Dive Brief:
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Pittsburgh-based Allegheny Health Network (AHN), which is owned by Highmark Health, said it plans to increase its minimum wage to $15 by 2021.
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The health system said the minimum wage hike "reflects the network’s ongoing assessment of the market and commitment to providing highly competitive compensation and benefits packages for employees at every level.”
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UPMC, a competing Pennsylvania health system, announced in 2016 that it planned to increase its minimum wage to $15 by 2021 after Gov. Tom Wolf criticized the company for paying low wages.
Dive Insight:
AHN’s announcement comes after its best operating performance year. The system has improved its operational performance for four consecutive years, including an 8% increase in revenues in 2017 compared to the previous year. The improvement was connected to stable hospital volumes and high patient acuity, greater operational efficiencies, better care coordination and improved business and clinical process, such as revenue cycle operations.
AHN’s announcement also comes weeks after UPMC reported one of its most profitable quarters in seven years.
Fair payment activists have promoted a $15 an hour minimum wage. The National Employment Law Project said 21 states and 37 cities and counties increased or plan to raise minimum wages for 2018, ranging from $12 to $15 an hour. Also, there are similar campaigns in 14 other states and three cities, NELP said.
One reason governments are looking to increase pay is that wages overall remain relatively flat, with few employers outside of the tech industry planning to raise their rates. That’s despite a strong economy and low unemployment rate, which would normally drive higher wages.
Meanwhile, healthcare job creation remains hot. The sector added 24,000 new jobs in April, and represented nearly 11% of all U.S. jobs. That was a new high, Altarum reported. As healthcare takes up a larger chunk of the economy, minimum wage increases like AHN’s will play a larger role not just in Pennsylvania or the industry, but also the larger U.S. workforce.
