Economic Development

Wisconsin State Journal | Emilie Heidemann

Madison-based American Family Insurance announced Wednesday the company is raising its minimum hourly wage from $20 to $23 as businesses across Dane County continue to grapple with workforce challenges amid the COVID-19 pandemic.

Its the second time in two years the company has implemented an increase, as American Family previously upped its base pay in early 2020 from $15 to $20, which affected 1,700 workers — including 350 in Madison. The company Wednesday also touted its benefits package, which it said has evolved to include flexible work arrangements, supports for working parents and “days off to recharge.”

The second raise affects 2,000 out of 13,200 employees at several American Family group companies, which besides its local headquarters includes Boston-based Homesite Group, Nashville’s The General, Florida-based Main Street America Insurance and CONNECT, located in DePere. Staff members who work in various roles, such as customer service, claims and administration, were told during a meeting Wednesday afternoon that their pay would officially increase in July.

The new rate, like in 2020, is meant to attract and retain talent as American Family continues to grow, chief people officer Tracy Schweitzer said, adding that the business has been minimally impacted by the hiring woes that have left no industry untouched.

The increased wage does not include contractors, food-service workers or custodians at American Family’s Madison headquarters, nor agents and their employees (agents are independent contractors), she said.

“Workforce attraction and retention are top priorities for companies across all industries right now,” said Greater Madison Chamber of Commerce president Zach Brandon. “Based on input from our business surveys and dozens of virtual industry meetings, many employers are … when possible, re-examining compensation and benefits packages and other workplace incentives to encourage employees to stay and grow.”

There were 10.6 million vacant job openings in the United States at the end of November 2021, according to U.S. Chamber of Commerce data, which was a record high. And there is fewer than one available worker for every job opening, the lowest the ratio has ever been.

Meanwhile, employers around Dane County like American Family pay well above the minimum pay rate set by the federal government, which has been set $7.25 an hour since July 2009. Since then, the figure has lost 14.8% of its purchasing power to inflation (in 2018 dollars), according to data from the AFL-CIO.

Madison biomedical giant Exact Sciences has in the last two years raised its $15 an hour minimum wage to $17, said company associate director of corporate affairs Scott Larrivee, “with increases based on shift, experience and other factors.” The company, known for its assortment of cancer tests both on the market and undergoing clinical trials, employs about 6,500 people.

About 3,500 of those staff members are based in the Dane County area.

“When evaluating (wages), we consider our total package of offerings, including financial, medical, time away and well-being benefits as we strive to remain a great place to work,” he said.

Last September, semi-trailer manufacturer Stoughton Trailers implemented pay increases for several of its employees, said marketing manager Ron Jake, adding the company staffs about 1,400 people, and plans to hire another 300 in the coming months.

Stoughton Trailers assemblers and painters had their pay increase to $18 and $20.25, respectively, up from $16 and $18.25. Welders also received raises, from $18 to $20 per hour, Jake said.

“We have had an incredible amount of business,” Jake said. “We needed to build our workforce to a higher level than what we had.”

The economic balancing act

The sooner a company raises its wages amid the COVID-19 pandemic, the more likely it is to recover once the health crisis ends, said Jason Fields, president of the Madison Region Economic Partnership.

Compensation increases encourage healthy competition in local employment marketplaces, Fields said, as people will ideally vie for the roles that suit their needs best. And more money in the pockets of consumers means more capital that flows through the local economy, said MadREP vice president of talent and education Gene Dalhoff.

But there’s a lot that goes into the implementation of pay rate increases, Fields said, adding that some businesses may want to do so but not have the proper resources or profits.

“There is a concern … you have what is called a wage price spiral,” Dalhoff said. “Wages go up and businesses and employers have to pass that onto consumers.”

That can come in the form of inflation, which causes price increases, he explained.

“We’ve seen other people in the area raise their pay,” Jake said of Stoughton Trailers wage increases. “We needed to also do that to remain competitive.”

Article originally posted on madison.com