The federal government’s proposed Raise the Wage Act would increase the national minimum wage to $15 per hour. While proponents believe that a $15 per hour minimum wage would lift nearly 1 million people out of poverty, others say that it would only hurt small and midsized businesses (SMBs), which make up the majority of American employers.
Impacts of a Higher Minimum Wage
As we’ve covered before, wage increases may cause problems for SMBs. A report by the Congressional Budget Office (CBO) examined the impact of a 15-an-hour minimum wage and found that such an increase would boost incomes, but it would also result in job cuts. The CBO predicted that even raising the minimum wage to $10.10 could cost the economy 500,000 jobs, many of which might be lost due to the failure of small businesses in competitive, low-margin industries.
In a post-COVID economy, a $15 per hour minimum wage may not any longer be relevant. Most employers are already paying more than that to attract and retain talent in today’s employment market. Greater competition has benefited employees at all levels of the workforce with higher wages, even without a government mandate.
Is Innovation the Answer to a Minimum Wage Increase?
For years, businesses that rely on minimum wage workers have simply reduced their dependence on such workers. However, modern innovations may take some of the sting out of not being able to afford to hire employees.
Large employers like McDonald’s, for example, have introduced automated ordering technologies like kiosks and mobile ordering. SMB owners are quickly learning to use technologies like AI and automation to replace some of the headcounts they cannot attract or afford.
One study found that SMBs are successfully using automated workflows and AI to reduce reliance on human work for:
- Manual data entry, including copying/pasting data from one platform, database, document, or system to another.
- Lead management, including following up with new leads.
- Document creation and organization, including creating meeting agendas, to-do lists, etc.
- Managing inventory and distribution.
MarathonHR is always happy to provide SMBs with guidance on controlling business costs as part of our HR solutions. If your business is looking for creative ways to cut employee costs through deployment of technology, please schedule a call to see how we can help.