Wednesday, March 11, 2015

Behind the hype over Aetna’s minimum wage boost

$16 – is 16 the new $10.10??

While a firm’s decision to increase pay for lower-wage workers should certainly be applauded, it also begs the question: Why is the decision to pay workers $16 per hour breaking news?

My answer: because of the message it sends to investors and shareholders.

Business leaders are undoubtedly influenced by their investors and shareholders. Aetna made the business case for investing in their employees by committing to reduced turnover costs. Unfortunately, for some investors, a firm’s employees are viewed as liabilities instead of assets.

… Mark Bertolini took a bold stand by raising the wage floor to $16 an hour. Roughly 12 percent of the company’s U.S. workforce will directly benefit. In making this change, Bertolini made a larger point: these are the people that Aetna counts on to serve its customers. It is his belief that reducing turnover and improving the quality of customer engagement will yield significant returns on the estimated $14 million that these changes are expected to cost Aetna in 2015.

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