Note: Sources for this article varied in their use of
Hispanic vs. Latino. For simplicity, the term Hispanic has been used.
In this article, the term ‘Hispanic’ refers primarily to
immigrants from Latin America and their U.S.-born descendants.
Has Hispanic American income risen faster than any other in
The short answer is yes.
However, there are many asterisks to consider. The situation
is a complex one, made even more complicated by the economic impact of
Income Growth of Hispanic Americans
In a recent
Bloomberg opinion article, also picked up by Yahoo News, columnist Noah
Smith detailed the income growth of Hispanic Americans.
According to the article, from 2014 to 2019, Hispanics
logged greater income growth than any of America’s other main racial groups.
post by the Pew Research Center backs up this claim, noting that Hispanic
median personal income growth rose 5% between 2007 and 2017, vs. 3% for
Why is this happening now? Smith cites several reasons.
1.) Increased education for Hispanic children. In 2012,
Hispanic college enrollment rates exceeded those of Whites.
2.) Increased geographic mobility for Hispanic immigrants.
Recently, Hispanic immigrants have spread across the country, theoretically
giving them access to a broader range of social connections and opportunities.
This is all great news.
But what about those asterisks?
A Closer Look at Hispanic Income Growth
The Pew research article mentioned above explains that these
gains in income growth hide a more complex reality: a sharp disparity between
Hispanic Americans born in the United States, and Hispanic immigrants.
In 2017, foreign-born Hispanic incomes were 14% higher than
in 2007, but the incomes of U.S.-born Hispanics were 6% lower.
This means two important things.
First, increased personal income growth occurred mostly
among Hispanic immigrants, not U.S.-born Hispanics. The latter experienced
greater losses in the 2007-2017 period.
Second, demographic shifts, not the economy, are the main
cause of the income gains for Hispanic immigrants. This is also mentioned in
the Bloomberg article. A slowdown in immigration from Latin America led to an
increase in the percentage of Hispanic immigrants who have lived in the U.S.
for at least a decade. More-established immigrants usually earn more. Their
rising incomes gave a significant boost to the average income of Hispanic
Challenges Still Remain
Beyond the nuances of income growth already mentioned, more
challenges remain for Hispanic Americans.
Smith’s article acknowledges that Hispanic Americans still
face at least two huge economic hurdles.
1.) Building Hispanic wealth. As of 2016, White households
in the lower and middle-income groups each still owned roughly 3 times as much
wealth as Hispanic Americans.
2.) Homeownership. White American households continue to be
far more likely to own their own homes.
The most recent asterisk comes from the economic impact of
the COVID-19 pandemic. It may even call into question whether Hispanic American
incomes are still the ones growing the most.
Hispanic Americans disproportionately work
in the economic sectors most hurt by COVID-19. For example, food
preparation and serving-related occupations.
Maybe most importantly, Hispanic Americans have also been
slower to rebound from the economic impacts of the pandemic than Whites.
In January 2021, the Hispanic unemployment rate was still 4.2
percentage points higher than it was in February 2020. White workers’
unemployment rate rose only 2.5 percentage points above its pre-pandemic level.
And between the fourth quarter of 2019 and 2020, the median
weekly earnings of full-time Hispanic American workers grew at a slower
rate than that of workers overall.
Income growth among Hispanic Americans rose greater than any
other group between 2014 and 2017. But the growth is mostly among immigrants
and is largely a result of demographic changes instead of the economy. The
aftermath of the COVID-19 pandemic has slowed that growth and put continued
growth in doubt.
