What is one way a $15 minimum wage will affect small businesses?
To help you with understanding how a $15 minimum wage may affect small businesses, we asked successful small business owners and their employees this question for their best insights. From adjusting your employee model to increasing employee retention, there are several insights into how a minimum wage increase will impact small businesses.
Here are nine insights into the affects a $15 minimum wage increase may have on small businesses:
- Adjust Your Employee Model
- Invest in Your Business by Paying a Living Wage
- Create a Stronger Workforce
- Boost Employee Retention and Morale
- Be More Innovative
- Increase Your Prices
- Pay at Least $15 per Hour
- Provide New Workers with More Tools and Old Workers with Incentives
- Increase Employee Retention
Adjust Your Employee Model
The repercussion of the wage increase on small businesses will mean increasing prices and limiting the number of employees. Companies operating expenses will rise which then will increase the price of products and services to cover increased labor costs.
Longtime employees could earn the same as a new inexperienced hire, which in turn, can result in a trickle-down effect where the quality of the work suffers. Ultimately, small businesses are at risk of going out of business if they don’t adjust their employee model.
Hector Gutierrez, JOI
Invest in Your Business by Paying a Living Wage
An increase in the hourly wage enables more Americans to keep above the poverty level and make a decent living, leading to greater job satisfaction, improved performance, and reduced turnover rates. A $15 minimum wage better enables them to keep up with the recent cost of living increases. For this reason, they may even afford to work just one job instead of two, allowing them to have a healthier work-life balance. And studies show that happy workers are 13% more productive, indicating that an investment in your team is an investment in your business.
Chris Gadek, AdQuick
Create a Stronger Workforce
A $15 minimum wage can sound scary because it definitely will add to the cost of doing business. But I believe the benefits will outweigh the initial costs in the long term. Having a workforce that makes a living wage is overall beneficial to everyone involved. When employees can focus on their work and know they can pay their bills, they will be happier, more productive, and will more likely stay with you long term, lowering costs from things like employee turnover.
Ann McFerran, Glamnetic
Boost Employee Retention and Morale
I think the shift to the “living” wage will help boost employee retention and morale overall. This country’s service sector has been founded on cheap wages that increase socioeconomic disparities and worsen disease for the working class for too long. When considering inflation, rent, food, and other expenditures, fifteen dollars an hour is just barely enough to afford to live in most of America’s major cities. Considering that costs keep going up, the minimum wage over the last forty years in this country needs to rise to match that inflation. Businesses will have more solid employee foundations as a result of better wages while employees will have more reason to stick around in order to pay their bills.
James Shalhoub, Finn
Be More Innovative
It will force them to be more innovative. While many people consider a $15 minimum wage an attack on small businesses, I see this price increase as a necessary evil. Yes, it will have an economic effect on business costs, but inflation is through the roof right now, and workers deserve to make livable wages. That said, I think companies should leverage cutting-edge automation tools for their business establishment to help save time and money. Paying $15/hour per employee won’t hurt as bad if you can eliminate a full- or part-time position through the latest business automation tools.
Stephanie Venn-Watson, fatty15
Increase Your Prices
Small businesses may need to increase their prices more than they would otherwise in order to maintain profit margins, which could result in a decline of customers because the price increases were not worth it. This is just one possible way that a $15 minimum wage will affect small businesses.
Jar Kuznecov, Water Softeners Hub
Pay at Least $15 per Hour
A $15 per hour minimum wage isn’t going to affect home services like our flooring and remodeling company. We have been paying $15 per hour or more for entry level laborers for several years now, and I’m certain that every other construction and home service company has been as well. Fast food is already paying close to $15 per hour. With all of the inflation that has come recently, a $15 per hour minimum wage may be too little too late.
Ralph Severson, Flooring Masters
Provide New Workers with More Tools and Old Workers with Incentives
A $15 minimum wage harms two groups. First, it takes away price as a negotiating tool for people who are new to the job market. This means that more seasoned workers have an even stronger likelihood of getting hired than recent college graduates and others who are new to the job market. Second, a high minimum wage harms small businesses. International corporations with bigger budgets will have access to the most talented workers, while small businesses will be forced to cut corners or go out of business. The reality is that we’re in a period of hyperinflation and we’re in “The Great Resignation,” so $15 is inevitable. But a better approach to this problem is to provide new workers with more tools to enter the workforce, and old workers with incentives to upskill and grow in their careers.
Dennis Consorte, Snackable Solutions
Increase Employee Retention
Short-term pains could lead to long-term gains! An increase in the minimum wage will in no doubt have an impact on a small business owner. More of the revenue from an income will go into payroll, impacting their bottom line. But this could also mean higher employee retention, which cuts down on training costs. There may be some growing pains for a business as it navigates a higher minimum wage, but there are potential long-term benefits.
Tyler Read, Personal Trainer Pioneer