The following is adapted from an article that appears in the Fall 2015 inaugural issue of Ceridian HCM’s connect magazine.

Democratic and Republican candidates are already focusing on next year’s presidential election and the #1 issue could be income inequality.

No one disputes that the rich are getting richer and everyone else is staying the same or losing ground. Since 1979 the inflation-adjusted incomes of the top 10% have soared while the incomes of the middle 60% and the bottom 20% of households have stagnated. Inflation-adjusted median household income in 2013, $51,939, was actually lower than it was in 1999.

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Why “Income Inequality” Matters to HR

Mon Sep 28, 2015

The following is adapted from an article that appears in the Fall 2015 inaugural issue of Ceridian HCM’s connect magazine.

Democratic and Republican candidates are already focusing on next year’s presidential election and the #1 issue could be income inequality.

No one disputes that the rich are getting richer and everyone else is staying the same or losing ground. Since 1979 the inflation-adjusted incomes of the top 10% have soared while the incomes of the middle 60% and the bottom 20% of households have stagnated. Inflation-adjusted median household income in 2013, $51,939, was actually lower than it was in 1999.

Why should these trends matter to HR? Presidential candidates, as well as states and localities across the country, are advancing proposals to ameliorate income inequality, all of which will impact HR, Payroll, Benefits and Compensation.

HR leaders need to monitor three main proposals: raising the minimum wage; changing Fair Labor Standards Act overtime rules; and mandating paid sick leave.

Minimum Wage—President Obama advocates raising the federal minimum wage from $7.25 an hour to $10.10 over several years. The Republican-controlled Congress opposes that on grounds that it will cause employers to jettison a half-million jobs or more.

Nevertheless, a number of cities and states are pushing ahead with their own minimum wage hikes. Seattle recently voted to raise its minimum wage to $15. And the Los Angeles City Council just approved an increase to $15 by 2020. Last year some 14 states raised their statewide minimum wage.

With the jobless rate now close to full employment and the economy churning out new jobs at a monthly clip of 200,000+, look for elected officials to press for a “living wage” floor that could bubble up wages across the board.

Federal Overtime Rules

On June 30 the U.S. Department of Labor announced dramatic changes in federal overtime rules, proposing to more than double the salary threshold below which salaried employees are eligible for overtime pay from the present $23,660 per year to $50,440 or $970 a week in 2016.  The new rules also incorporate an inflation “escalator” that would automatically increase the threshold in future years.

The proposed rules represent only the second time in 40 years that the salary level has been updated and would entitle some 5 million additional workers to overtime pay under the Fair Labor Standards Act.

While the Labor Department did not specifically address long-standing “duties tests” for executive, administrative and professional worker exemptions, final regulations could include such changes.

The Society for Human Resource Management (SHRM), the National Retail Federation and others submitted comments during the 60-day public comment period that ended September 4.

Final overtime rules, possibly effective in 2016, will surely present significant cost, classification and compliance challenges for employers and HR professionals.

Paid Sick Leave—President Obama and many in Congress support initiatives that require employers to provide employees some level of paid FMLA or sick leave.

The “Healthy Families Act,” introduced by Senator Patty Murray (D-WA) and Representative Rosa DeLauro (D-CT), would entitle eligible workers to 7 days of paid sick leave per year.

Opposition from employer groups and others appears to have iced the federal legislation for the time being. However, like minimum wage increases, several states and cities have moved ahead on their own.

California, New Jersey, Washington, Rhode Island, Connecticut, Seattle, San Francisco, New York City and others have approved some form of mandatory paid sick leave.

Elected officials across the political spectrum recognize that income inequality undermines our nation’s commitment to shared prosperity. The debate is over what to do about it—with the minimum wage, overtime rules and paid sick leave now in the spotlight.

Income inequality will continue to have impact on HR leaders as our elected officials deliberate these issues. HR leaders have much to contribute to this debate, and can proactively shape constructive policy responses.