How the Minimum Wage Increase Might Affect Your Business


A group of employees in a set of cubicles.By summer 2009 everyone hired at minimum wage will be making $7.25 per hour. That’s a $1.40 increase from the current minimum wage of $5.15 which was last increased in 1997. On May 24th, 2007, the Senate passed the controversial bill that will see a .70 increase in the minimum wage by the end of this summer, with another .70 increase by the end of summer 2008.While the increase bodes well for minimum wage employees, the hike may pose difficulties for the small business. Shortly after the initial approval in January of this year, the Washington Post reported that the White House released a statement opposing the Senate’s wage increase while praising its consideration of tax breaks for the small business. The wage increase and the small business are definitely at odds.While many small businesses currently claim to pay their employees more than $7.25 per hour, the minimum wage increase would make their wage less appealing in a market where labor is available at an even higher rate. There will be an adjustment period, for which the small business should prepare. However, inflation in retail prices and services fees will soon kick in and stabilize the economy.How can the small business prepare for this adjustment period? recommends the following:

Develop Quality Employees

You want to evaluate your staff and determine which employees could really become valuable assets to your business. Once you pick the keepers, you take the time to grow their loyalty and ability. Gradually give them more responsibility and experience, taking the time to reward their efforts. This doesn’t have to be expensive: taking an employee to lunch, gifting free movie passes, or allowing them a more flexible work schedule are great rewards. Once you have strong employees who feel part of your business, you have individuals that will help increase process efficiency, saving you time and money.

Increase Process Efficiency

If you motivate them, they will increase efficiency. Those employees that you invested in will help you improve processes, enabling you to do more in less time. Eventually it will increase your bottom line and pay for that wage increase you’re anticipating. In fact, in the long run it may help improve your business’s profitability.

Eliminate Weak Links

As you take inventory of your employees, your processes and other elements of your business, you should eliminate all weak links that limit your profitability. Once you reinforce those weak links, you’ll find your business improving in ways you may not have imagined.

While the wage increase may not seem like the best thing for your business, you may find that in preparing for it your business will become stronger and more profitable. And once that adjustment period ends, you’ll find your business in a better place.References“House Passes Increase in Minimum Wage to $7.25” by Jonathan Weisman“Preparing for the Minimum Wage Hike” at

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