By Deborah Jeanne Sergeant
Raising minimum wage may seem like a way to help entry-level workers get ahead. However, its unintended consequences are causing problems for small employers — even those who pay more than minimum wage.
“Minimum wage has made an impact on candidate expectations,” said Michelle Jevis, professional in human resources at CR Fletcher Temps and CR Fletcher Industrial in Syracuse.
“A few years back in 2021, when minimum wages was $12.50 an hour, we would hear from entry-level candidates that they would only consider $14-plus and hour. That mentality of not being willing to work for minimum wage has continued.
“Now that minimum wage is $15-plus an hour, it is very rare for us to find an entry-level candidate willing to work for less than $18 an hour. That means that companies need to increase their starting wages to well above the minimum. Then, for pay equity, all positions within those companies need to be evaluated to ensure there is the ‘right’ increase from role to role as more experience is gained.”
Randy Wolken, president and CEO of Manufacturing Association of Central New York (MACNY), rubs shoulders with many leaders in the skilled and advanced manufacturing industries. He said that raising minimum wage causes wage compression.
“If the lowest-paid person gets more, each person needs to be paid more,” Wolken said.
It’s tough to convince employees with experience and seniority that the newbie in the workforce will make comparable wages as they do. Their tenure should be worth more. Not raising their wages also can lead to employees quitting for greener pastures.
And companies that pay no employees minimum wage still feel pressure to raise wages because companies that start workers at minimum wage raise the wages of their other workers to compensate.
Raising minimum wage costs employers more money and to compensate for that shortfall, they must increase the cost of goods and services.
“Throughout a community, it causes higher prices,” Wolken said. “It is part of what’s driving inflation. Costs go up for eating out and hospitality. It tends to cost more to do and have things. All of those things are impacted by a higher minimum wage.”
He added that small companies, nonprofits, hospitality and government entities, which tend to pay at a lower pay scale, are affected by the wage hike the most.
Inflation can affect wages as well.
Elvis Mehmedovic, franchise owner at Express Employment in Syracuse, said that any job that involves driving to work because the employer is located away from public transportation, is hard to fill for an hourly rate of less than $17 an hour.
“It’s pressure of economics and people’s needs,” he said. “The vehicle requires gas and maintenance. Irrelevant of the minimum wage, that requirement raises the cost.”
Like Wolken, he has observed companies raising prices to allocate funds for making their payroll. Another strategy has been to increase their retention efforts.
“If you have turnover, it’s more expensive than if you can keep people, so decreasing turnover is a cost savings,” Mehmedovic said.
In addition, some companies are cutting staff and cross-training existing staff to consolidate positions. Technology can also help with completing some tasks. Automation and AI are reducing the amount of work people need to do.
