The pandemic opened our eyes to a lot of problems in 2020, including a major financial issue that existed long before the sudden sweep of mass unemployment.
Despite the rising cost of living, the federal minimum wage hadn’t been raised since 2009. While the $7.25 per hour minimum isn’t expected to change in 2021, nearly two dozen states are getting a head start on upping their hourly minimum.
Why? Because waiting could be costly in the long run.
If the Raise the Wage Act of 2021 is passed, there will be a national mandate. This means whether you’re ready or not, you’ll have to raise your employees’ pay. One person who gets it is John Pepper, co-founder and Chief Worker Advocate of Worthee.
Pepper’s advice to small business owners: Start raising your wages now, voluntarily.
“If [business owners] want to get a leg up on attracting and retaining the best people, begin to flex into the new wages,” he says.
Many small business owners find themselves stressing over what it will cost to raise their employee’s wages. It’s understandable as many are still seeking financial assistance to ride out the remainder of the pandemic and revive their businesses.
What those people who voice opinions against the minimum wage increase are missing is the benefit hidden in plain sight.
“There’s a real impact that paying someone low wages has on the well-being of employees,” Pepper explains. “When you’re fighting for survival, you aren’t at your best.”
Businesses can’t afford to overlook how financial decisions affect the quality of life for employees and their on-the-job performance.
“Where it will help businesses, in theory, is they will have better adjusted, less stressed employees,” Pepper says. By reducing your employees’ financial anxiety, they’re able to focus on their tasks more and stress less.
When business owners show employees that they care about their well-being — whether financial, mental or physical — there’s a change in productivity.
It’s hard to build a culture of employees that care about the business and will go the extra mile when the business doesn’t demonstrate it cares about them.
—John S. Pepper
In addition to increasing the productivity of employees, it also gives those employees more purchasing power, which is necessary to continue to help the economy thrive.
So how can businesses afford to raise their minimum wage without jacking the prices through the roof? Well, the cost of products and services has been steadily increasing each year.
While it’s easy to say, “raise the price” to help offset the wage increase, that’s not the only option. If you don’t think raising your prices is an appropriate move for your business, don’t.
Revisit how you pay yourself and make sure it’s a responsible amount. Maybe you are well off enough where you can afford to skim your salary down for the sake of your employees. You’ll be surprised by the support you may gain from both your staff and customers.
On the other hand, why not? Why not raise your prices if your services are worth it?
Take a look in the mirror for a second. You’re not one of those big-name companies raising its prices for the sake of profit and stock increase. You’re doing it to reward those who keep your company running smoothly. That’s to be applauded.
So if you need to adjust pricing, understand you can raise your cost without upsetting your customers.
Right now the decision to raise their minimum wage is in the hands of business owners. They have to consider whether employee satisfaction and increased retention are worth the added cost of a wage increase.
“If you get ahead of [the wage increase], there’s a chance that you’ll attract better people who know they’re appreciated, who stick around, who provide better service,” Pepper says. “And, perhaps, you’ll be lucky enough that your customers realize that and your sales go up.”