What an increase of minimum wage could do to your business
The debate over whether or not to raise the federal minimum wage has been raging on since the minimum wage was instated. Cities and states around the country have been raising the minimum wage on their own, with Seattle being the first to raise their minimum wage to $15, and the rest of the country is most likely going to follow suit.
Why the Raise?
Advocates for a raise of the federal minimum wage say that it’s necessary to keep minimum wage workers above the poverty line, as a full-time minimum wage worker would make far less than the poverty level. In addition, since the last raise of minimum wage in 2009, the cost of living has risen while the minimum wage has stagnated.
In order to compensate for the rising cost of living, people are advocating for higher minimum wage. They claim that the extra money will allow people to buy more goods and services and stimulate the economy.
Who’s for It? Who’s Against It?
Small business owners are evenly split over raising the minimum wage. While some business owners say an increase would be on-par with rising living costs and would allow people to spend more easily and pump money into the market, others say that it will force them to let go of employees and possibly even shut down.
While it’s certain that raising the federal minimum wage will cause businesses to pay more for labor if they were to maintain the staff they have, it’s uncertain whether or not the economic stimulation will happen as some suggest.
Ways to Combat the Problems Caused by the Raise
- Cross-train employees
- Cross-training employees to do several jobs instead of one will allow for your business to keep functioning as close to business-as-usual as possible in case an employee needs to be let go for financial reasons following the wage hike. You won’t have to scramble to do all the work yourself and your business will be prepared for the worst.
- Increase prices
- Small, incremental price increases for products or services could save a company if a minimum wage increase were to go awry. If your product or service is in a niche market, it will be easy to increase prices, as your customers go to you for what they need in such a small market. It’s difficult to do this in larger markets, but it’s possible to compensate with excellent customer service and promotions.
- Adapt your business model
- Minimum wage increases don’t happen all at once. No government, state or federal, would implement a steep change in one day; changes happen in increments. Though Seattle changed their minimum wage to $15, the goal is to reach $15 by 2021. You can prepare your business for wage increases by changing the way your business operates or changing staffing structure. In turn, you’ll be prepared for the final wage increase and won’t have to shutter your doors.
There’s a strong fight for raising the minimum wage. If it happens, it’s essential for your business to be prepared— even if that means restructuring your business’ function. Businesses have shut down because they were unable to handle the load. Get ahead of the curve and prepare now.