The minimum wage of $5.15 an hour increases to $5.85 an hour 60 days after the House and Senate versions are reconciled and the bill is signed by the President. The second increase, to $6.55 an hour, becomes effective 12 months later. The third increase, to $7.25 an hour, kicks in a year later. (We will update this file when dates become exact.)

Increases will take effect in the Commonwealth of the Northern Mariana Islands under a different schedule: The CNMI minimum wage will rise from $3.05 to $3.55 an hour 60 days after the President signs the bill. After that adjustment, the CNMI minimum wage will increase by 50 cents an hour every six months until the commonwealth's minimum wage reaches $7.25.

Between NOW and the effective dates, you must consider:

WHERE ARE YOU NOW? -- Prepare a complete spreadsheet summary of all hourly-paid wage plans:

Until                        Step 1            Step 2          Step 3           Step 4
Hourly rate            7-1-07            7-24-07        7-24-08          7-24-09
     5.15                     5.75 (Guam)     5.85             6.55                7.25

Calculate each hourly rate you currently pay to determine the date and the cost when each hourly-paid employee will reach $7.25.

CNMI Employers:
Current          Step 1    Step 2    Step 3     Step 4     Step 5   Step 6   Step 7    Step 8    Step 9
Hourly rate  7-23-07  1-23-08   7-23-08   1-23-09   7-23-09  1-23-10  7-23-10 1-23-11  7-23-11 
3.05                 3.55       4.05        4.55         5.05        5.55        6.05       6.55       7.05        7.25

THE RIPPLE EFFECT -- The "ripple" (for employees who currently earn $7.25 and more) is an unavoidable effect of laws that increase minimum wage rates. Employees have an expectation of a modest pay increase when the new-hire starts at an hourly rate it too them 2-3 years to achieve. Their expectation is reasonable.

It will not be necessary to adjust the pay rates of ALL employees, only those in the lower 25 to 30 percent of your pay plan for hourly-employees.

Before deciding that you can not or will not make ripple adjustments, you need to evaluate the ability of your managers and supervisors to communicate truthfully and factually with ALL employees about costs, the competitive situation, your growth plans and the economic bumps ahead.

If your leaders have failed to develop the respect and trust of the employees, re-think your "no ripple" decision. There are TWO unwanted consequences:

(1) turnover of experienced employees as they leave to join your competitors;
(2) a union will capitalize on your perceived "unfairness".

NEW IMPORTANCE OF PERFORMANCE APPRAISALS -- You already know that ALL pay adjustments must be made on the basis of regular, thorough, productive PERFORMANCE APPRAISALS.

If your Performance Appraisals have been allowed to deteriorate into a system where no one gets a fair, timely rating and all employees are given a satisfactory rating (this is the "halo effect" no one is not great or lousy), you need to renew your commitment to the appraisal process and re-train the people who perform them.

Otherwise, any adjustments you make will not have the desired effect.

Careful, detailed appraisals will guide your decisions about which employees will get pay adjustments -- and which ones will still be on your payroll this time next year.

The minimum wage increase has presented you with a rare opportunity: you now have a compelling reason to weed-out the UNRELIABLES, the WHINERS, the UNDER-FORMERS, the ones who have RETIRED ON THE JOB using a systematic (and legally defendable) performance appraisal process.

HIRING FORECAST -- Once you know who has earned: (1) a pay adjustment; (2) continued employment -- you need to do a HIRING FORECAST that is based on these questions:

1. How many employees will you need in the next several quarters?
2. What skills do you expect to need?
3. Which employees need new training to help you compete?
4. What kind of training?
5. Where can get it done?
6. Are your pay and benefits TRULY competitive?
7. Are your growth estimates realistic or are they guesswork or "I hope"?
8. Are you positioned to deal with an unexpected opportunity?
9. What kind of new, unexpected costs are on your horizon?
10. Can your HR staff strengthen your appraisal system and teach your supervisors to motivate employees?