Consider Charlie Bucket’s dad, who worked at a toothpaste factory and lived with his son and five adults. As the only one at home with a job, he still earned just enough to keep a roof over their heads and buy the only groceries they could afford: bread, potatoes and cabbage.
“But a toothpaste cap-screwer is never paid very much money, and poor Mr. Bucket, however hard he worked, and however fast he screwed on the caps, was never able to make enough money to buy one-half of the things that so large a family needed.”
That’s from Roald Dahl’s classic, “Charlie and the Chocolate Factory,” whose titular 11-year-old hero inherits a sweet fortune that moves the family out of poverty.
The subtext in the 1964 children’s book resonates today, as employers and employees struggle to find an economic common ground that affords employees a living wage and employers the ability to survive and thrive in a competitive market.
“That’s a good analogy for a living-wage job, Charlie Bucket’s dad,” says Aspen Gorry, associate professor in the Clemson University John E. Walker Department of Economics.
“From an economics perspective, I think, largely, wages are driven by whatever the underlying productivity of the job or the task is,” he adds. “A nerdier way to put this is there’s not an underlying demand for labor — there’s demand for the goods and services that the labor produces.”
But where is that labor?
In April, the unemployment rate in the Greenville-Mauldin-Easley area dipped to 2.3%, down from 2.9% in December, the U.S. Bureau of Labor Statistics reports.
Meanwhile, median hourly wages in the Greenville metro area rose to $28.54 per hour in December 2021, a jump of 13.6% over the previous December, according to an Upstate Business Journal report in February that cited a South Carolina Department of Employment and Workforce study.
These days, “Help Wanted” signs at, say, fast-food establishments around town show starting wages are often more than double the $7.50 federal and state minimum hourly rate.
“Companies are having to step up to pay what I would consider a market rate that really now is so far beyond the minimum wage,” says Julie Godshall Brown, president and owner of Godshall Recruiting. “I haven’t seen a job for minimum wage in probably, I don’t know, 10 years. So even without an increase, the market is driving that up.”
Consequently, she says, “There is more power in the employees’ hands. In other words, they have more choices than they’ve ever had.”
Offering a caveat, she says workers’ bargaining power extends to certain skill levels. She mentions bank tellers: Her firm sees those employees earning in the $16- to $22-per-hour range, while a few years ago, they were taking home $10 to $13 per hour, “even for your big banks.”
Ethics and the livable wage
But now back to Mr. Bucket.
“If we want to push the analogy further,” Gorry says, “he’s supporting his wife, his son and the four grandparents who are all living in the house. I guess the ethical question is, should his wage be higher because he’s supporting six other people?”
Based on a living wage calculator from the Massachusetts Institute of Technology, Mr. Bucket would have to earn $50.67 per hour at a toothpaste factory in Greenville County to come even close to what the calculator deems a livable wage to support the Bucket family.
Likewise, a single worker with no children must earn $17.50 an hour to meet MIT’s livable wage threshold — that is, to afford housing, food, medical care, child care, transportation and so forth. Based on 51.4 workweeks a year, that comes out to $35,980 before taxes, according to the MIT calculator.
Alex Harris, a 29-year-old information technology employee, earns a dollar an hour more than that.
His employer offers him a raise of 50 cents per hour each year, he says, but the monthly rent in his apartment complex off Pleasantburg Road goes up $80 a year. That means the landlord boosts Harris’s housing costs as much as 8% a year, while his annual merit raises rise only about 3%.
That’s why Harris says he must share a 1,300-square-foot, three-bedroom, two-bathroom apartment with two roommates, neither of whom can afford a place alone.
“It makes it hard to progress with your life. I’m at the age now where I don’t really want to be living with roommates anymore. It’s not horrible, it’s not bad, but I prefer to have my own place, be independent,” says the Greenville native, who has had to share housing since graduating from college in 2015.
The wages of doing business
Godshall ponders whether, say, $25 per hour for a fast-food worker at a drive-thru would drive the price of a burger up to $15. “Then,” she asks, “aren’t you basically chasing your tail whereby you’re paying more and driving your costs up?”
