Tight labor market demands competitive pay

By Mary MacDonald

The minimum wage increased in Rhode Island this month to $10.50 an hour, the second bump in two years.

For the estimated 20,000 to 30,000 Rhode Islanders working at a primary job that pays that mandatory floor, this meant an immediate raise.

But for many businesses whose pay ranges exceed the minimum, the tight labor market has demanded its own minimum wage.

The hourly rates advertised by several Rhode Island businesses exceed the state minimum. Businesses say they are doing so because they are either having difficulty filling openings or want to remain competitive.

Among a recent sampling in online ads: Seven Stars Bakery in Pawtucket, seeking a part-time box truck delivery driver for $15 an hour; All About Home Care, which employs caregivers, hiring for numerous positions in Newport and Bristol counties in the range of $11 to $16 an hour; Inskip’s Warwick Auto Mall, seeking lot attendants at $11 to $12 an hour.

Michael Arena, owner of the popular West Side Diner in Providence and several other restaurants and diners in Rhode Island, recently placed an ad for a kitchen expediter that called for a $15-an-hour rate.

It wasn’t largesse, or kindness, but a necessity. No one would likely take or commit to the job if it paid the minimum, Arena said. The position is on weekends, when the Westminster Street diner is busiest, from 8:30 a.m. to 2:30 p.m.

“It’s not about how much you’re getting paid an hour, it’s how much is it worth” over the week, for an employee to commit to a 15-hour-a-week job, he said.

“If I can find the right people, $15 an hour is worth it for me,” he said.

While business organizations have opposed minimum wage increases as being difficult for small businesses, in a tight labor market, small businesses will increase their pay rates to remain competitive, said Dan Horne, an associate dean and a professor of marketing at Providence College. What is happening in Rhode Island among employers paying more is a product of low unemployment and a strong economy.

“If you want good people, you pretty much have to pay them. If you don’t, somebody else will,” Horne said.

Amazon.com Inc. recently pushed its minimum for all employees to $15. But that is not likely putting much pressure on businesses in Rhode Island, Horne said.

And Massachusetts, which pays $12 an hour, is only going to attract workers who live right on the border.

Although a 40-cent increase for Rhode Island sounds substantive, Horne said, it isn’t when carried across a 40-hour workweek. “Do the math. That’s 16 bucks a week,” he said.

“It just helps them keep up with inflation,” Horne said. “Their rents are probably rising faster than their wages.”

“If you want good people, you pretty much have to pay them. If you don’t, somebody else will,” Horne said.

Amazon.com Inc. recently pushed its minimum for all employees to $15. But that is not likely putting much pressure on businesses in Rhode Island, Horne said.

And Massachusetts, which pays $12 an hour, is only going to attract workers who live right on the border.

Although a 40-cent increase for Rhode Island sounds substantive, Horne said, it isn’t when carried across a 40-hour workweek. “Do the math. That’s 16 bucks a week,” he said.

“It just helps them keep up with inflation,” Horne said. “Their rents are probably rising faster than their wages.”

Massachusetts on Jan. 1 increased its state minimum wage to $12 an hour and will increase its minimum to $15 an hour by 2023. But that’s not putting as much pressure on Rhode Island businesses as might be imagined, Selle said, because at the same time, the Bay State is going to phase out a time-and-a-half requirement for Sunday and holiday work.

In a competitive labor market, which is now the case, he said, the company is constantly reviewing its wages and benefits.

The minimum wage increase will have an immediate impact for tens of thousands of Rhode Islanders who earn the lowest wages in the state.

The R.I. Department of Labor and Training uses a federal survey – the Current Population Survey – to estimate how many minimum wage earners work in the state.

The data indicated that in 2018, when the state’s minimum wage was $10.10 an hour, about 30,000 people earned between $10 and $10.50 an hour, according to Nora Crowley, a department spokeswoman.

The Economic Progress Institute, a Rhode Island-based think tank on economic policy, released a Standard of Need report recently that found a single adult in the Ocean State needs to earn $13 an hour to meet basic needs, including housing, transportation and food expenses.

Families with children need to make more than that, and represent almost 1 in 4 minimum wage earners, said Rachel Flum, the organization’s executive director.

The organization estimates 19,800 people in Rhode Island work at minimum wage jobs.

“We do still have a lot of low-wage workers in this state,” Flum said.

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