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How Will Changes in Minimum Wage Laws Affect Your Contact Center Location Decisions?

How Will Changes in Minimum Wage Laws Affect Your Contact Center Location Decisions?

/ Strategy, Planning
How Will Changes in Minimum Wage Laws Affect Your Contact Center Location Decisions?

A Sponsored Article by NCS International.

According to the National Employment Law Project (NELP), the fight for a $15 minimum wage is a grassroots movement of low-wage workers that seeks to undo decades of wage stagnation and growing inequality by raising the wage floor to more robust levels ( www.raisetheminimumwage.com ). The movement, which began in New York City in 2012 when fast food workers walked out of their jobs to demand $15 and a union, has spread from coast to coast, shaping the national conversation around wages and inequality, and helping to push through dozens of state and local minimum wage policies.

This has significant implications and potentially huge budget impacts for many contact centers in the United States.

Twenty-nine states, plus the District of Columbia, have set their minimum wage above $7.25 per hour, including California and New York, which have raised it to $15.

According to the California Department of Industrial Relations, effective January 1, 2017, the minimum wage for all industries will be increased yearly. From January 1, 2017, to January 1, 2022, the minimum wage will increase to $15 for employers with 26 or more employees. This increase will be delayed one year for employers with 25 or fewer employees, from January 1, 2018, to January 1, 2023. The scheduled increases may be temporarily suspended by the Governor, based on certain determinations ( http://bit.ly/2jsnPPZ ).

In New York, Governor Andrew M. Cuomo signed legislation enacting a statewide $15 minimum wage plan and a 12-week paid family leave policy. The legislation was passed as part of the 2016-17 state budget.

The state budget included an increase in the minimum wage, ultimately reaching $15 an hour for all workers in all industries across the state ( http://on.ny.gov/2iQFBMb ).

  • For workers in New York City employed by large businesses (those with at least 11 employees), the minimum wage would rise to $11 at the end of 2016, then another $2 each year after, reaching $15 on December 31, 2018.
  • For workers in New York City employed by small businesses (those with 10 employees or fewer), the minimum wage would rise to $10.50 by the end of 2016, then another $1.50 each year after, reaching $15 on December 31, 2019.
  • For workers in Nassau, Suffolk and Westchester Counties, the minimum wage would increase to $10 at the end of 2016, then $1 each year after, reaching $15 on December 31, 2021.
  • For workers in the rest of the state, the minimum wage would increase to $9.70 at the end of 2016, then another 70 cents each year after until reaching $12.50 on December 31, 2020—after which will continue to increase to $15 on an indexed schedule to be set by the Director of the Division of Budget in consultation with the Department of Labor.

In several other states, advocates are actively campaigning to raise the wage floor to at least $12.

How much are hourly wages at your contact center? In many states if they are not at least $12 you might be in for a financial awakening very soon.

Consider these events, which occurred in 2016:

  • A total of 25 states and localities approved minimum wage increases.
  • 7 states (Arizona, California, Colorado, Maine, New York, Oregon and Washington) approved raising their minimum wages to between $12 and $15 per hour.
  • Three of these states passed minimum wage increases through their state legislatures and four through ballot initiatives.
  • 18 cities and counties approved minimum wage increases ranging from $10.10 to $15.

According to NELP, there are 13 states or local jurisdictions with active campaigns in 2017 to raise the minimum wage to $15 ( http://bit.ly/2j8KzVx ). Twelve of these states are listed in the table below. Washington, D.C., has been omitted as its focus is on “tipped workers,” and as such, call center workers are not included.

Ongoing or New Campaigns for 2017-2018:

If your center is located in one of these locations, or if you are even considering these locations, your budget process should more than likely prepare for increases in the next few years.

Only Wyoming and Georgia have state minimum wages lower than the federal, and therefore, the federal wage is recognized as the minimum wage. I would expect that these states will receive more consideration for contact center expansion projects.

The District of Columbia has the highest minimum wage at $11.50 per hour.

There are 14 states that have a minimum wage requirement that is the same as the federal minimum wage requirement:

Iowa New Hampshire

Idaho Oklahoma

Indiana Pennsylvania

Kansas Texas

Kentucky Utah

North Carolina Virginia

North Dakota Wisconsin

These states are probably safe, but should be monitored. In fact, one California company, Competitive Edge and Research, announced their move of 100 jobs from California to Texas in December 2016. CEO John Nienstedt noted that California’s rising wage floor was the main cause of the move (KVIA News, http://bit.ly/2ioIW3X ).

Alabama, Louisiana, Mississippi, South Carolina and Tennessee do not have an established minimum wage requirement (U.S. Department of Labor, http://bit.ly/2jNcrlb ).

These states will also receive increased consideration for contact center expansion, however, the impact of wages paid by the automotive manufacturers and suppliers, which are prevalent in these states, will need to be factored.

Bottom line is that since about 60% of your contact center costs are wages, you will need to be more deliberative in factoring the impact of minimum wage laws on your location decisions.

To find out more, visit the U.S. Department of Labor website, and click on the interactive map for information in your state ( http://bit.ly/2jNcrlb ).

About NCS International

NCS International specializes in site selection for Customer Service Operations, Call Centers, Back Office Operations, Regional Headquarters and Data Centers.

NCS International provides strategic location planning, multi center alignment, incentive negotiations and workforce development programs.

James R. Beatty

Jim Beatty is President of NCS International.

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