The historic $15 minimum wage increase is the latest hot topic to hit the CA legislation and it may have you wondering, how will this affect my business? The first truth is that the overall impact of minimum wage is still unknown, but it’s important for you to educate yourself with the basic underlying truths. There are several “myths” of what minimum wage is and who it affects that we can quickly debunk.
Myth 1: Minimum wage has the biggest impact on small businesses with less than 10 employees
False: The truth is that companies with 100 of more employees employ 66% of all low wage workers. Yep that’s the truth, in July of 2012 the National Employment Law Project (NELP) published a report to understand more about the makeup of the low waged workforce. This report unveiled that 66% of the low-wage workers were employed by large, profitable corporations. To make matters worse it also revealed that 50 of the largest low-income employers paid out a whopping $9.4 million annually to their chief executive officers.
Myth 2: Teenagers will reap the biggest benefits of the minimum wage increase
False: Your typical low wage earner is not a teenage high school student dawning braces looking for weekend pocket change. Truth is that 89% of the biggest beneficiaries of a minimum wage hike are age 20 or older and 56% of them are women.
Myth 3: Small business owners are strapped for cash and therefore do not support a minimum wage increase
False again: In fact a July 2015 survey showed that 3 out 5 small business owners with employees supported a minimum wage increase. The mentality was that raising the minimum would put money directly back into their pockets. The more money low-income workers have the more likely they are to spend it on goods and services. They believed that an increase to minimum wage would be a direct stimulation to the economy.
Myth 4: Increasing minimum wage is just plain bad for businesses
You guessed it, false again: Research has shown that the reality is an increase to minimum wage increases employee loyalty as well as happiness. When an employee is happy they are less likely to leave therefore lowering the turnover rate and in turn lowering training and onboarding costs. Although increased wages may put a squeeze on your wallet upfront, in the end it will benefit you somewhere else and have a network effect to the economy.
Like any other legislation change there are both positives, negatives and lots of differing opinions. Minimum wage is no different and although upfront it seems costly, the long term effects may benefit us all. Of course nothing is 100% guaranteed, so it is important for you to educate yourself in order to truly understand what impact it will have to your bottom line.