Growing Business. Building Community.

Pay Now or Later – an Old Lesson to Re-learn

One of the iconic advertisements in television history dates to the early 1970s as an auto mechanic extols the benefits of being proactive: “You can pay me now or pay me later.” That ad campaign promoted oil filters, but the message still resonates more than 40 years later as a reminder that long-range strategies and decisions almost always prevail over short-term thinking.

It’s a timely, relevant message these days for Northwest Michigan’s business community, as it struggles to deal with a thin labor force and a growing need for skilled workers. It relates to another well-worn adage unique to our region that even precedes the oil filter commercial. “A view of the bay is half the pay” is a saying that’s been half-jokingly thrown around this area for generations. But the negative consequences of this decades-old mindset become more apparent every day. It’s time for area employers to look at employee compensation with the understanding that, one way or another, they are going to have to proactively address it.

Regional employment and wage data from Networks Northwest for 2015 for the 10-county region indicate that average weekly wage for our area is only about 77 percent of Michigan’s average – about $744 a week compared to a state average of $963. The gap is even wider with the national average of $1,018 (73 percent). Wages in tourism-related industries across the region lag even further behind state averages. This is not something to dismiss lightly or sluff off as a fact of life in a resort community. Such numbers simply don’t make sense in an area starved for talent and looking to attract outside investment.

Of course it’s difficult for employers to pay more. But there are hidden – and sometimes more detrimental – costs that come with fighting to keep wages low. Low pay leads to expensive employee turnover, potentially sub-par workers, lost customers, and public subsidies needed for basic needs like living space, transportation or child care – hence, higher taxes and fees. Those are all hidden costs with the potential to sap a business’ bottom line much more significantly in the long run, and are costs that will stay with the business regardless of how efficient it becomes in the future..

Ideally, and normally, these gaps between supply and demand are addressed by “the market.” But “the market” has been slow to respond. The longer it (employers in our region) waits, the more it invites outside intervention from places like the public sector in tax-funded subsidies, or knee-jerk policy changes such as “living wage” ordinances and mandatory benefit offerings. Or the private sector will respond with competitors that offer higher wages moving into the region– the new Costco store is one example – or buying long-held family businesses, further shortening the talent pool for businesses unable or unwilling to respond to the changing times. Worse yet, the region’s labor force could further stagnate or even shrink if potential employees decide to leave for greener pastures.

The lesson? A “view of the bay” won’t pay for housing, fill the gas or propane tank, buy groceries or provide health insurance or child care. Those days are long gone, and it’s better for the business sector to control its destiny rather than having outside forces foist upon it remedies that might create more problems than they solve. Employers can pay now or pay later, but to keep our region’s economy growing they will have to pay.