Over 120,000 Call Center Jobs at Risk in Arizona, Colorado, Maine and Washington as the Minimum Wage Increases to $12 Per Hour
by King White, on Nov 21, 2016 9:34:42 AM
The minimum wage in states across the U.S. continues to inch up as states pass legislation pushing their minimum wages above the federal rate of $7.25 per hour. California was one of the first states to increase their wage to $15 per hour, which will place an estimated 500,000 jobs at risk, as discussed previously in my blog, Over Half a Million Manufacturing, Distribution and Call Center Jobs are at Risk Due to California’s Minimum Wage Increase. Other states including Massachusetts, Maryland, Hawaii, Washington D.C. and Connecticut are slated to increase their minimum wage beyond $10 per hour by 2018 as shown in my blog, Top 25 states with the Highest Minimum Wage Increase by 2018.
The latest legislation, passed on Nov. 8 in Arizona, Colorado, Maine and Washington, clearly shows how states are following each other by increasing their minimum wage to $12 per hour respectively ($13.50 in Washington) over the next few years. These wage increases potentially spell trouble for call centers as employers will be forced to increase wages to stay competitive against less skilled and often easier jobs in industries like retail and fast food.
“In order to be competitive in local labor markets in these states, call center employers will be forced to pay at least 15-20% above the minimum wage. This will push the starting wages for an entry level inbound call center worker to approximately $14 per hour if they want to attract labor with a more advanced skill set than those working in the retail and hospitality sectors. We estimate this will place over 120,994 call center jobs at risk of wage escalation or possible relocation to other states with lower wages,” explains Brett Bayduss, Principal of Site Selection Group, who specializes in workforce analytics and site selection for call center operations.
The potential impact of minimum wage increases of call center jobs
The following table provides a summary of the call center jobs by state and estimated jobs at risk. In addition, a more detailed explanation for each state has been provided below.
|Total Call Center Jobs||Call Center Jobs Paying Less Than $12 per hour||Call Center Jobs Paying Less Than $14 per hour|
Arizona will increase from $8.05 to $12 per hour
Arizona will incrementally increase its state minimum wage from $8.05 an hour to $12 an hour by 2020, according to Proposition 206. With an estimated 133,092 call center workers in the state, it is estimated that 75,862 call center workers are currently making below $14 per hour.
Colorado will increase from $8.31 to $12 per hour
Colorado will incrementally increase its state minimum wage from $8.31 an hour to $12 an hour by 2020, according to Amendment 70. With an estimated 59,201 call center workers in the state, it is estimated that 19,536 call center workers are currently making below $14 per hour.
Maine will increase from $7.50 to $12 per hour
Maine will incrementally increase its state minimum wage from $7.50 an hour to $12 an hour by 2020, according to Question 4. With an estimated 18,940 call center workers in the state, it is estimated that 9,281 call center workers are currently making below $14 per hour.
Washington will increase from $9.47 to $13.50 per hour
Washington will incrementally increase its state minimum wage from $9.47 an hour to $13.50 by 2020, according to Initiative 1433. With an estimated 33,988 call center workers in the state, it is estimated that 16,314 call center workers are currently making below $14 per hour. Please note that the city of Seattle implemented a minimum wage increase to $15 per hour by 2017 which may skew the results in Washington.
Companies need to consider all options to deal with minimum wage increases
All of these states are at greater risk of employers relocating out of state as well as companies no longer expanding or opening new locations within a particular state due to new legislation. Of these four states, Arizona probably has the greatest risk due to their heavy concentration of call center operations. Metro areas including Phoenix, Tucson and Yuma have long been very active call center markets with the vast majority of call centers paying workers less than $12 per hour. To combat these wage increases, companies are going to be forced to make some hard decisions about relocating their call center out of the state. As a result, economic developers are going to be hard pressed to build a business case around the attractiveness of their state for call centers despite their ability to offer economic incentives, quality of life and other location attributes their state may have to offer.