Like so many things in today’s business world, the situation
is much more complex than it first appears.
and Geoffrey Griffard
February 28, 2019
is your company’s compensation philosophy? Did you know that you have one?
company has a compensation philosophy. Some are explicitly published by the
company while others are implicit in the actions taken by various decision
makers in the company. There are many who feel they have a philosophy but their
employees do not agree. A 2017 survey by Payscale revealed that among their
respondents, 31% of employers reported having a transparent compensation
philosophy but only 23% of employees agreed
advantages of a published compensation philosophy are obvious. Compensation
actions can be viewed in light of the company’s stated compensation philosophy
to ensure conformance. It not only is more difficult to ensure conformance to
an unwritten compensation philosophy, but such a philosophy can change without
notice and is subject to the capriciousness of the person making the compensation
is imperative to invest the time and energy to formulate a compensation
philosophy that makes it clear what compensation plans are intended by the
company and how they are to be developed, communicated, administered, and
updated. The compensation philosophy is intended to guarantee that pay actions
support and promote the company’s achievement of goals and objectives. Such an
integration is hardly possible when compensation decisions are dictated by
market forces alone. The philosophy should detail the company’s strategy,
budget issues, short-term and long-term plans, and growth provisions.
Apart from building a solid understanding of how the
company manages employee compensation, it also requires management to put teeth
in its commitment to take full control of pay—including pay plan development,
communication, administration, and ensuring all managers are trained in their
role of compensating the company’s employees.
compensation philosophy ensures every employee’s pay is administered in
accordance with the predetermined, consistent direction set by the company. Development,
maintenance, and analysis of pay ranges then become straightforward. In
addition to HR’s expertise in these actions, all line managers must understand
the company’s compensation philosophy so that they can make decisions in line
with that philosophy—and explain to their employees how pay is determined. The
education of managers and employees is central to the smooth, consistent, and
orderly administration of employees’ pay, which in turn, is fundamental to the
company achieving its goals and objectives for productivity, growth, and
benefit of a stated compensation philosophy is that it allows organizations to
place themselves in the market according to the level of compensation they can
afford. Organizations can become employer brands for superior talent by
offering to pay fat pay checks and incentives for the same. Or they may choose
to build talent by recruiting newcomers, investing in their training and
development, and paying salaries that are just about the market range.
compensation philosophies ensure stability and sustainability of the
compensation strategy adopted by the organization. It has implications for the
organizational strategy, as well as, all the other HR functions. If, for
instance, compensation philosophy dictates paying market rates but training
employees to ensure their retention, the learning and development function
needs to be well-planned and developed to allow this. The resourcing function
needs to choose internal recruitment options while performance management
should reward employees handsomely for their performance.
Example of Compensation Philosophy
the following example of how a company stated its compensation philosophy.
XYZ Corp believes that our employees are our
most significant resource, and our continued success depends on maximum use of
their contributions. We strive to have compensation policies and practices
demonstrate our appreciation for each employee’s contribution.
XYZ Corp’s compensation philosophy is to:
employees based on their contribution to the company’s success.
on-the-job performance as a primary factor when determining changes to an
employees with compensation opportunities that are competitive within the
employees with compensation opportunities that are equitable within the
that all employees and management understand XYZ Corp’s policies, plans, and
programs that govern compensation.
When paired with an effective communication
plan, the XYZ Corp compensation program supports, reinforces, and aligns with
our mission and values, business strategy, and operational and financial requirements.
Our compensation program balances the needs of both employees and the business,
with a goal of growth and profitability.
The XYZ Corp compensation program is designed to attract,
motivate, and retain talented employees who drive the company’s success. We
strive to provide base salaries that are competitive and appropriate for the
market. Each position is assigned a pay
range as determined by XYZ Corp
based on the position’s duties, responsibilities, and qualifications. The pay
range is a reflection of what the market pays for the same or similar
positions. The pay range minimum approximates the 20th percentile of the market
while the pay range maximum approximates the 90th percentile of the market. The
pay range midpoint is an average of the minimum and maximum.
