Human Resources in Health Care Management
Implementing the living wage policy aims at balancing the income among employees in an organization. This paper addresses the implementation of the living wage policy at Methodist hospital. The implementation would address wage disparity issues in the hospital and increase the wages of the minority groups in the hospital, mainly African Americans and Latinos. A living wage policy is a regulation or law that regulates employees’ income to ensure that their earnings are enough to experience satisfactory living conditions and ensures that less than thirty percent of the income covers rent or mortgages. Methodist Hospital’s jurisdiction had not implemented any living wage policy, resulting in wage disparities in the hospital. The evaluation coalition calculated the living wage policy, which considered the job duties, hospital tenure, experience, age cost of healthcare, childcare, transportation, food, and shelter of every employee. The impact of the living wage policy would be favorable since it would substantially benefit the lowest-paid workers in the hospital. The hospital would reconcile the living wage policy with the compensation system by incentivizing duties. Implementing the living wage policy is evidenced by financial impacts like increased productivity and reduced employee turnover.
Living wage policy implementation is an effort to balance the income among employees in an organization. The engagement of this policy at Methodist Hospital would level the playing field for all the staff members at the hospital. This strategy would address wage disparity issues in the hospital and increase the wages of the minority groups in the hospital, mainly African Americans and Latinos. Furthermore, given that the hospital was in the spotlight for wage disparities among the minority employees, it was necessitated to implement the wage policy. The policy was intended to balance the wage disparity based on the needs of each employee depending on where they live and their household needs. The policy will have significant implications on the hospital workforce since not all the employees will conform to the policy. Conversely, the redistribution of compensation in the hospital will result in the equitability of wages and reduce employee turnover rates.
Description of concept
Scholars and analysts describe a living wage policy as a regulation that mandates an organization or employer to compensate their employees with wages that coincide with the poverty line of the state or the nation or compensate them with wages that are slightly above the poverty line. In other words, a living wage policy is a rule that regulates the income of a full-time employee in an organization to ensure that their earnings are enough to provide for a family of four individuals. Additionally, the policy ensures that less than thirty percent of the income covers rent or mortgages. A living wage policy can also be described as the hypothetical wage level that enables families to cater to basic needs like shelter and adequate food. The policy aims at ensuring all employees have a standard life and are not living in poverty (Anker and Anker, 2017).
Implementation of the living wage policy in the hospital’s jurisdiction
Methodist hospital was among the largest hospitals in the city. In the history of its existence and operation, living wages had not been implemented in the hospital’s jurisdiction. The hospital would be the pioneer of the living wage policy in the city. The living wage policy was to serve as a remedy for the wage disparity in the hospital. The absence of the living wage policy in the hospital’s jurisdiction was among the causal factors of wage disparity at Methodist Hospital. Most of the employees lived in fear voicing out their concerns about the wage disparity. The divergence of skills in the hospitals and other organizations surrounding Methodist Hospital jurisdiction leveraged the lack of a living wage policy in the jurisdiction
The absence of living wage policies in the jurisdiction resulted in wage disparities in the organizations (Ford and Gillan, 207). For instance, the director of information technology at Methodist hospital earned ninety-eight thousand dollars annually while the dietary aide at the same hospital earned eight dollars per hour. Some employees lived below the state poverty lines since they were paid low wages, especially the supporting staff members. Due to the lack of regulation of income levels, some of the employees were paid peanuts reducing their productivity, consequently impacting the hospital’s productivity. Furthermore, the lack of strict wage regulations promoted systematic racial bias in the hospital, which extended for ten years. On the other hand, the lack of a living wage policy in hospital jurisdictions has led to the sustainability of jobs that pay below the poverty line in the hospital. Additionally, the lack of the living wage policy facilitated Methodist hospital to maintain a large staff employing the community members.
Calculation of living wages
When assessing the living wages for employees at the Methodist Hospital, the evaluation coalition considered the cost of healthcare, childcare, transportation, food, and shelter of every employee. Given that the employees resided in different locations, each employee’s residence was also a consideration when calculating their living wages. The evaluation coalition engaged the Living Wage Calculator designed by the Massachusetts Institute of Technology. Using the calculator, the team assessed the basic requirements of every employee. It formulated an estimated living wage of every employee-specific since the employees had different living standards.
