Why Should You Pay a Living Wage to Your Employees?

Why should you pay a living wage to your employees

Paying a living wage is only one part of improving your employees’ lives. If you want to learn more ways read our previous article Hierarchy of Employee Needs.

You should pay a living wage because it helps your employees concentrate on work, it improves employee loyalty, and improves your organization’s image. All these lead to happy employees, happy clients, and more sales! Read below to get all the details.

What is a Living Wage?

A living wage is based on a calculation of the costs of common living expenses. These are food, rent, childcare, fuel, transportation, and so on. The cost of these items is calculated yearly and then distilled down to what a person needs to earn per hour to be self-sufficient.

Living wage varies by location. If you live in a city, it may be higher or if you live in a small town or rural area it may be lower. The remoteness of your community is a factor along with things like the demand for housing near a large employer.

There may be an organization in your area that calculates the living wage. Here is the link to the Alberta Living Wage Network the organizationOpens in a new tab. that calculates living wages in my home province of Alberta, Canada. On it the 2022 numbers you can see that Canmore is $37.40 CAD per hour, Fort McMurray is $26.50 CAD per hour, and Edmonton is only $18.10 CAD per hour.

Canmore is a mountain vacation town just outside a national park where a lot of rich people have homes. Fast-food workers need to be paid $37.40 per hour to support themselves.
Fort McMurray is just south of the Alberta Oilsands where there are large employers, a home shortage, and it's remote. A fast-food worker here needs to make $26.50 per hour to support themselves.
Edmonton is the Province of Albert’s capital city. A fast-food worker in the capital only needs to earn $18.10 per hour to support themselves.

Higher Employee Concentration

An employee that is worrying about a bill or debt collector is not concentrating properly at work. Some industries rely heavily on employee alertness to avoid safety issues, accidents, and death. Customer service issues could have been avoided if the employee was not distracted by thinking of how to make extra money to pay for their child’s lunches next week.

It is not the employer’s direct responsibility to solve employees’ personal problems. Although, if employees have no personal problems, then the employer will benefit. What an employer has control over is how much they pay for someone’s time. Paying the living wage in an area will go a long way in helping your employees to concentrate at work.

Higher Employee Loyalty

If you want loyal employees, then the first step is paying them more. If an employee makes less than the local living wage, they will be looking for a higher-paying job. A low wage overshadows everything, even if you have a happy work environment with benefits and perks.

You want happy and loyal employees so they stay longer. The cost of being short-staffed is paid by overworking your current employees, which leads to burnout and more departures. The cost of hiring can be in the range of 25% of that person’s yearly income. These are hard to swallow, so why not prevent them by paying a living wage? 

Earn a full-tim income blogging in 24 months.

Improve Organization Image

What happens when you have employees that can concentrate and are loyal? Only good things!

Examples of good things may be:

  • better customer service,
  • happy clients,
  • better reviews,
  • higher productivity,
  • higher sales,
  • employees that are happy,
  • employees that give ideas more readily,
  • employees that participate better in brainstorming sessions,
  • employees willing to volunteer more,
  • employees okay with arriving early,
  • employees that are okay with staying late,
  • employees that work better as a team,
  • employees that stay with your organization long term, and
  • employees that spread good word of mouth about your organization even after they move on to advance their careers.

Next Steps

  1. Research your local living wage,
  2. Create a plan (that works for your organization) to increase wages,
  3. Let your employees know that you have a plan and ask for input, then
  4. Implement the plan.

A good HR Consultant can help you with this process, consider LBH Business Services Inc.

Ian Hopfe

Ian Hopfe is the owner of LBH Business Services Inc. in Edmonton, Alberta, Canada. Ian is an Indigenous Human Resources Consultant. He has over ten years experience in HR and over fifteen years experience in management. All blog articles on this website are written by Ian unless a guest writer is indicated on the post.

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