Many in Rhode Island will be celebrating the sleight increase in the minimum wage starting on January 1 that will boost their hourly rate 12.5%, from $8 to $9. But in a conversation I had recently with two CVS employees, I learned that this increase is not happening without some push back from one of Rhode Island’s leading businesses.
The employees spoke to me on the condition that I protect their identities: they fear reprisals from the company for speaking out. The senior employee has been with CVS for a few years and makes just under $9 an hour. The junior employee has been with the company for nearly a year and makes just over $8. Both are due, they say, for a year-end review and a slight bump in pay, which usually amounts to a 10 cent increase. But this year they were told that there will be no review and no raise because the minimum wage increase took care of it.
The way they tell it, the senior employee makes more money due to experience, knowledge and time on the job. Yet, when the minimum wage increase kicks in, all employees currently making $9 an hour or less will be making the same amount. Both employees feel that their hourly rate should respect the additional time and experience of the senior employee. In other words, they feel that employees should receive a dollar raise, not simply have their pay increased to the new minimum.
In response to my inquiries, CVS Director of Public Relations Mike DeAngelis wrote,
CVS Health is committed to compensating our employees with a fair, market-based wage and less than 1% of our Rhode Island employees are paid at the current state minimum wage.
Salary increases are based on market-based rates and the individual performance of employees. The increase to Rhode Island’s minimum wage does not change this.
We consider a variety of factors to establish competitive wages based on the local market for both our full-time and part-time employees. Our compensation and benefit offerings include many components other than the hourly rate or salary, such as employee discounts, wellness programs, flex hours, and for full-time employees – competitive health care benefits and paid time off.”
DeAngelis clarified that he’s talking about “All RI employees: corporate, stores, distribution centers, call center, etc,” not just the cashiers and shelf stockers most of us interact with when we visit the store. The figures might be skewed then, since CVS maintains its corporate headquarters in Woonsocket, and presumably the employees there are earning more than minimum wage.
The employees I spoke to also told me that they were informed by management that the company is imposing scheduling cuts and shrinking the number of hours stores are allowed to schedule to cover shifts. Store management told the employees that these cuts are a direct result of the minimum wage increase. To the employees I talked to, these cuts mean that each of them will be responsible for doing the same work in less time.
Rather than see an increase in their paychecks, some employees might actually see a decrease. An employee currently making $8.75 will see an increase of 25 cents an hour, but losing an hour’s work each week will cancel out the increase. The employees I talked to average about 30 hours a week each at the store.
DeAngelis said there isn’t a top down directive to cut hours at the store.
…a store’s payroll hours are not determined by wage rates, but by factors such as hours of operation, volume of business, and appropriate staffing levels to ensure customer service delivery.”
It makes sense that corporate might have a different understanding of the situation than the managers and staff. As a matter of policy large retail chains sometimes set onerous parameters and goals, leaving it up to local managers to meet those goals. Though corporate will insist that the goals be met within the constraints of company policy and the law, these goals might not always be realistic or achievable, and many managers might feel pressured to cut corners for fear of losing their jobs or possible promotions.
As to whether or not CVS can afford these increases in minimum wage, according to Fortune.com, CVS has the “largest CEO-to-worker pay disparity among top companies.”
CVS has the greatest disparity between CEO pay and the median wage of its employees among the 100 highest-grossing companies in the U.S., according to a study released Thursday by compensation research company PayScale, Inc. [Larry] Merlo’s $12.1 million salary is 422 times the size of the median wage for CVS employees: $28,700.
That’s the median wage. A minimum wage employee working 40 hours a week 52 weeks a year would make $10,000 less than that.
I asked the senior employee if, given the response of CVS, increasing the minimum wage is worth doing. It turns out that an increase from $8 to $9 isn’t much of a game changer, especially if employers actively seek to undercut the increase.
“I used to have a job that paid me $13 an hour,” said the senior CVS employees to me, “and I was just getting by. Now I have two jobs and I’m not doing any better.”
However, there was a caveat. “If the minimum wage were to go up a lot, like $15, there’s no way the company could cut enough hours and keep the stores running. If that were to happen, the company would have to dig a little deeper to pay its employees.”