Note: Deciding to use specific percentiles of the market to set the pay
range minimums and maximums is a major step in the evolution of a company’s
management philosophy. Not only does this decision require a solid
understanding of how the company manages its employee compensation, it also
requires management to plan all details of the compensation policy, be
committed to it, and train its line managers to handle regular compensation
issues. Whether to use the percentiles in the above example (20th and 90th)
or any other should be a matter of enlightened discussion and definitive
action by the company’s management team.
Compensation Philosophy can be extremely potent given the sophistication of
today’s pay surveys. It is not only possible but obligatory that a company’s
compensation philosophy state the range minimum and maximum as explicitly
defined points in the market. The midpoint then becomes just an average of
the minimum and the maximum.
compensation philosophy can and should be very specific about what to pay
employees with the basic
qualifications for each position, as well as, what to pay employees with outstanding qualifications. Telling
your top performers that their pay opportunity is up to the 90th percentile,
for example, can provide reason for such employees to invest a significant
portion of their careers at your company.
a percentile at the lower end of the market data should be done with an
understanding of the qualifications of employees whose pay is at the lower
end. There is a point below which employees have less than minimum
qualifications and minimum performance. It is possible to argue that that
point is the 10th percentile or the 15th percentile or the 25th percentile. A
company must arrive at this decision with the same level of sagacity as it
used to determine the range maximums.
Each employee’s position within the pay
range is based on that employee’s skills, knowledge, and abilities as assessed
by XYZ Corp, taking into consideration the employee’s education, training,
experience, and performance. All employees must meet the minimum qualifications
of the position. Those employees with less experience, less-developed skills,
or whose performance does not exceed expectations will be paid in the lower
portion of the pay range. Those employees with significant experience, fully
developed skills, and whose performance meets or exceeds expectations will be
paid in the middle portion of the pay range. Those employees with extensive
experience, outstanding skills, and performance that exceeds expectations will
be paid in the upper portion of the pay range.
Employees of XYZ Corp who are not meeting
expectations are counseled to improve their performance before any pay increase
is available. Employees counseled to improve their performance and who
subsequently do not improve, will have their employment terminated.
In addition to base salary, XYZ Corp uses
incentives or variable pay as a way to meet the strategic goals of the company.
Incentive pay will be available to some employees with consideration for a
number of factors and will be based on individual goals that relate to the
company objectives as well as overall company performance.
In alignment with our company culture, we
strive to communicate openly about the goals of the company and the design of
the compensation program. The compensation process is intended to be fair and
simple so that all employees and managers understand the goals and outcomes of
The pay administration program at XYZ Corp was
created to achieve consistent pay practices, comply with federal and state
laws, and mirror our commitment to Equal Employment Opportunity. Pay decisions
and reviews are made without regard to race, color, citizenship status,
national origin, ancestry, gender, age, religion, creed, physical or mental
disability, or any other factor protected by law.
Several factors may influence an employee’s
rate of pay. XYZ Corp considers the essential duties and responsibilities of
the job, market data, as well as individual and company performance. XYZ Corp
periodically reviews its pay administration program and restructures it as
necessary. Merit-based pay adjustments may be awarded in conjunction with
superior employee performance as documented through the performance evaluation
Pay, bonus, and any other type of compensation
information are highly confidential. You should not discuss your compensation
or other employees’ compensation with anyone other than your manager or Human
Resources. You should bring any pay-related questions or concerns to the
attention of your manager, who is responsible for the fair administration of
departmental pay practices. Human Resources is also available to answer
specific questions about the pay administration program.
Employees will not be paid below the pay
range minimum unless there are issues related to the employee’s qualifications
or performance. Employees will not be paid above the pay range maximum unless
circumstances exist where an individual is required to fulfill specific needs
of the company. Such needs may be a stated project or a specific goal to be
realized in order for the company to achieve its goals and objectives. Paying
below minimum (green circle) or above maximum (red circle) requires the
approval of the VP of HR. Such approval will be based on the stated project or
goal and upon a course of action to adjust the employee’s pay and/or
classification following the achievement of the project or goal.
