Your Front-Line Staff Have Pay Pressures — Understand Them

Pay isn’t always the answer to every problem, but understanding the pay pressures on the most vulnerable of our employees is essential for every health center.  Front-line employees in the FQHC environment, whether in the the “front office” or “back office,” make up the majority of health center employees, and are critical to the success of any health center in achieving its mission.  Any health center executive will tell you how crucial having skilled front line employees are, and how these employees represent the “face” of the organization.  Ask any provider, and they will tell you that their success, as well as a good part of their work satisfaction, is dependent on their support staff.

This morning the Wall Street Journal published an article “States Where Day Care Costs More than College” that provides readers with the average cost of day care for a four-year old child in each state and the cost expressed as a percentage of state median income.  Unsurprisingly, the amount is staggering.  For example, a single employee earning $15/hour working full time in Michigan would spend just under a quarter of her take home pay (24.5%, after factoring in the child care tax credit) on day care for one child.

You should know how these numbers work for employees in your health center, because the odds are high that more than 20% of your work force is in this position.  The overwhelming majority of front-line employees in the typical health center are young (under 35) and female.  There are currently just under 10 million single mothers in the  United States, of which about 5 million are under 35 and employed.  Given the total number of working women between 20 and 35 is just over 23 million, about 21.5% of the workforce that fits the typical front-line employee demographic is a single mother.  Add to this the fact that health centers are going to have most of the lower-educated and therefore lower-paid portion of that population, it is likely the percentage will increase to about one quarter of all front line employees.

Apply this to your employees — a single mother (assuming only one child) working full time at $15/hour at your health center (assuming you are in Michigan) will have disposable income of only about $1,700/month.  Let’s take off some living costs (all monthly):  about $650 for rent (average for a one bedroom apartment, Wayne County), $350 for food (USDA “Low Cost” food plan), $475 for transportation (an $8,000 car on a five year loan at 8%, plus insurance, and two fill-ups of the tank per month), and $220 for medical insurance premiums (based on Merces’ Michigan FQHC benefit survey).   That means she has $5/month left over for everything else.   These are all extremely conservative estimates, given that using the “living wage” calculators, those four costs would have already taken our employee into the red about $500.

Why should this matter to you?  Forget any guilt or moral obligations you may feel, because this is going to just be about pure business.  These jobs are not the burger-flipping, gain work experience type of jobs that the current minimum wage battles are about.  These are long-term jobs for people we want to keep, which means we want to do everything in our power to reduce turnover and disengagement. Someone who at best will have $5/month to spend on life is NOT thinking 100% about work.  She is thinking about how to get government assistance, whether she can find a roommate to save costs… and most of all… she is NOT thinking about the health center’s mission when she gets an opportunity to leave to earn another dollar an hour.

Turnover in healthcare is more than 20% annually; turnover in front line staff easily exceeds 30%, and in low paying organizations will be even higher than that.  These aren’t statistics you can wish away.  Pay will not solve all of these problems; some turnover will occur anyway, and some employees will leave to take higher paying types of jobs.  However, an effective compensation program can reduce turnover by ensuring you are at least competitive and not vulnerable to losing employees in the first two years … right after you have trained them up for someone else.

About Edmund B. Ura

Edmund B. Ura, MAIR, JD, works with governing boards, executives and human resources staff to develop methodologies for ensuring fair and equitable compensation programs that support achievement of organizations' missions. Contact Ed at ebura@mercesconsulting.com.
This entry was posted in Compensation, Competitive Data, Staffing and tagged , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s