Whenever the minimum wage increases, small businesses tend to take the biggest hit. Finding where that extra money will come from isn’t easy.
Thanks to New York’s minimum wage law, which first went into effect last year, wages increase for the next four years until they reach $15/hour (or $10/hour for a tipped wage).
On December 31, the new minimum wage will be:
There are different hourly rates for workers in the fast food industry and those who receive tips.
This past year, the minimum wage for Nassau County was $10/hour while the remainder of New York State was $9.70. There has not been an announcement on if the hourly wage will be higher for Nassau County than the rest of the state when this year’s increase goes into effect. Individuals can call 1-888-4-NYSDOL (1-888-469-7365) with questions.
Preparing for the increase
While finding the extra funds to pay for increased wages likely won’t be easy, there are a few creative options businesses can explore.
Reviewing areas where automation may be possible for specific tasks could assist the business – employees will have more time to impact the bottom line in other ways, reducing your need to hire in the future. Make it clear that automation is being considered to help the business afford the minimum wage and keep employees working in other areas, not as a means to reduce staff.
Another option is reducing hours of operation. Customers may not be happy they can’t come in as early or as late as they used to, but compared to a price increase on goods and services it may be more favorable.
While it may be too late to adjust your budget to prepare for the upcoming wage increase, looking at your budget plans can give you an understanding of the business’s cash flow and find areas for cuts or reductions. Knowing that this growth is going to happen again next year, you can preemptively prepare for December 31, 2018.
It also gives you an opportunity to review departments and do a return on investment analysis – what’s working, what isn’t? Do you need to take money out of the TV advertising budget and move to digital, or vice versa?
Anything you can do to keep from increasing prices or laying off staff is likely more favorable for you and will keep your customers and workforce happier. It’s not always easy to determine where those opportunities lie. If you are still struggling where to find areas to reduce costs or are concerned litigation is a possibility if you lay off employees, talk to a professional who understands the concerns of a small business and can help you prepare.
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New York, NY 10022-7513