Should You Pay Minimum Wage or More?

June 24, 2014 | 1,114 views

Should You Pay Minimum Wage or More?

Should You Pay Minimum Wage or More?

Minimum wage. It’s a great debate in our country, and one that isn’t going away any time soon. Whether you’re in the restaurant industry, tourism, or any other that hires unskilled labor or entry-level positions, you’re probably wondering whether you should stick to minimum wage or pay more.

 

First, a Look at the Current State of Minimum Wage

The national rate for minimum wage is currently $7.25 per hour. Your state may also have its own minimum wage. In California, it’s $8 an hour. That is subject to change with legislation as the government works to ensure that all employees make enough to pay their bills.

 

There’s also what’s called “living wage” laws, that set minimum wage in cities that have passed these laws even higher than state standards.

 

And not every industry is required to pay minimum wage. For employees who receive tips, such as servers in restaurants, employers are required to pay no less than $2.13 an hour, plus tips received from customers. That’s assuming the employee’s tips plus the hourly rate equal minimum wage, otherwise the employer has to make up the difference.

 

It’s a lot to pay attention to. How do you know what to pay? Essentially the rule of thumb is: pay the highest required amount, be it the federal minimum wage, state, or local. Check with your city’s employment division online to determine what you’re required by law to pay.

 

But is Minimum Wage Enough?

Sure, you want to cut costs whenever possible when it comes to your staffing expenses, but there are benefits to paying more. For one, you become a highly sought-after employer, and can find the best talent to work for you. This bodes well when you work in high-turnover industries like food and beverage.

 

You also engage your employees better when you pay more, or when you offer raises in response to their meeting certain milestones. Happy employees work harder for you, and will be more likely to stick around, cutting down on the time and money you spend on finding, hiring, and training new employees.

 

So What’s the Solution?

Test out what you pay. Consider giving existing employees a raise, then track to see their progress in the future to see if they stay with the company longer than your minimum wage employees.

 

Then, for the next role you hire for, look to see what your competitors are paying. You can do this by looking at job advertisements online. Make sure you remain competitive in your offering so you attract top-tier talent.

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