With over half of US states boosting hourly pay above the federal standard of $7.25, and with some major corporations getting on board as well, the controversy over minimum wage it not only brewing, it’s bubbling over.
Alaska, California, Massachusetts, and Nebraska will all be bumping up their wages by a whole dollar as of January 2016, while cities like Seattle and Los Angeles plan to increase their minimum wage to $15 over the next few years. Target, Wal-Mart and McDonalds are joining the fight by agreeing to raise the compensation for their minimum wage employees on a national scale.
While supporters of the increase are the first to point out the continuously growing gap that exists between the federal minimum wage and the cost of living, those against it suspect a pay increase won’t actually help pull Americans out of poverty. This leaves millions of small business owners with a tough question: should they pay their employees more than the minimum wage? The sides are almost equally split.
While 3 out of 4 small business owners don’t employ minimum wage workers, the percent that do are faced with a complex list of pros and cons to weigh. Offering higher pay than what’s legally required can increase employee loyalty and morale. In fact, some small business owners who lost employees stated that it was because larger companies could afford to pay them better. Offering workers a higher pay can also widen the employee selection pool and increase company standards, as more qualified and experienced individuals are attracted to greater pay.
Yes, employing a team of loyal, well-paid hard-workers sounds great, but it does come with a few downsides that cannot be ignored: paying employees more than the minimum wage would mean reducing the number of employees, hiking up the prices small businesses charge for products and services to cover the costs, or completely restructuring the way they do business. With a higher starting pay, small businesses may find that they have fewer employees with the initiative to advance to higher positions.
Out of the small businesses surveyed that do have minimum wage workers, nearly all of them indicated that they would give a dollar raise within the year to those who maintained a positive work record. Very few planned to keep their employees at the minimum wage.
Regardless of where small businesses started their employees on the pay scale, 75% of them reported that they planned to increase wages over the next year.