Posts Tagged ‘state wages’

How Will Wage Changes Affect Your Establishment?

February 15, 2012

The state minimum wage has been raised, or is scheduled to be raised, in 8 states this year: Washington, Vermont, Oregon, Ohio, Montana, Florida, Colorado, and Arizona. This likely affects your business (or will), whether you live in one of these states or not.


What do these wage changes mean, and how will they affect you? That is what I’d like to discuss with you today.


Why the Wage Hike Affects You – Even if it Doesn’t


Anyone running their own operation knows that pessimism doesn’t help run a business – but realism does.


I hope that I sound realistic rather than pessimistic when I say that wage increases will be coming soon to the rest of the 42 states in the union.


How each operator will deal with this is largely a personal choice. But we can make educated decisions based on how establishments in other states handle the change.


What the Wage Increases Don’t Mean


Washington is a “no tip credit” state. This means that restaurant owners and managers don’t have the option of paying a lower wage to wait staff and other employees that receive tips. On average, each Washington restaurant employs three fewer employees than the national restaurant average.


More importantly, employers in Washington State have had to deal with minimum wage hikes every year since 1998 (except for 2009).


The Washington Restaurant Association surveyed its members and found out that most of members will not make up for increased labor costs by raising their prices. That would be a difficult step for any operation in today’s economy.


Instead, 70% claimed that they would cut hours, shifts, employees, or benefits to offset 2012’s $0.37 minimum wage hike.


What do these Figures Mean for Your Operation?


As a restaurant owner or manager, you have a choice of what to do about these wage increases when they come your way. You already know how small changes in cost of operating – be it wages, food costs, or even the price of electricity or gas – can add up.


Many of you are already paying above minimum wage for your kitchen staff, and potentially for other staff as well. Does this mean you should just ignore the issue?


Hardly. Wage increases have a ripple effect that modifies the entire economy. You’ll likely improve turnover if you raise your staff wages at least some token amount – it doesn’t have to be the full wage increase amount.


How will you absorb the costs? Some operators prefer to raise the cost of select popular items by several cents. Others may cut shifts by 15 or 30 minutes, or deal with less closing or opening staff.


The choice is up to you. Just remember that smart business decisions will help you weather any economy!