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Hospital Uses Executive Bonus Money to Give its Workers a Raise

Hospital Uses Executive Bonus Money to Give its Workers a Raise

Written by Bryce Covert

Parkland Health & Hospital System in Dallas will raise its own minimum wage to $10.25 an hour next month, paying for the increase with money originally devoted to executive bonuses.

The lowest-level employees at the hospital currently make $8.78 an hour, and the increase will give about 230 workers a raise. Those workers were already making more than Texas’s minimum wage, which is the same as the federal $7.25 an hour rate. The move also means that every worker employed by Dallas county, inside and outside the hospital, will make more than $10.25 an hour.

The wage increase will cost the hospital about $350,000 a year. The expense will be covered with money from the upcoming quarter’s bonus pool for the hospital’s 60 vice presidents and top executives. That pool was between $750,000 and $1.2 million in the most recent quarter, and it’s between $3 million and $5 million for the full year.

Dr. Jim Dunn, the hospital’s executive vice president and chief talent officer, told Modern Healthcare that the decision was made in the hopes of improving workers’ morale and to provide a living wage. “We really want, in any way possible, to break down any gaps or anything between the top leaders and those who are closest to our patients,” he said. “We feel like it’s the right thing to do.”

Raising wages can help businesses’ bottom lines, as it can improve efficiency, make it easier to recruit workers, and lower turnover. Losing employees to turnover is particularly expensive, as it can cost as much as 20 percent of a workers’ salary to replace her. Other companies have voluntarily raised their minimum wages lately, including retailer Gap, which boosted its lowest pay to $10 an hour.

Funding a raise with executive compensation also makes sense, given the growing disconnect between pay at the top and the bottom. CEOs’ pay is now 295.9 times the pay for their own workers, far higher than the 87.3-to-one ratio in the early 1990s. Average pay for a chief executive last year was $15.2 million, a 21.7 percent increase over 2010, while workers saw their pay fall by 1.3 percent in the same time. Corporate profits have also hit record highs as workers keep increasing their productivity, but they haven’t shared in that growth. If the minimum wage had kept up with rising productivity, it would be nearly $22 an hour, and if it had simply kept up with inflation since the 1960s it would be over $10 an hour.

President Obama and Congressional Democrats have pushed to raise the federal minimum wage to $10.10 an hour, but it’s been stymied by Republicans. In light of that inaction, some states have taken matters into their own hands, and three have passed a $10.10 minimum wage while Vermont put its at $10.50.

This post originally appeared on ThinkProgress

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Photo Credit: Thinkstock

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9:30PM PDT on Jun 21, 2014

ty

8:45AM PDT on Jun 21, 2014

I'm stunned!

8:21AM PDT on Jun 21, 2014

Baby steps ...

3:40PM PDT on Jun 20, 2014

Good idea.

2:08PM PDT on Jun 20, 2014

I am shocked that there are employees in health care being paid Minimum Wage. Being exposed to infectious diseases, inhalation injuries in Dietary and Housekeeping.

Congrats to Dr. Jim Dunn, the hospital’s executive vice president and chief talent officer, quote; that the decision was made in the hopes of improving workers’ morale and to provide a living wage. “We really want, in any way possible, to break down any gaps or anything between the top leaders and those who are closest to our patients,” he said. “We feel like it’s the right thing to do.”

A living wage would be using a full years executive bonus to bump up their wages.

This is an inherent problem with private insurance funded w/health care. Good step forward realizing that front line staff/patient experiences are their advertising.

2:38AM PDT on Jun 20, 2014

Smart move.

2:38AM PDT on Jun 20, 2014

Wonderful.

9:42PM PDT on Jun 19, 2014

Stone the flamin' crows! It's a miracle! :)

5:30PM PDT on Jun 19, 2014

Wow!

4:21PM PDT on Jun 19, 2014

Good to see the effect of talking about wages and what's fair to pay. Still seems a lot of money for executive 'bonuses'

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