Business owners learn strategies for changing minimum wage laws

The rising minimum wage affects different businesses in different ways.


UKIAH 2/4/2017 — At a workshop on changes in the minimum wage law, Steve Lamb, of West Company, offered small business owners advice on how to comply with evolving regulations while staying financially viable. On April 4, 2016, Governor Jerry Brown signed Senate Bill 3, which will eventually raise the minimum wage in California to $15 an hour. This is happening incrementally, and at different rates for businesses of different sizes. Last year, the minimum wage went up to $10 an hour. On the first day of 2017, some businesses were required to raise that pay again, to $10.50 an hour.

West Company[footnote]Footnote 1: Full disclosure, The Mendocino Voice is a client of West Company and participates in the county’s small business program. However, the reporter who worked on this story does not ever interact with West Company, or the business side of The Mendocino Voice.[/footnote] is a non-profit economic development organization that offers business consulting to entrepreneurs and small businesses in Mendocino County. Lamb, a business adviser, acknowledged that there were “doom and gloom” aspects to his presentation about the increased minimum wage. These included increased prices all around as the cost of labor rises, the difficulty of retaining employees who grow restless in low-paying jobs, and the eventual link between the minimum wage and the consumer price index (CPI). However, the point of the workshop was to offer strategies, which consisted of crafting job descriptions, keeping track of prices and regulations, and knowing exactly what is going on in the business.

The minimum wage went up to $10 an hour on January 1, 2016. On New Year’s day this year, that wage went up to $10.50 an hour for workers at businesses employing 26 or more people. These businesses have until 2022 to raise the minimum to $15 an hour. However, businesses that employ 25 people or fewer have until 2018 to raise their minimum wage to $10.50. These smaller businesses also have an additional year to raise the minimum to $15 an hour. After 2023, the minimum wage will be tied to the CPI, with a cap of 3.5%. The state is still working on a formula to determine the rate of pay for businesses that rely on seasonal workers and have fluctuating numbers of employees throughout the year.

Willow Anderson, executive director of the Ukiah Chamber of Commerce, which co-hosted the event, pointed out that many small businesses in the area will not have to raise their wages until next year. But she hopes employers will plan for the inevitable, “Rather than waiting and being grateful for a grace period.”

Lamb advised business owners to be knowledgeable about how much they can expect their vendors to raise their prices, based on increased cost of labor. “Check with your vendors,” he advised. “Ask if they’ve checked with their vendors.” It’s also important to know where suppliers are located, because it is not unheard of for out-of-state vendors, who are not affected by wages in California, to raise their prices for California-based clients who are. “You’ll have to pay more, but there’s no reason to pay twice as much,” Lamb told attendees.

Another important thing for employers to know about is what their employees are doing. Lamb said many businesses lack a policy of writing up job descriptions, based on a job analysis. “How do you get anything done if you don’t have minimum performance standards?” he asked. In addition to providing useful information to everyone involved about what is supposed to be happening, job descriptions can also protect employers who fire someone for not fulfilling clearly stated requirements. Lamb added that knowing exactly how each job is done can be helpful in evaluating if it is possible to absorb the loss of an employee, or if a replacement hire is absolutely essential.

It’s also important to hire wisely, which Lamb said can be done using an interview style that resembles an intelligence debriefing. An example of a question in such an interview would be, tell me about a time you failed at a task, and what you learned from it. “Never hire the guy who says, if they’d just listened to me, it would have been fine,” he said. The technique is designed to elicit responses about experiences that will provide information about the applicant, so “only the qualified candidate can answer the question,” Lamb explained. He recalled that before he started relying on the technique, “Every time I thought I had the box with the bow,” or the perfect candidate, “It was just an empty box full of hot air.”

Sarah Reith [email protected]

Did you enjoy this article? Consider paying a dollar and supporting local independent journalism.