to $15 an hour in that city. Businesses with fewer than 500 employees will reach a minimum wage of $15 per hour within seven years, and there is a compensation responsibility of $15 to be met in the first five, “which can be achieved by combining employer-paid healthcare contributions, consumer-paid tips and employer-paid wages,” according to plans. Large businesses with more than 500 employees would reach $15 in three years and employees who receive healthcare benefits will reach $15 in four years. Future increases in the Seattle minimum wage would then be tied to the consumer price index.

The city of SeaTac, Wash., already raised its minimum wage to $15 an hour, but it has faced challenges implementing it. In addition, Rep. Barbara Lee, D-Calif., said she supported raising the minimum wage to $26 an hour.

Although the federal government sets a minimum wage, states can set their own. Federal minimum wage law supersedes state laws when the state minimum wage is less than the federal. If a state minimum wage is higher than the federal, then the state minimum wage applies. For a listing of minimum wages by state, click here.