What a Minimum Wage Increase Would Mean to You
Sharpen your budget-balancing pencil and get ready for rising costs if a federal minimum wage increase is enacted. There is a movement in Washington to increase the minimum wage by $1.50 per hour to $6.65. While it is not certain that the measure will pass, and if so, how large an increase will result, the prospect of a minimum wage increase may affect your decision to take on new workers and certainly will have an impact on the cost of goods and services.
What would a minimum wage increase mean to you?
It depends on the nature of your business. Those businesses that depend on teenagers and entry-level workers bear the direct cost of any increases in the minimum wage. This direct cost includes both salary and payroll taxes. For example, every $1 increase in the minimum wage will cost you about $1.10 after factoring in payroll taxes.
Allbusinesses, even those without minimum-wage employees, are impacted by a rate increase. As the minimum wage rises, so too do the salary levels of all employees (and payroll taxes on those increases).
Businesses may have to increase the price of their goods and services to afford minimum wage increases, price increases that are passed along to consumers of these goods and services. You may be forced to raise your prices as well.
State minimum wage rates
The Fair Labor Standards Act (FLSA) sets a federal minimum wage, currently $5.15 per hour. States and local communities are allowed to set higher rates and an increasing number of localities have already taken this action. If you are thinking about moving to another state or taking on employees there, be sure you know your minimum wage responsibilities in the new locality.
