How Will an Increase in the Federal Minimum Wage Affect Your Company?

U.S. Chamber Deputy Chief Economist J.D. Foster recently wrote that raising the minimum wage will result in lost jobs. If employers believe they cannot afford to pay their employees the difference in wages, they would rather opt (or feel pressured) to terminate them than struggle with the added expenses. This was the knee jerk reaction taken by some employers who terminated employees in response to the Affordable Care Act.

Sheryll Poe, a senior writer at the U.S. Chamber adds to this discussion in a most recent article where she examines how the increase in minimum wage may affect small business owners and their customers. Poe shares stories of small business owners who admit that there is pressure to increase the cost of goods sold to counterbalance a minimum wage increase for their employees. Translation: ‘If I have to pay my employees more, then I have to raise prices on my customers to afford this increase’

What do you think?

Through the Consumers Lens
As a consumer would you be willing to pay a slight increase for the products you love, as a trade off? Would you even notice a price increase? If you did, would you ask why there was an increase? If you don’t want to pay the increase is there another company out there offering the same products at a price point that you are comfortable with, and is the quality of the products to your liking?

How does your view differ if the company is service-based, not offering you a tangible product but a service that you desire?

Through the Business Owner/Senior Leader Lens
How will your company be impacted by an increase in the federal minimum wage? Will senior leaders have to look closer at which employees they can afford to keep? Or would there be a decision to increase the cost of goods sold? Can you see the possibility of being forced to do a combination of layoffs and price increases?

With all of the ups and downs surrounding the Affordable Care Act, what are employers (who are dealing with the pressures from paying higher insurance costs for employees) thinking and feeling about the potential impact of minimum wage?

Or maybe you see things from a different perspective. Maybe you are more optimistic. Do you see this as a great opportunity for business and the economy? Do you think that it is long overdue for an increase, and that states should also meet or closely reach the federal minimum?

No Impact Thanks to my State
Some businesses that are located in states with minimum wage limits considerably lower than the federal wage, are not losing sleep over this issue, because in their opinion they can choose to either meet or exceed their state limit for minimum wage—-and they have the option of doing the same in regards to the federal limit. There is no pressure either way. As long as their state does not force them to increase their company’s minimum wage, life does not change for them.

That operational plan is no different than restaurants (and other eating establishments) in some states where they pay their food servers less (sometimes depressingly less) than both the state and federal minimum wage because there is an assumption that tips left by customers should supplement their hourly wages. This practice is accepted and acknowledged by the state governments. So in cases such as this, the federal minimum wage has no impact on their businesses, employees, or customers. But should it?

Do you remember when the federal minimum wage was $4.25 and lower? We have come a long way, or have we?

Share your thoughts.

About us: Foreman & Associates, LLC is a business management consulting firm based in metro Atlanta Georgia. For more information about us and the services that we provide visit: http://foremanandassociates.co

Sources:
Sheryll Poe, US Chamber: https://www.uschamber.com/blog/not-so-sweet-impact-minimum-wage-increase?utm_source=Twitter&utm_medium=Wallpost&utm_campaign=Status

JD Foster, US Chamber: https://www.uschamber.com/blog/proponents-know-minimum-wage-hike-means-lost-jobs

Copyright 2014. Foreman & Associates, LLC. All Rights Reserved.

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