UNC Health Care is promising a $15 million thank-you to thousands of employees.
The Chapel Hill health care organization said Tuesday it will increase its minimum wage to $15 an hour in the Triangle, a move that will ultimately boost the pay of some 9,000 employees, nearly a third of its total workforce. The organization owns or operates 13 hospitals and employs about 30,000 people.
But UNC Health Care’s beneficence is currently limited to the Triangle, where UNC Health Care employs 21,500 people.
The health care system’s statement said the Triangle’s “higher cost of living, strong job market and competition for talented co-workers are key factors in the decision to make a living wage adjustment now.”
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“Discussions about living wages at other UNC Health Care entities outside the Triangle are currently underway,” according to the statement.
UNC’s decision is part of a national movement to pay a “living wage” to hourly-wage workers as a public commitment to corporate responsibility. In July the state legislature raised the minimum wage to $15 for most state employees, becoming the first state to set the minimum at that pay level. The state and federal minimum for businesses is $7.25 an hour.
Other organizations have independently announced across-the-board raises in North Carolina for low-wage workers. In July, Duke University, Durham’s largest private employer, increased its minimum wage to $14 and plans to raise it again to $15 in July 2019. Wake Forest Medical Center raised its minimum wage to $12.50 an hour last month, and Novant Health in Winston-Salem did the same in August.
The minimum amount someone needs to afford food, health care and other essentials can vary significantly, according to MIT’s online living wage calculator. The living wage in Raleigh ranges from $11.73 an hour for a single adult to $35.07 an hour for an adult with three children, the MIT calculator estimates. And the results it produces show that living expenses are slightly higher in Raleigh than most parts of the state.
But raising the minimum wage has its detractors, who warn that forcing companies to pay a higher minimum wage results in fewer workers getting hired. Some critics discourage interfering with normal free market dynamics, while others say there are better ways of helping lower-wage workers, such as government subsidization of wages through housing vouchers and food stamps.
A University of Washington study in 2017 concluded that a Seattle wage increase to $13 an hour reduced the total hours worked in low-wage jobs by about 9 percent as employers adjusted to meet their budgets. As a result, Seattle’s minimum wage ordinance had the effect of lowering low-wage employees’ earnings by an average of $125 per month in 2016, the study’s authors concluded.
“The majority of studies over decades have found setting a minimum wage lowers the employment of lower skilled workers,” said N.C. State University economist Michael Walden. “An alternative — not ever used in the U.S. to my knowledge — is a government wage subsidy. Here government would directly add to the wage rate of workers earning below some level. A key difference is it is publicly funded, whereas the minimum wage is paid directly by businesses.”
Mark Overbay, founder and president of Big Spoon Roasters in Durham, said he can understand that some industries would respond to a higher minimum wage by cutting hours to minimize their overhead. But he said his 10-employee organization is built on a sustainability ideal that pays premium costs to suppliers and builds those expenses into the employee compensation model, which starts out workers on a living wage of $13.75 an hour.
“One of our core values is to attract the best people,” Overbay said. “We want to provide a great standard of living to the people who make the food we sell.”
Overbay said Big Spoon Roasters doesn’t have to cut back on hiring or on employee hours, because the company’s values are part of what it sells. The commitment to a living wage, health insurance and other employee benefits is intended to appeal to customers, who are supporting a shared value system by buying Big Spoon Roasters’ handcrafted nut butters, Overbay said.
UNC Health Care plans to raise its minimum wage in two phases: to $14 an hour on Jan. 13, and to $15 an hour in July. The employees who will get the raises include housekeepers, cashiers, stock clerks and nursing assistants. No one employed at UNC Health Care in the Triangle currently makes less than $12 an hour, said spokesman Alan Wolf.
“We are committed to providing a competitive living wage to support our workforce,” said Dr. Bill Roper, CEO of UNC Health Care, in a statement. “We are proud to employ the best people to fulfill our mission of caring for patients and their families, and offering a higher living wage is an important step we are able to take.”
The pay raise will boost 3,750 employees to $15 an hour, but it will have a ripple effect on other workers in the organization. As the minimum-wage laborers move up the pay scale, their raises will push up the wages of employees higher up the ladder so that the organizational pay scale remains relationally intact.
UNC Health Care’s move will give the workers affected an average pay raise of $139 a month, or $1,667 a year. But those whose pay jumps from $12 an hour to $15 an hour, a 25 percent increase, will boost their annual income by $5,760.