Managers are responsible for ensuring job descriptions are up to
date for the positions that report to them directly or indirectly. HR reviews
and approves the job descriptions and maintains copies for use in determining
the market pay for the positions. Pay ranges are reviewed annually with respect
to market pay and are adjusted to the appropriate levels for the upcoming year.
Individual employee performance is
assessed through the Company’s Performance Management Program. Pay increase
budgets are established based on market pay movement and the company’s
finances. Based on the budgets and employees’ performance, pay increase
recommendations are submitted to HR for review. Following its review, HR
submits the recommendations to Management for review and approval. Approved pay increases are then communicated
to employees by their manager in one-on-one meetings following the direction
provided by HR.
example shows how an organization can spell out the objectives, goals, and
purpose of its compensation policy while also declaring the privacy and other
ethical dilemmas that may arise in the future. By declaring all these aspects
in detail, the company now not only possesses a clear direction, it is also
more likely to formulate its resourcing and reward management decisions in the
same vein. This will allow a well-integrated HR framework that can
strategically support the organization.
deliberating and deciding on a compensation philosophy, it is necessary to
answer the following key questions:
the philosophy equitable, i.e., does it discriminate among employees on any
the philosophy legally defensible and fair?
it possible to tweak the compensation policy based on labor market changes?
it possible to communicate the policy to employees and the general public?
does the firm’s philosophy stand when compared to its competitors?
will be the compensation mix – fixed salary components vs variable? Performance
based pay? Group incentives?
answers to these questions will yield a well-drafted compensation policy that
allows the organization to place itself in the desired market position as an
employer, possess the right compensation mix, build a focus on rewards, and
ensure differentiation among performers and non-performers.
Low, T. (2018) Comp is culture:
2017 Compensation Best Practices Report. Available at: https://www.payscale.com/content/report/2017-compensation-best-practices-report.pdf.
on there. Can you fire someone because you don’t like their attitude?
course, if you ask your employment lawyer, you won’t get a “yes” or “no”
answer. You might get “yes you can, but…” or “no you can’t, unless…”. Using
full sentences might be “yes you can but prepare to be sued” or “no you can’t
unless you can prove that the employee’s attitude made it such that they did
not perform their duties and responsibilities at an acceptable level”.
then the reason for employment termination would be the non-performance, not
wait a minute, many man managers complain about employee attitude because they
observe behavior that is easily described as bad attitude (demeanor, posture,
mindset, mentality, mood, tone, etc.).
Perfecting Employee Performance (PEP) hrpep.com, we use attitude as one of our
performance metrics. As with all performance metrics and competencies, we have
defined what we mean with the following.
Demonstrates positivity by affirming those aspects of the
work to be done that are beneficial to the Company, its employees, and its
customers. Helps others demonstrate positivity. Is cooperative with all
levels of employees. Demonstrates and tolerates nothing less than complete
integrity and forthrightness. Stimulates teamwork in others.
definition puts “attitude” into a context that can be communicated by a manager
to an employee so that the employee knows clearly what how they are expected to
perform their work. The manager uses this to coach employees who do not
demonstrate the stated behaviors.
a manager labels an employee has having a bad attitude, the manager is abdicating
responsibility for coaching that employee. not capable articulating what is
Establishes meaningful and achievable goals for employees
so that they know what is expected of them.
Communicates and reinforces behavior competencies so that employees
know how they are to perform their jobs.
Motivates employees to meet or exceed performance measures. Finds creative and innovative ways to
sustain performance. Develops employee capabilities and provides
opportunities for employees to grow in their capacities. Coaches employees by
providing frequent instructive feedback and listening to input from
Has the term “living wage” come up when discussing employee wages within your organization? What exactly is a living wage, and how can it affect your business?
What is a Living Wage?
A “living wage” is the wage an individual must earn to
afford an adequate standard of living, based on the individual’s location,
household size, and number of working adults. Those earning a living wage
should be able to afford sufficient food, shelter, and other essential needs
for their families.
