As New York and New Jersey raise the hourly minimum wage to $15 per hour, some economists and business owners are calling it a “well-intentioned mistake”. While praised by employees, these wage increases aren’t met with as much enthusiasm by business owners, primarily in the hospitality industry, who say they will likely need to raise prices and potentially cut staff to stay afloat.
The “Fight for $15” campaign began in 2012 when the minimum wage in New York State was at $7.25 an hour. Presently, economists are split on whether this latest rise in pay will help most hourly employees. Many economists who followed the effects of the wage increase (when it started in Seattle back in 2014) stated then that the idea would be “a total flop”.
However, today some now call it a “tradeoff” that makes life more bearable for experienced workers, at the expense of the new, younger generation about to enter the workforce. That is perhaps the most compelling argument against the minimum wage increase.
It appears that in many cases, it hurts the people it claims to help. How so? Well, it’s argued that by forcing employers to pay workers more, it will prevent them from taking a chance on hiring new, unskilled workers, who desperately need to learn skills and gain experience.
The Big Effect on Small Business
For New York, this would be the third rise in the city’s base wage since Dec. 31, 2016. Then, it rose to $11 an hour. This latest increase is part of a plan that phases in minimum wage hikes across New York state, (and NJ) with amounts and effective dates that vary by region and industry. However, the increases are not limited to only New York and New Jersey. The “Fight for $15” movement has seen wages rise in 20 states in the new year. As a result, this has forced businesses across the country to now manage higher payrolls and compete for employees with corporate giants like Amazon, who already offer $15 an hour.
“Time” Will Tell
“Small and mid-sized businesses will be forced to make tough decisions”, said Joel Kohn, CEO, and founder of Brooklyn-based, HR Platform, Fingercheck. “The hourly wage increases and management of larger payrolls is making business owners pay closer attention to work schedules. We see more small businesses embrace the technology to track hours worked – which saves money”.
Once considered only for larger companies, time tracking technology (and the low cost of implementing it), has led smaller and smaller businesses to consider its use. Using advanced biometric time clock software allows employees to punch in/out using fingerprint recognition and track work hours right down to the minute. It virtually eliminates “buddy punching” that on average, accounts for 2.2% of gross payroll, according to the American Payroll Association (APA). Even better, software such as Fingercheck offers a host of features, that includes integrated payroll automation. Rather than resorting to cutting jobs while for some may be inevitable, it’s worth taking smarter steps to offset the hourly wage increase by better managing work schedules and account for work hours in a more organized and efficient manner.