Key Podcast Highlights
What Minimum Wage Increases Will We See This Year?
- The federal minimum wage is $7.25 an hour. There are still many states adhering to that.
- In 2024, minimum wage is going up in more than 20 states, including Alaska, Arizona, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New York, Ohio, Oregon, Rhode Island, South Dakota, Vermont, and Washington.
- A few states are hitting $15 for minimum wage including, Delaware, Florida, Maryland, New Jersey, New York State, or Rhode Island.
- The state with the highest minimum wage is Washington at $16.28 cents.
- Washington D.C., which is not a state, has a minimum wage at $17 an hour.
- There are some states, particularly California, which is implementing higher minimum wages depending on the industry. So, in California, workers in the fast-food Industry are likely to have a minimum wage as much as $20 an hour.
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Hey everybody, this is Gene Marks, and welcome to another episode of the Hartford’s Small Biz Ahead podcast. Thank you so much for joining me. This week’s episode, let’s focus on minimum wages. As I’m sure you know, the federal minimum wage is $7.25 cents an hour, and there are still many states that are adhering to that. I do not see that federal minimum wage going up, anytime in the near future, particularly in this election year. I think things will be at a stalemate in Congress. There is bipartisan support for increasing the minimum wage, but probably not enough to get it through, Congress. There are definitely some arguments to be made on both sides.
Some people feel that a minimum wage, an increase will help people make more money and spend more money, and that’s good for the economy. Of course, as a business owner like you and me, we see an increase in minimum wages doing nothing more than increasing our costs. Why hasn’t the federal minimum wage gone up since 2009? There are some people that believe and fair enough that why should their constituents in their state, be paying as much as constituents in another state? In other words, the cost of living in Tennessee is a lot lower than it is in California. So, why should Tennessee businesses be subject to a federal minimum wage? Let’s just leave that to the states, and the states are responding.
In 2024, many wages are going up. More than 20 states, have increased minimum wages in 2024. Shall I list them out? Okay, I’m gonna list them out for you all 20 very quick. Alaska, Arizona, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New York, Ohio, Oregon, Rhode Island, South Dakota, Vermont, and Washington are all going to be seeing increases in their minimum wages in 2024. There are a few states that are hitting that $15 an hour minimum wage. If you are a business in Delaware, Florida, Illinois, Maryland, New Jersey, New York State, or Rhode Island, your minimum wages are going up to $15 an hour. The state with the highest minimum wage is Washington at $16.28 cents. However, Washington D.C., which is not a state, has the highest minimum wage in the country actually at $17 an hour. There are some states, particularly California, which is implementing higher minimum wages depending on the industry. So in California, workers in the fast food…
Industry are likely, hasn’t been completely firmed up, but are likely to have a minimum wage as much as $20 an hour for their minimum wage. So minimum wages across the country are going up everywhere. Your question is, what do I do about that? What do I do? And, and let’s be aware, even if you are paying your workers more than the federal minimum of $7.25 cents, if your state rate is higher than the federal rate, the state takes precedence. Also, if the minimum wage itself is going up in your state, just know that that impacts all of your workers, not just the people getting the minimum wage, right? Because when minimum wages go up, that everybody else wants to stay on parity. So say you’ve got somebody making, I don’t know, $20 an hour and the minimum wage goes up to $12 an hour, well, that person making $20 an hour is gonna be wanting to get more wages themselves, that they’re on parity with that entry level persons.
Just bear in mind that an increase in the minimum wage really does affect all workers in your business because again, people wanna maintain parity. So that’s certainly an issue. So the question is, what do you do? Minimum wage itself is going up in your state. How do you handle that? Well, you have a few choices. I mean the worst choice, is just to absorb it. Some business owners decide to do this and increase in the minimum wages, adds to their expenses, reduces their margins, adds to their overhead. But some employers are like, well, it is what it is. Or maybe, the increase is not so significant that I can’t absorb it, and I’m willing to do that without taking any other actions. Now, another move to make when minimum wage in your state increases, is to increase prices.
I’m expecting to see that in California at fast food restaurants. We’ve already even heard the tales of the $18 Big Mac meal. That’s because wages for McDonald’s have gone up among other expenses. I wouldn’t be surprised to see that in the fast food industry in California, if minimum wages increase to $20 an hour. So, you just make your customers pay more. Obviously there’s a tipping point as to how much a customer will pay before they back out, but a lot of companies just turn right around and just pass that increase down to their customers. And that is what it is. Now, there’s a combination of things. You can increase prices while at the same time trying to reduce expenses. So how do you reduce expenses when minimum wage goes up? Well, for starters, you try and keep your labor hours as low as possible.
That is one way to do it. The other way to do it obviously, is to try and look for other areas in your overhead that can also be cut. So maybe there are negotiations you can be doing with your utility company, the people that you pay freight to. The outside service people that you are employing. Maybe you can, you can shave off some savings in different parts that can help make up for this increase in the minimum wage. So you’ve got that as well. Finally, you can increase in technology and we’re seeing a lot of that going on all across the country as the cost of technology comes down and down and down. Now, don’t discount the use of artificial intelligence in your business. It’s still a ways before it really becomes part of the routine and that will happen.
But even tools like ChatGPT or tools like Microsoft’s Co-pilot or Google Duet for workspace, these are tools that can help your workers do things faster. They will compose emails, they will compose documents, they will do PowerPoints. They can answer questions, they can do research, they can do marketing work for you as well. All of these generative AI platforms and there are more out there besides ChatGPT, Microsoft and Google that can help your existing employees get their work done faster, which means they can do more work during the current workday. And then finally, the other thing is you can look for workers that are at a lower wage to fill the higher wage people. And that certainly happens as well. I mean, if you’ve got somebody that may not be maybe making above a minimum wage but you could hire somebody at the minimum wage that can do the work just as well.
I have a lot of clients doing that too. So these are all tactics and strategies to try and get around the increase in minimum wage. And as all the states that I mentioned, they’re going up this year. And if you’re in one of those states, you gotta start thinking about it ’cause that’s going to impact your business in 2024. So I hope this information helps and this advice helps. I’m not sure if you’ve got some ideas and strategies for dealing with minimum wage, but by all means, share them with us please. And if you need any other tips or advice and help in running your business, please visit us at smallbizahead.com or SBA.thehartford.com. You’ve been listening to the Hartford Small Biz Ahead podcast. My name is Gene Marks. Thanks for tagging along. I hope this information has been helpful. I’ll see you again next week with some more information, at least some tips and advice to help you run your business. Take care. See you then.
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