The living wage varies by state, city, and county and is
based on the Living
Wage Calculator, developed in 2004 by Amy Glasmeier, a professor of
economic geography and regional planning at the Massachusetts Institute of
Living Wage vs. Minimum Wage
People often confuse living wage with minimum wage, but they
are not the same.
Congress created the federal minimum wage to prevent
American workers from falling into poverty. The minimum wage is roughly based
on poverty guidelines, but unfortunately, it has not kept up with rising living
costs and is often well below local living wages. The current federal minimum wage for covered
nonexempt employees is $7.25 per hour. The minimum wage is legally mandated and
must take into account business needs and overall economic impact.
(This does not apply to self-employed individuals, who can
actually work for as low as $1.00 per hour.)
The living wage, by contrast, is generally not
legally mandated and focuses on average living costs for individuals and
(If your organization works under municipal contracts,
receives public economic development funds, or is located in areas that have
benefited significantly from public investment, you may be legally mandated to
pay a living wage. Learn more here.)
How is the Living Wage Calculated?
As mentioned earlier, the living wage is based on MIT’s
Living Wage Calculator, which factors in the following local costs: food,
childcare, health insurance, healthcare, housing, and transportation. This
calculation is based on what a single individual must earn, and it assumes that
person is working full-time.
The calculator shows the living wage for counties in all 50
states. MIT updates the calculator during the first quarter each year.
Why Does Living Wage Matter?
There are many reasons why a business would want to be aware
of the living wage in the location where it employs people.
According to a study by The Peterson Institute for International Economics,
paying employees a living wage or higher generally:
more qualified hires
need to micromanage employees
In their article “Why ‘Good Jobs’ Are Good for Retailers,” the
Harvard Business Review contrasts “vicious” and “virtuous” labor cycles.
Businesses that follow the virtuous cycle pay employees
higher wages and experience lower turnover, fewer mistakes or accidents, and
attract more productive workers.
Businesses that fall into the vicious cycle pay low wages
and experience high turnover, frequent mistakes and accidents, and disengaged,
Supporters of paying a living wage claim it grows the
economy by enabling workers to buy more goods and services.
However, adjusting your organization’s wages to more closely
match the living wage has potential drawbacks. Some opponents of the concept of
a living wage argue that the calculator cannot effectively account for the many
choices each family makes, such as gardening or family childcare.
Other opponents point out that the greatest burden of paying
a living wage falls on small businesses and individual employers, who have
fewer options to offset increased expenses.
An important note: The wage for jobs requiring specified
skills, education, and qualifications should be based on the cost of labor
instead of the cost of living. A Compensation Analyst or Compensation
Consultant can analyze what employers are currently paying and determine the
prevailing wage or the market rate.
Living Wages in Idaho
How does Idaho rank in terms of living wages?
A search of the Living Wage Calculator shows that the living
wage for a single adult with no children is $14.12 per hour, or a full-time salary
of $29,370. A family of four in Boise, Idaho with a single income must earn
$31.86 per hour, or a full-time salary of $66,269.
By comparison, Idaho’s minimum wage as of 2021 matches the
federal rate of only $7.25 per hour, which is barely more than half the living
wage for a single worker.
There are substantial differences from state to state and
from city to city. The chart below shows the living wage for a single adult
with no children for various locations.
Your business should be aware of the living wage for your
area. It is a tangible data point in determining what a company should pay
employees. Just as companies cannot be expected to sell products for an amount
less than it costs them to produce the product, companies cannot expect
employees to devote their full working time for less than it costs them to pay
their living expenses.
As a reminder, the living wage is calculated for full-time
jobs. It is not meant for full-time students, temporary employment, seasonal work,
or part-time jobs.
Continue to be mindful of how the living wage affects your
organization. The large gap between the minimum wage and the calculated living
wage will likely continue to have potential repercussions going forward.
