Manager

From minimum wage to salaries, compensation for employees is a never-ending topic for business owners to research, discuss and work through. With a rise in the conversation of wages in recent years, including law changes to minimum wage rates, there’s a lot of confusion left for sorting through when it comes to cutting a paycheck.

Let’s set the groundwork for why the minimum wage battle has both business owners and employees uptight.

As a whole, the goal of any minimum wage increases can be seen as both good and bad. When you stop and consider the goal, minimum wage increases are set to help reduce income inequality and to increase the earning of middle-class households.

On the flip side, if your goal for an increase in wages is to help the least experienced and most needy job seekers find their place in the workforce, then the minimum wage increase can truly hurt them and your business.

Recall the 2014 analysis of the effects of increasing the federal minimum wage to $10.10 per hour from $7.25, where it has been since 2009. It was found that the boost would increase the earnings of millions of workers by a total of $31 billion. It also found that the increase would reduce employment by hundreds of thousands of jobs, and that less than one dollar in every five of that $31 billion would go to households living in poverty.

So, what is the lesser of two evils? Higher pay for employees, or less employees in the workforce?

Following the federal wage increases, individual cities and states have stepped up to raise those minimum standards even greater. Take Seattle for example, the Seattle city council voted in June 2014 to increase the city’s minimum wage to $15 per hour over a period of a few years. Seattle’s minimum wage hit $13 last year (on its way to $15), and the consequences aren’t pretty.

A team of researchers at the University of Washington found that the number of low-wage jobs in Seattle declined considerably as a consequence of the $13 per hour mandate. They also found that the number of hours worked by low-wage labor declined by 9 percent, while wages increased by only 3 percent. Since hours went down more than wages went up, the net result is that the amount of money earned by low-wage workers actually fell.

So, what’s the workforce and business owners supposed to do about the good, the bad and the honest stats from minimum wage increases?

We’d propose one thing: there may not be a perfect blanket solution for all employees in every industry and in every city across the United States. Perhaps it’s more of a city by city or industry by industry standard which should be set.

We want to hear your feedback. What ways has the change of wage requirements affected your business or career search? Are you running an establishment on less employees but paying more?