Remember when the legal minimum hourly wage reflected what entry-level workers were paid? Minimum hourly wages in Texas follow the Federal standard, which is still set at $7.25 an hour. If you want good workers—or any workers at all, really—you may need to not just double but triple that number.
Hourly Wages in Texas Overall
Back in March, Governor Greg Abbott remarked that the average hourly wage in Texas is $29 an hour. Houston’s KHOU wanted to verify that surprising claim because “at $29 an hour, that means the average Texan makes more than $60,000 a year.” Turns out the 2021 data is true and that for 2022, the numbers are even higher, with an average hourly rate surpassing $30 an hour.
What both Abbott and KHOU failed to mention is what “average” they’re going by. It seems from our own research that they’re talking about the mean as opposed to the median average. It’s also important to point out here that it encompasses all hourly wages and not jobs that may have (at least in the past) been paid minimum wage. So, we’ve got highly paid hourly workers in tech, finance, and healthcare (to name a few) in the mix. These extreme outliers skew the average to make it look like most workers are being paid more than they are. That’s the good news for employers with workers in the lower bracket of hourly wages in Texas. Those hourly wages don’t need to be $30. Ready for the bad news?
Minimum Hourly Wages
“We talk to employers who are proud that they’ve significantly increased their pay to $12 or $14 an hour for roles that have been traditionally minimum wage. That’s a step in the right direction, for sure. But unfortunately, it’s just not enough in many cases,” says Stephanie Grubbs, Regional Managing Director for The HT Group’s Staffing Division.
Let’s break it down: The average production worker in Texas is getting about $16.54 an hour. But manufacturers and others who hire blue-collar workers are having trouble finding employees at even $20 an hour, which is the new minimum wage set for Travis County employees.
And that’s still not the entire story.
MIT’s Living Wage calculator shows the living wage for Texas households with two working adults and two children is about $22 an hour. A 2018 report from the National Low Income Housing Coalition found that Travis County residents, in particular, must make $25 an hour to afford a two-bedroom home (and that was before the recent housing price surge).
Recalculate, Recalculate, Recalculate
The bottom line is that hourly wage expectations have become a major barrier to successfully filling production and similar roles. Can you afford to triple the pay for roles that were previously minimum wage? That’s a tough call. The bigger question may be: Can you afford not to?
“It’s critical to listen to the recruiters you trust when they tell you that your wages need to be re-evaluated,” advises Grubbs. “There’s so much more at play than when you first set those wages. Giant companies with attractive compensation packages like Tesla and Amazon are increasing their presence, the cost-of-living in and around Austin has skyrocketed, and worker shortages remain in place.”
We know the sticker shock on the rates that were once minimum hourly wages in Texas. But ignoring the trends won’t work. Instead, take a good look at your industry, location, competition, and more—tapping recruiters who can help you look into this data if you need it—and weigh what you’ll gain versus what you’ll lose by revising your wage strategy.