And if an employee can demand higher pay, then an employer’s expectations are higher, she says.
“And if you don’t meet them, you’re the first to go,” she says. “If you’re not worth what you’re being paid, then one way or another, you’re not going to earn it, because at some point, they can’t afford to pay you more than you’re worth.”
From an employer’s perspective
Meredith Bost, who has just opened a restaurant, Resident Diner, in Travelers Rest, says she’s working to strike a balance.
“We’re hoping to pay people a living wage — that’s the goal,” she says, adding that for the 10 or so employees she anticipates hiring at her new restaurant, she’s offering $13 an hour, along with shared tips; she plans to pay herself that rate too, minus any tips.
“Service industry people work super hard, and there’s this idea that if you work hard enough, pull yourself up by your bootstraps, then you’ll be fine,” she says. “But that’s just not realistic.”
At the end of the day, she says, “Work is work, but it doesn’t have to be miserable. We can all have fun. If we’re doing it right, it can be a good time and a profitable time, hopefully.”
Evaluating wages
Julie Godshall Brown, president and owner of Godshall Recruiting, offers these tips for determining pay:
- Start first with a careful evaluation of a job’s “true requirements.”
“Oftentimes, companies will use a job description that’s 5 years old that they just continue to add needed skills to without ever going back and re-evaluating. Make sure that you’re really clear on the front end what your real needs are versus what might be in the job description. That will drive the cost of the skill set.”
- Heed the latest job-market assessments, especially with the market’s volatility and speed.
“This is really new. We used to encourage our clients to listen to our assessment of the market at least annually, be that compensation for a bank teller, an administrative assistant or a CFO for a midsize company,” she says, advising employers to evaluate wage structures more frequently.
On the employers side
“High Inflation Means Resetting Pay Strategies: Organizations that don’t meet employees’ salary expectations risk losing talented workers to employers that will pay more.”
That’s the headline of a report from the Society for Human Resource Management, published June 18, which outlines how employers are resetting pay strategies and boosting salary budgets this year — while consumer prices also reached a year-over-year high of 8.6%.
Likewise, 40% of workers expect pay raises greater than 6% this year; 31% expect an increase of more than 9%; and 21% see pay increases topping 10%, according to the report.
“For employers, high inflation puts upward pressure on wages and salaries,” the report notes.
The report, which cites a global consulting firm, echoes comments from Aspen Gorry, associate professor in the Clemson University John E. Walker Department of Economics, and advice from Julie Godshall Brown at Godshall Recruiting:
- Employers should ensure pay is competitive — and not just for new hires. Long-term employees’ pay shouldn’t lag behind labor-market conditions.
- Consider taking a “living wage” approach to setting minimum wages, especially in markets with a higher cost of living. (Interestingly, if you’re earning an annual “living wage” of $35,890 in Greenville and you want to move to Charleston, you’d need to earn $39,842 to maintain your current standard of living, according to PayScale.com, a compensation-data provider. In other words, your hourly pay — based on 40 hours a week, 50 weeks a year — would have to go up from $17.95 to $19.92.)
- Be transparent. Explain how compensation is set.
- An employee may look for a different job because compensation might not be a priority. Meredith Bost at Resident Diner considers the same issue. The work environment, including employer-employee relations, may provide intangible rewards that lead to worker loyalty — and retention.
Working for beans
In “Charlie and the Chocolate Factory,” the candy magnate Willy Wonka retained his workforce with payment in cocoa beans, their favorite food.
Roald Dahl’s book doesn’t mention how many beans Wonka “paid” his Oompa-Loompas, but consider this: On June 21, 1 kilogram of cocoa beans, or 2.2 pounds, cost $2.35, according to the International Cocoa Organization. If each worker earned 1 kilogram per hour, the wage wouldn’t sound so sweet — that’s nearly 60% below the $6.19-per-hour poverty line, according to the MIT calculator.