Marcus Buckingham wrote an article published in the
February 9, 2015 issue of Harvard
Business Review titled "Most HR Data is Bad Data". He asks the
question, "If you were my manager and you
watched my performance for an entire year, how accurate do you think your
ratings of me would be on attributes such as my “promotability” or
What Marcus Buckingham is saying is that no one can
rate another person and therefore rating systems are of no use. He states
that "The research record reveals that neither you nor any of your peers
are reliable raters of anyone. And as a result, virtually all of our people
data is fatally flawed." He goes on to cite research conducted over the
last 15 years and documented in the Journal of Applied Psychology and Personnel
Psychology in which it was found that ratings done were more reflective of the
rater than of the person being rated. " Bottom line: when we look at
a rating we think it reveals something about the ratee, but it doesn’t, not
really. Instead it reveals a lot about the rater."
Marcus Buckingham, like many academicians and
theoreticians, over shoots the mark. He
is trying, through research and studies to predict future performance in
abstract terms. Meaning that he is
looking at the more esoteric attributes of employees. Many companies have
fallen into this trap thinking they are more advanced or sophisticated and are
molding employees in the image of the "founder" or some other
They think they should be able to foretell if a
person will be successful beyond what the person is currently doing. While such
endeavor would not only be nice, it would be miraculous. If someone could
devise a prognosticating system to do this, that person would become wealthy
selling it to companies.
The problem is the focus. The studies Mr. Buckingham
cites focus on factors like "promotability", "potential",
"competency", "strategic thinking",
"adaptability", "assertiveness", "motivation",
"creativity", "initiative", etc. These factors are subjective and yes, rating
them or teaching someone else to rate them is difficult if not impossible.
Effective performance management systems focus on
results using factors that can be measured and rated. For example, "productivity",
"accuracy/quality", "job knowledge/skills",
"planning", "communication", "problem solving",
"teamwork", and "people management" are Performance Metrics
that can be observed. For productivity,
did the employee get his/her duties/responsibilities completed in the time
frame given? Did he/she escalate issues properly and timely? Did the employee
seek additional work when done with regular work? Did the employee demonstrate
a sense of urgency in accomplishing work?
All of the above Performance Metrics can be used to communicate
expectations to employees. Employees can be coached to achieve success with
these metrics. Managers can be trained to rate employees' results in each of
The key is to keep it simple and focus on results
and achievements, not abstruse and subjective factors.
The next question should be, "then what does a
company use to help determine promotions and rewards?" The best predictor
of future performance is past achievement. If an employee has achieved sound
results in the past, then provide the opportunity to take on more. This is not fool proof, but it is more sound
than using factors with unintelligible definitions, subjective measurement, and
are three primary actions steps in an effective Employee Performance Management
Expectations - set performance goals (what you want the employee to do) and set
performance metrics/competencies (how you want employees to do their jobs)
for Success - daily observation of results with appropriate feedback and documentation
Results - fair, objective, timely evaluation
three basic steps, employee performance management is made simple. As Leonardo da Vinci said, "Simplicity
is the ultimate sophistication."
are practitioners of performance management who focus all or almost all on
coaching. While coaching is critical, it
is not everything that is needed to successfully manage performance. Coach for
Success means the frequent interaction between the manager and the employee.
This is where the manager observes actions, sees achievements, and sees areas
needing improvement. The manager should be continually providing feedback
to the employee so that the employee can make changes in order to achieve the
desired results. If an employee is "surprised" at year end by
his/her performance rating, the manager has failed to properly coach the
employee. Year end is too late for the employee to make changes.
point of irritation or frustration to managers and employees is that at year
end, it is difficult to remember everything that occurred during the year.
Assessments often are superficial and focused on the last couple or few
months. Perfecting Employee Performance has a feature called PEP
measured improves performance. Performance measured and reported, quickens