The debate about whether it is a good or bad idea to raise the federal minimum wage continues across the county, and this complex issue promises to remain a key area of workforce management well into the future. Some lawmakers and employers consider raising the minimum wage to be harmful to businesses and say it could result in people losing their jobs. Others think it's essential for the economic success of the U.S., as increasing the minimum wage ensures people are able to pay their monthly bills while also putting more money into their pocket to spend. Payroll management is a critical aspect of human resources and can directly impact a company's success, and so this issue is often on the mind of many small and medium-sized employers. Knowing a few of the pros and cons of raising the minimum wage can help employers better understand whether increasing workers' earnings can harm or hep the business.
Pro: Decreases worker turnover
Providing employees with higher wages can prevent the best talent from leaving the company, thereby reducing the costs of having to find and train replacements. According to Salary.com, this is a benefit not many companies often consider. Many employers only think in terms of how much raising the minimum wage will cost them in salary dollars, not necessarily how doing so benefits the company in less-measured ways.
Con: Reduces the business's revenue
However, boosting the minimum wage does take money out of the company's pocket and puts it into the workers'. For small businesses, this directly affects their profitability and ability to stay open. Some companies may find themselves faced with the decision to either cut workers or take a hit to their bottom line. Many employers may chose to protect the business, thus causing a surge of layoffs. Entrepreneur reported that many lawmakers and financial experts don't believe the current job market is stable enough to handle boosting the minimum wage.
If the federal minimum wage is hiked, small and medium employers need to be especially careful with how they manage their payroll. Payroll outsourcing is an effective means of ensuring workers' earnings are being managed effectively and the company is complying with the federal minimum wage. Employers need to protect their businesses, and this often means having a better handle on workers' wages.