Calculation of individual employee living wages accommodated the difference in residence, the size of the dependent family, and other factors like hospital tenure, job responsibilities, experience, and age. The calculation of living wages, including all these aspects, was to ensure that the policy adequately distributed the wages and every employee experienced living conditions that were standard and satisfactory (Prowse and lane, 2016). This action promoted equity of wages and ensured all the hospital employees lived above the poverty line. There are different approaches to living wage policy. The hospital could adopt the approach that mandates implementing different living policies in different departments to control the divergence of skills in different hospital divisions, which would cause reduced backlash from the employees. Another approach entails implementing the exact living wage policy requirements in all the departments in the hospital, which would spur a negative response from the employees due to divergence of the job description, experience, and duties.
Impact of living wage policy on employees
The living wage policy requires that all the employees’ wages are balanced concerning their basic needs, location of residence, and size of the family. Implementing the living wage policy at Methodist Hospital would reduce the wages of the highly paid employees to a level that enabled a satisfactory life standard and be within the poverty line. Similarly, implementation of the policy would also entail increasing the wages of the employees who are paid below the poverty lines. This wage increment would be to facilitate the employees provide for their whole family’s basic needs and provide utilities that promoted a satisfactory living standard.
Given that the living wage policy would accommodate the job experience, hospital tenure, work duties, and other critical factors, the impact of the living wage policy would be favorable. This is because it would substantially benefit the lowest-paid workers in the hospital, that is, the African American and Latino employees.
Reconciliation of living wage policy with the current compensation system
Given that the hospital was in financial distress and needed to make informed decisions regarding financial resources, the hospital management must be discreet with balancing the compensation system (Prowse et al., 2017). To meet the market requirements to attract and retain employees successfully, Methodist hospital can employ the living wage policy coupled with duty-oriented incentives that would calculate the bonuses based on the duties of every employee. This would maintain the equity of wages while providing incentives concerning every responsibility in the hospital attracting and retaining employees to Methodist hospital. Additionally, the management can reconcile the policy with the compensation system by offering perks like massages and end-of-the-year paid vacations, reducing the turnover rates, and encouraging hard work among the employees. This would make the living wage policy more attractive when the employees consider Methodist Hospital their employer.
The financial impact of living wage policy on organizations
Researchers have argued about the financial pros and cons of living wage policy on organizations. Living wage policy results in enhanced organizational productivity among the employees; for instance, in Methodist hospital, implementing the policy would make African American and Latino employees feel valued and equally compensated, which would increase their morale leading to increased hospital revenue stemming from increased employee output. Another financial impact of living wage policy is the attraction and retention of qualified employees. With higher wages set above the poverty lines, organizations can attract and retain employees efficiently. This reduced turnover could save the organization’s costs of training recruits and reduced productivity accompanying employees’ resignations. The organizations can monetize the increased productivity to satisfy all their customers to tighten their grip in the market while widening the profit margins. Since the living wage policy also entails reducing the wages of highly paid employees to maintain internal equity, the organization can monetize the reduced wages cost (Johnson, 2017).
In summary, a living wage policy is a rule that regulates the income of employees to ensure that their earnings are enough to experience satisfactory living conditions and ensures that less than thirty percent of the income covers rent or mortgages. Methodist hospital was required to implement this policy to address the wage disparity issues in the hospital that stemmed from racial bias, which significantly impacted the African American and Latino employees given that the hospital jurisdiction had no living wage policies. The hospital would reconcile the living wage policy with the compensation system by incentivizing duties. The implementation of the policy would result in reduced employee turnover and increased productivity.
Anker, R. and Anker, M. (2017). Living Wages around the World: Manual for Measurement, Edward Elgar Publishing, Sussex.
Ford, M. and Gillan, M. (2017). In search of a living wage in Southeast Asia: Employee Relations, Vol. 39 No. 6, pp. 903-914.
Johnson, M. (2017). Implementing the living wage in UK local government: Employee Relations, Vol. 39 No. 6, pp. 840-849.
Prowse, P., Lopes, A. and Fells, R. (2017). Community and union-led Living Wage campaigns: Employee Relations, Vol. 39 No. 6, pp. 825-839