Small Businesses Debate Minimum Wage Increase
With several cities and even federal government entities discussing minimum wage increases, small businesses are starting to crunch the numbers. Even the most well-meaning entrepreneur such as Glen Gonzalez can’t make every budget work with higher minimum wages. This economic debate has more than just two sides, however, making it a hot topic until changes occur to local laws.
Skills Versus Value
One of the main concerns regarding wage hikes is skills compared to value. If a fast food worker is paid $13 per hour, for example, their skill set should reflect that hourly wage. For many limited-skill workers, there isn’t a real justification for the wage hike except for cost of living. With their wage increase, other skilled workers may force employers’ hands to increase their specific wage because of perceived value to the company. This domino effect could actually hurt both small- and medium-size businesses.
The flip side to this argument is enhanced work ethic. When a worker feels valued with a higher wage, they’re more inclined to work harder and faster in the same time period. Beds could be made faster or food served more rapidly, depending on the industry. This effort only reflects positively on the employer, boosting their profit margin with returning customers and stellar services. The wage increase could even be covered by more business walking in the door, making the debate a moot subject.
Balancing the Ledger
Small business owners argue that higher minimum wages only force them to make creative employee schedules, including layoffs and decreased hours each week. Unlike large corporations, small businesses don’t have the ample loans and credit to float through a month until customers pay bills. Cash flow is tight, making payroll one of the largest debts on the books. Some owners believe a higher minimum wage could actually put them out of business, contributing to unemployment rates and poor local economic conditions.
Assuming businesses can hold onto their employees with better work ethic as a result, higher earnings spread across the local economy. With more money to spend, minimum wage earners could boost local business profits by purchasing a car or a new bedroom set. Even small expenditures at the grocery contribute to better lives for employees, employers and local residents. Earners may eventually be able to buy a home, lifting property values higher and contributing to lucrative funds for local schools.
Workers Want to Stay
Business owners know that taking care of employees is the best way to keep them at their current positions. When employers have high turnover rates, their costs soar because of recruiting, interviewing and training necessities. Workers earning a solid wage with familiar job duties are more inclined to stay put than to strike out to another job interview. Companies with loyal employees show that employers treat them like humans instead of as a number. Although you can’t stop everyone from seeking other career opportunities, higher pay is a strong reason to stay.
A reasonable quality of life is a right that everyone should have, but small businesses are still concerned for their bottom line. It will only take time to see how these economic changes will turn out. Ideally, businesses will find a way to keep all their employees and still break even. It may be some time before lucrative profits can actually make their way into entrepreneurs’ pockets.