2014 Wage Inflation Bills Something to Watch - Modern Distribution Management

2014 Wage Inflation Bills Something to Watch

Wolseley CEO: U.S. salary inflation, health care costs concerning.

The White House has endorsed a bill that would raise the federal minimum wage by almost $3 per hour, according to The New York Times. According to the Times, President Obama threw his support behind the Harkin-Miller bill, also known as the Fair Minimum Wage Act, which would raise the federal minimum wage from $7.25 to $10.10 an hour. In addition, 34 states have introduced minimum wage legislation during the 2013 legislative session, according to the National Conference of State Legislatures, making wage inflation something to keep an eye on in 2014.

The subject of wage inflation in the U.S. came up in several earnings conference calls for the most recent quarter. Wolseley chief executive Ian Meakins said salary inflation in the U.S. in the past couple of years has been higher than elsewhere, and he called rising health care costs in the U.S. “frustrating.”

At the Acuity Brands call, CFO Richard K. Reece said human resource costs are cutting into the savings it had hoped to gain through its cost-cutting initiatives, which include production facility closures and the realignment of responsibilities within its sales, distribution and administrative departments. “Wage inflation and the health care increases are going to consume some of these productivity gains and streamlining savings,” Reece said.

Acuity CEO Vernon Nagel says he expects HR costs will continue to rise next year, and he says Acuity plans to adjust its pricing posture and make other efforts to offset those costs.

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