Why a $15 per Hour Minimum Wage May Not Be All Bad for Small Biz





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).



Track It

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 Outdated, manual or analog time and attendance don’t utilize the power of the Web and GPS tracking.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.

Incentivize

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.

Free Them

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 5 Comments ▼


Christian Brim


Christian Brim Christian Brim has worked with thousands of small business owners over his 20+ career. This work comes from his “why” of helping small business owners reach their full potential, helping them have clarity in their business decisions, and to keep the business working for them, not the other way around.

5 Reactions

  1. Aira Bongco

    It’s sad right? They have to pay lower wages or cut people off just to make ends meet. I hope that that is not the case though. After all, I am all for employees getting enough compensation.

  2. I am really not surprised at all by this article. You probably also believe that employees should be given breaks to grab a joint. The minimum wage is there as a minimum. If an employee has greater value, guess what, they will find a job that pays them what they are worth. The purpose of a minimum wage is NOT to create another form of welfare for the unmotivated employee. It is there as an incentive for people to work and increase their marketplace value to that they can pursue their God-given destiny. From your bio, there doesn’t appear how you help small businesses. But hey, you just got paid to write this piece so that is an accomplishment.

    • Anita Campbell

      Hi AJ,

      Just to clarify one point: this author is not a staff author and was not paid by us to write this article. This reflects the author’s opinion and not the opinion of this site.

      He is entitled to his own opinion. And it is our policy to allow authors to express their own opinions — and we defend their right to do so. It wouldn’t be a very effective publication if people couldn’t write what they believed in.

      – Anita Campbell
      CEO and Publisher, Small Business Trends

    • Christian Brim

      AJ,

      Appreciate the feedback. As Anita said, I am not compensated to write these articles. As I stated in teh article, I do NOT support minimum wage laws, and this article doesn’t go into the arguments for or against minimum wage laws. Rather, I’m acknowledging that it is a reality with which small business owners have to deal. Hope that clarifies my message.

      Cheers!

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