Gradually, many cities and states throughout the country have been raising the minimum wage. As such, many small business owners may be faced with an increase in their employees’ wages. The adjustment has been spurred partly due to an increased cost of living, but it could impact your company’s regular costs. Deciding to raise your employees’ wages must be carefully considered, but if you don’t live in a city or a state where the minimum wage is rising, you may want to look into raising your employees’ wages anyway. Consider the following arguments for and against raises.
There are plenty of intriguing arguments for raising the earnings of underpaid employees, but one of the most compelling is that it helps attract good employees. If your company pays its employees well, it is more likely that high quality people will apply for open positions, and that they will stay with your company. An article on Entrepreneur titled “3 Reasons You Should Increase Employee Pay Now” states, “If you’re having trouble finding the right employees for the job, take a hard look at the pay you’re offering for the position. Money talks, and while vacation days and excellent health insurance are nice, it’s not going to attract and keep top talent.” Paying your employees well can also help to boost morale, creating satisfied employees, which in turn can help to boost your brand.
One of the biggest arguments against raising wages is that the increased costs could cause small business owners to reduce necessary costs elsewhere. The Council of Smaller Enterprises explored the issue in its blog. “On the contrary, many smaller employers believe minimum wage increases will exert upward pressure on all employees’ pay, requiring an increase in overall prices.” For businesses that compete with large chain retailers or online businesses, raising prices could cause them to lose their competitive edge.
Many economists have researched the potential consequences of raising the minimum wage, and many city and state governments are choosing to move forward with an increase. Regardless of whether or not your state has enacted legislation to raise rates, it may be beneficial to your business to raise wages anyway.
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This article was written by Alaina Brandenburger for CBS Small Business Pulse.