The new year means hourly wage increases in many places. (Check your minimum wages using this handy tool from the Economic Policy Institute) If you were affected, don’t just pay more, turn it into a positive.

First, did you face an increase? 14 states increased their minimum wages through legislation since January 2014: Alaska, Arkansas, California, Colorado, Connecticut, Hawaii, Massachusetts, Michigan, Nebraska, New York, Rhode Island, South Dakota, Vermont and West Virginia. Three states–Nevada, Minnesota, and Maryland–will institute higher wages later in 2016. Seattle, San Francisco, and Los Angeles will also implement their own wage standards.

Second, if your business has been affected by the minimum wage increase, prepare for the year of higher labor costs. Below are three things to do this month:

1) Review your business finances

Focus on the things you can control, and use the wage increase as the catalyst for reviewing your business finances. Pull your annual report from your accounting software, and look at how your costs changed over the course of the year. Calculate your major cost items as a percentage of your sales, and look for what grew more than your sales. Don’t let labor increases mask cost increases elsewhere in your business.

2) Rethink the way you schedule your workforce

Effective shift scheduling can balance out the higher wages. First, evaluate how your shift scheduling matches the demands of your customers. Within Homebase you can easily view your labor cost % of sales throughout the week to look for opportunities to reduce your labor budget.

Second, reconsider how operational tasks are distributed. Have an employee committed to a single task throughout their shift? Unless they only work the busy hours, their is a good chance they’ve got some downtime. Assigning additional duties can reduce labor needs later in the day, keep your team from getting bored, and also promote teamwork.

3) Invest in your team

Turn the situation into a motivational opportunity. You just gave every member of the team an effective increase; are you going to expect the same from them? Schedule 1-on-1s with your team members to discuss what additional responsibilities they can take on, and set goals for the quarter. Show them you’re confident in their abilities and watch their productivity increase.


We’d love to hear how are you’re making the most out of the 2016 wage increases in your business. Share with our local business community below.