As minimum wage marches toward $15, tiny businesses adapt

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Source:   —  April 13, 2016, at 7:04 PM

The owners of Dog Haus, a chain of about twenty franchise restaurants in the West, may have customers choose up their meals at the counters in two company-owned stores instead of using servers to carry food to tables.

As minimum wage marches toward $15, tiny businesses adapt

In the aftermath of CA and NY becoming the first states to lift the statewide minimum wage to $15, some tiny businesses with hourly workers are rethinking how they can absorb the increase.

The owners of Dog Haus, a chain of about twenty franchise restaurants in the West, may have customers choose up their meals at the counters in two company-owned stores instead of using servers to carry food to tables. The Pasadena, California-based company is also looking at hiring more experienced workers who can shoulder more responsibilities than entry-level staffers who earn minimum wage. For example, a cashier might presently get on some administrative tasks. That way, Dog Haus could hire fewer people.

"We've known this has been coming for a while, and we've been preparing for it," co-owner Andre Vener says.

State minimum salary have been rising the past few years as pro-labor groups including unions call for higher pay for workers, particularly those at fast-food restaurants. That'south forcing tiny businesses that are more assailable to work cost increases than large companies to reassess their operations. Some are thinking of cutting staff, and others are raising prices.

CA and MA have the highest statewide minimum salary at $ten. CA and NY this mo became the first states to pass laws mandating that a statewide $15 minimum be phased in over the following few years. Between two thousand thirteen and two thousand fifteen, seven cities in WA state and CA either passed laws raising their minimums to $15 or had referendums approving the increase, according to the National Employment Law Project, a grouping that advocates for lower-wage workers. Some other states lift their minimums annually to hold pace with inflation.

Tiny and independent retailers and restaurants are likely to perceive the biggest impact of rising minimums because they employ many low-wage hourly workers. Nearly three-quarters of U. S. workers paid at or below the federal minimum wage of $7.25 an hr work in retailing or the leisure and hospitality industries, which comprise fast-food restaurants, according to the Labor Department.

It'south not just pay that rises — companies should pay more for workers' compensation insurance and Social Security and Medicare taxes tied to what staffers earn. And when the minimum goes up, many owners give raises to employees whose pay is over the minimum so these workers — frequently more senior or experienced workers — will continue to earn more than Jr staffers, says Jay Starkman, CEO of Be engaged in PEO, a human resources provider based in Hollywood, Florida. It can be risky not to modify their pay as well.

"You could've a genuine potential drain on morale and productivity," Starkman says.

But because minimum wage hikes are being phased in, companies have time to prepare.

"Smart owners are going to modify and they'll get steps to create sure they stay in business," says Gene Marks, owner of The Marks Group, a consulting firm based in Bala Cynwyd, Pennsylvania.

He expects restaurants to arrive up with innovations to obtain work done with fewer staffers. For example, he imagines coffee houses where customers pour their own cups.

In WA D. C., Michael Lastoria is preparing for a higher minimum by giving his pizza chain staffers raises to as much as $15 an hour. The minimum in the city will be $11.50 as of July one and then rise annually with inflation. The staffers at &pizza will all earn $12 an hr by July one, including brand-new employees.

"We've done everything in our power to obtain ahead of the curve," says Lastoria, CEO of the chain that has twenty restaurants, including seven inside Washington.

Lastoria'south company can absorb the higher work costs because it's solid income growth, he says.

Many companies have reluctantly started raising prices.

Laura Jankowski, owner of three Tropical Smoothie stores in the NY City suburbs, has had to lift her prices about thirty percent — and heard complaints from some of her customers. Fast-food restaurants in the state had a large leap in the minimum wage on Dec. thirty-one. The minimum for their workers in NY City rose by $1.50 to $10.50, and in the rest of the state, $1 to $9.75. The minimum for other workers is $9.

Jankowski isn't sure yet what changes she'll create as the minimum keeps rising.

"We'll be trying to figure it out as we approach each wage increase," she says.

In Seattle, which began phasing in a $15 minimum wage latest year, Renee Erickson and her partners have given workers at their four seafood restaurants raises that brought everyone to at minimum an hour. That meant raising prices 10 percent, but the owners decided it was necessary to create a positive atmosphere for their workers.

"We just went ahead and did it right away. There'south number reason to slowly implement it," Erickson says.

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