With over half of the states having a higher minimum wage than the federal minimum, it may feel like small businesses are being squeezed.
According to the U.S. Department of Labor, two-thirds of minimum wage earners are in the service industries, a full 44 percent in food service. Two-thirds are part time workers, and half are under 25 years old.
I say all of this not to opine on minimum wage requirements (I’m against them), but rather to give you context for understanding who minimum wage laws actually impact.
With every problem comes opportunity.
In my personal experience and observing my small business clients over the years, the stress of a difficult change requires us to come up with a better solution. That is the nature of the entrepreneur.
Will a $15 per hour minimum wage eliminate many food service jobs? You bet it will. Businesses, large and small, will find ways to cut labor costs since they can’t simply pass on a 100 percent increase in labor costs in their prices.
But what if you’re in one of the 28 states with a higher minimum wage than the federal rate? (See a map of prevailing minimum wages rates, by state).
I would start with reviewing your time and attendance tracking. Outdated, manual or analog time and attendance don’t utilize the power of the Web and GPS tracking.
Low-cost options are available with rich features, including very reasonably priced bio metrics. Review your system and make sure that it is filling all of the potential holes in your time tracking including “buddy punching,” automatic lunch and break recording, and GPS tracking for mobile employees.
Rework Your Accountability, Organizational Charts
Truth of the matter is, you can wring another 20 percent efficiency out of about any organization.
Everyone wants to think they’re as efficient as possible, but the truth is virtually all business owners and managers don’t actively change their org chart to meet their changing businesses.
People and positions that were absolutely necessary 5 years ago, may not be as important now. Add to that the power of technological advances, and chances are there is consolidation that can take place in your organization.
If you trim head count and rearrange work, the people remaining will feel like their doing more work for the same amount of money. So pay them more!
Your employees already know who the dead weight is. Likely, your good people are having to pick up the slack for them already. If you get rid of the excess and pay the good people more money, it really is a win-win.
Just make sure that their compensation is line with their performance, achieving their personal goals, and contributing to the success of the businesses goals.
Maybe you don’t need to let anyone go.
You probably have some things that you’ve been meaning to get to, but just haven’t had the time. Before you send anyone to the unemployment line, see if their talents could be better utilized in you business doing something that isn’t being done, but should be.
It might require some additional investments in time and training, but if you have a good employee that fits your culture, find a way to let them bring value to your customers, and therefore your company.
Whatever state you’re in, take the opportunity this month to see where you can gain efficiency and add to the bottom line. Have other suggestions on how?
Minimum Wage Protest Photo via Shutterstock