Column: Prepare for a Minimum Wage Increase

Share this content:

There is regular talk in Washington about raising the minimum wage. This year is no exception, and though actions unlikely will match the rhetoric, change is inevitable.

In the past year, 21 states have had 166 proposed pieces of legislation targeting varying rates of minimum wage increase. Changing the minimum wage has many potential impacts and unintended consequences for the teleservices channel. Here are some:

No difference. Employees in teleservices already enjoy competitive wages, which on average well exceed the minimum wage and proposed increases. Though increased wages in industries that compete for labor causes obvious concerns, it is always possible that the 5.219 million people employed in the channel will see little direct effect. This scenario is unlikely based on historical trends when contact centers enter into wage wars in challenging labor markets.

Companies may decrease live operator use. When labor costs rise, a natural outcome is more automation. The U.S. consumer already has shown frustration with an inability to reach qualified, quickly available live operators. Increased labor costs will exacerbate this problem as companies try to maintain their cost structures by increasing interactive voice recognition and Internet self-service. Many companies will feel they have little choice amid rising investor expectations but to shift technology use to manage costs.

Renewed energy to send work offshore. Labor in emerging markets can be 15 percent to 20 percent of the costs in the United States. Though firms seek the best balance for onshore and offshore customer handling, the balance is tipped to offshore with every cost increase regardless of size.

Live operator service levels decline. Pressure already exists to improve customer service training, speed and effectiveness for consumers. But if costs rise and companies still want to provide live operator service, we can anticipate longer hold queues and greater dissatisfaction as a result. Companies may cut back on training budgets as well.

If any of the options outlined above are used, the need for personnel decreases, so we will experience job losses. An unintended consequence of decreased live operator use or increased offshoring is the potential for more regulation and legislation. Consumer outcries concerning poor service, long wait times or offshore issues will be met with legislator and regulator focus. In essence, the same people who would create the problem by raising wages would try to solve the problem by placing more demands on business.

Efforts to thwart the legislative impetus for the wage increase will not hold it off forever. Firms need to consider what balanced approach of technology, right shoring and service provision will best serve their customers and their business. n

close

Next Article in Marketing Strategy

Sign up to our newsletters

Company of the Week

Since 1985, Melissa has helped thousands of companies clean, correct and complete contact data to better target and communicate with their customers. We offer a full spectrum of data quality solutions, including global address, phone, email, and name validation, identify verification - available for batch or real-time processes, in the Cloud or on-premise. Our service bureau provides dedupe, email/phone append and geographic/demographic append services for better targeting and insight. For direct mailers, Melissa offers easy-to-use address management/postal software, list hygiene services and 100s of specialty mailing lists - all with competitive pricing and excellent customer service.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here