Rising Minimum Wages in US Impact In-House Contact Centers

In today’s corporate environment, there are many factors that impact an organization’s bottom line.  Perhaps none are as important as the wage structure that determines employee pay. The issue of wages has been a hot topic recently; particularly that of minimum wage. Many U.S. politicians believe the U.S. minimum wage is too low ($7.25 per hour)  and several states seem to concur with that as they have taken it upon themselves to raise their minimum wage well above the rate the U.S. Federal Government has set. Below is a chart detailing the U.S. states who have voted to increase their minimum wage within the last year.

Every industry is impacted by wage hikes and while increased wages are good for the individual, there is a definite cause and effect relationship between wage hikes and their impact on the economy. Higher wages put more money into the wallets of minimum wage workers but it also raises the cost of doing business. Often, employers feel the need to offset these higher costs by reducing their workforce or cutting employee hours in order to stay in business. Wage hikes impact every industry, but for this blog, we’d like to take a look at how rising minimum wage rates specifically impacts U.S. contact centers.

RISING WAGES AND THE CONTACT CENTER

Call Centers have grown significantly in the last twenty years. What started as a very basic customer service function has grown into an integral and multi-channel support network known as the contact center. As contact center demands have increased, agent salaries have increased as well. Below is a break-down of a typical salary structure in a U.S. Call Center in 2018.

Source: Site Selection Group

As the duties and expectations of contact centers have expanded in recent years, this has led to a demand for higher salaries. Call Centers have, in the past, experienced a significant amount of turnover. This turnover as stemmed from a variety of reasons, pay being one of them. Since contact centers are often the frontline to the customer, many organizations have wisely realized that it is to their great advantage to maintain a team of qualified, skilled and well-equipped agents who are ready to serve their customers so raising wages in order to attract skilled agents has been a natural outflow of contact center growth.

While call-centers have been growing throughout the U.S., there is one state that has experienced exceptional growth in the call-center industry.  According to a recent article in AREADEVELOPMENT, the one state that has seen the most rapid growth in call-center employment is Arizona, which has added 133,000 contact center jobs recently. However, despite the rapid growth, more than half of these jobs are compensated at less than $14.00 per hour. Arizona also raised their minimum wage from $10.00 per hour to $10.50 per hour as of January 1, 2018. Fifty-cents per hour may not seem like a lot but when you consider that this affects 1 in 9 workers, across a multitude of industries offering minimum wage jobs, the increase quickly adds up to a hefty sum.

It remains to be seen how this increase will affect the contact centers in Arizona. Businesses will definitely “feel the pinch” eventually and one of two things will likely happen:

1. Employers will be forced to cut positions in order to hold profits steady.
2. Employers will rely more on outsourced call-centers in order to defray costs and continue serving their customers.

There are some industry insiders who believe the wage increases will have no negative impact on U.S. contact centers since wages in this industry have been on the rise anyway. For Arizona, it may be different. The contact center industry has experienced exponential growth in this state, however, the hourly wage for many contact centers in the state is well below what others pay. Between the growth and the higher wage required in Arizona, we may begin to see a shift to more outsourcing. If that happens, Centris will be ready! We have two near-shore call-centers staffed with experienced, fully bilingual and highly-skilled agents, many of whom grew up in the U.S. Our minimum wage and cost of living is much lower than that of the U.S. allowing us to maintain consistency among our staff of agents. While we certainly applaud the growth our industry has seen throughout Arizona and the rest of the U.S., we pay close attention to the impact of wage hikes across the industry. If these hikes impact the ability for organizations to maintain a high level of customer care, we will reach out and offer a solution that allows businesses to cut costs and continue to serve their customers well.

If you are looking to lessen the impact of wage hikes on your U.S. contact center contact us; we would love to develop a plan for you that will offer the best of both worlds: lower operating costs and excellent customer service.