Colorado is one of several states fighting for a minimum wage increase. And starting in January of 2020, cities in the state will be able to set their own minimum wage requirements. The new standards have sparked concern for Colorado businesses as they worry about how they will adapt to these new changes. When the minimum wage goes up, business owners may need to reevaluate their current processes to keep their stores and companies running.
Expenses can go beyond hourly pay
Workers are often a business’s biggest expense. When states and municipalities implement wage hikes, the extra costs it creates can go far beyond hourly pay. When workers receive more compensation, it can raise an employer’s payroll taxes. In some cases, wage boosts may also require an employer to invest more in workers’ 401k or health insurance, all of which can damage the bottom line.
Ways businesses can survive minimum wage increases
These moves can help lower expenses and keep operations in check:
- Balance the budget to increase ROI: Businesses should consider looking for inefficiencies that are hurting their profit margin and find ways to reduce them. That may include cutting back on maintenance services or automating certain tasks.
- Increase prices: While doing so may not be ideal for customers or clients, a price mark-up can help bring in extra revenue to make up for additional wage expenses.
- Adjust hours and methods of operation: During a wage hike, businesses may want to find ways to reduce operating hours and costs. This can be done by shortening worker shifts during slow periods, limiting overtime and keeping the business closed on certain days.
- Consolidate offerings: When a business is thriving, many often look to expand their products or services. However, when labor expenses go up, they may want to assess the value of their current offerings. If there are any products or services continuously underperforming, businesses may need to make cuts in those areas.
Businesses deserve a say in wage hikes
Running a business takes a lot of time, money and energy. When wage requirements go up, it may cause business owners to readjust certain aspects of their organization to maintain its profitability. If you run a business and have questions regarding minimum wage requirements, an experienced attorney can assist in addressing your concerns and help you understand state wage standards.