Minimum Wage Increase for 2024: Impact for Local Businesses
The minimum wage has increased in several states in the US over 2022 and 2023. According to CNN, 23 states raised their minimum wage in January 2023, as part of previously scheduled efforts to reach $15 an hour or to account for cost-of-living changes. Some of the states with the highest minimum wage in 2023 are Washington, D.C. ($17), Washington ($15.74), California ($15.50) and New York ($15)1.
So, what happens when you crunch the numbers? You may find that absorbing the cost is not sustainable. It’s not just about paying employees more. There are indirect costs too. Unemployment insurance. Worker’s compensation. Both will go up as your payroll expands.
The challenge for businesses
But it doesn’t stop there. Imagine you own a small or medium business. These types of businesses employ over 60% of minimum wage workers. Large corporations are buying these smaller companies. Why? Because it’s hard for smaller entities to compete with the new wages.
Think about it. Even if your city hasn’t raised the minimum wage yet, the city next door might have. Your employees could easily drive a few extra miles to earn more money. So, what happens? Your employee turnover climbs. Now you’re scrambling to hire new staff.
Here’s where it gets even more complicated. There are hidden costs. Marketing to find new staff. Training them. Time spent interviewing. These costs creep up and add to your expenses. Also, don’t forget your existing higher-paid employees. They will want raises too.
This isn’t just a burden on you. It also costs the state. Take California, for example. The decision to raise the minimum wage will cost the state $4 billion each year. Project this over a few years and it’s clear. It’s a snowball effect. And it’s rolling faster than our economy can manage. On the other hand, some small businesses may benefit from a higher minimum wage, as it could boost consumer spending, reduce employee turnover, and improve worker productivity and morale4.
Insurance companies are impacted just as much.
A higher minimum wage can change how insurance companies work. They may have to pay more to their workers, like those who help customers or sell insurance. This can make them earn less money, unless they charge more to their customers. A higher minimum wage can also change how much people and businesses want to buy insurance. Some people may have more money, but some businesses may have less funds available to buy insurance, or some people may have to pay more for other things. A higher minimum wage can also affect other parts of the economy, like health care, shops, hotels, and factories. For example, health care may become more expensive.
The Search for Solutions
Faced with this complex issue, some companies have been looking for answers. Their top executives came together. They explored various avenues. Outsourcing seemed promising at first. But there’s a catch. It’s not practical for smaller operations. These contracts often require you to outsource hundreds of roles. Also, these deals are risky. Turnover rates are high. Work conditions and Legal Complexities abroad?
That’s where Staff Boom comes in.
After successful trials and happy clients, Staff Boom offers a different path. Our service can cut your labor costs by up to 70%. Want to know how? Click here to find out more.
2024 Problems are upon us.
The issue is pressing. The minimum wage isn’t spiking overnight. It’s a gradual rise, planned until 2022. That might sound considerate. But the negative effects are already showing.
And it’s not stopping there, the minimum wage is going up as soon as January 2024. For business owners like you, this isn’t simple news. It’s a challenge. You have to make choices, difficult ones. Let’s break it down:
California: The minimum wage will increase to $16 per hour effective January 1, 2024 for all employers, regardless of size2.
New Jersey: The minimum wage will increase to $15 per hour effective January 1, 2024 for most employers.
New York: The minimum wage will increase to $16 per hour in New York City and the counties of Nassau, Suffolk and Westchester, and to $15 per hour in all other parts of the state effective January 1, 2024.
Connecticut: The minimum wage will increase to $15 per hour effective July 1, 2023 and will be adjusted annually based on the cost of living.
Hawaii and Illinois: The minimum wage will increase to $14 per hour effective January 1, 2024.
Maine: The minimum wage will increase to $15 per hour effective January 1, 2024.
Maryland: The minimum wage will increase to $15 per hour effective January 1, 2024.
Massachusetts: The minimum wage will increase to $16.25 per hour effective January 1, 2024.
Staff Boom’s Unique Approach
Staff Boom offers a first-of-its-kind solution. Before us, small-scale outsourcing was out of reach. Now, it’s not just possible; it’s effective. Our model can reduce labor expenses by as much as 50-70%. At the same time, the quality of your operations remains high. In many cases, it even improves.
The notion that outsourcing overseas is problematic. It’s a myth. Staff Boom employees are dedicated and effective. We have a growing team that has a lot of experience with insurance services. The challenges are real. But so are the solutions. And Staff Boom aims to be a viable, cost-effective answer for businesses like yours.