How Will Changes To Minimum Wage and Overtime Pay Affect Small Businesses?
The increase in the federal minimum wage across multiple states is big news in America, and an even bigger concern for thousands of small business owners who must pay their workforce.
Early in March 2014, The New York Times reported that President Obama is determined to enforce wage and overtime increases, while Republicans are determined to stop this initiative. This comes down to President Obama’s decision to use executive authority to transform current minimum wage and overtime rules for millions of fast-food workers and other often underpaid “executive or professional” salaried workers.
The proposed minimum wage increase to $10.10 per hour (from $7.25 per hour) is not sitting well with small businesses around the country that are concerned they will not be able to support their labor force under already burdensome Affordable Care Act mandates.
What Raising the Minimum Wage and Overtime Pay Means to the Small Business
Raising the minimum wage has serious implications for the 23 million small businesses that currently provide over 55% of all new jobs created in America. According to the Small Business Administration, nearly 54% of all sales generated in the US come from small businesses, and the workforce has doubled in the small business sector since the 1990s as compared to larger businesses. Every day, new small businesses are formed, providing jobs for 8 million people and opportunities for countless others. Adding the burden of raising minimum wage could be disastrous to those who rely on low cost labor sources to get the job done on American soil rather than outsourcing to other countries.
Controlling Costs of Payroll Administration with PEO Payroll Administration
If the President gets his way, and things are looking like they are headed in that direction judging from the way the Affordable Care Act was rolled out, many small businesses will be faced with the decision to either let more people go or outsource some tasks to control business costs. Recent polls indicate that three out of four voters in America are in favor of raising the minimum wage in New Jersey and other progressive states. Voters in New Jersey actually approved a Constitutional amendment in November 2013 to increase the 2014 minimum wage, and tie it to increases to the cost of living, even after the Governor vetoed the measure. Meanwhile, the proposal to raise the federal minimum wage was recently defeated in the Senate, with Florida’s two Senators split along their respective party lines.
Proponents say raising the federal minimum wage could add as much as $25 million to consumer spending in 2014. Either way, these aspects can be negative to your bottom line as a small business. Instead, a professional employer organization (PEO) can provide a cost effective solution to managing the demands of payroll management.
By outsourcing payroll to a qualified PEO, your business can have a partner in the war for your small business. This factor alone can help you to survive the challenges of increased wages and overtime rules. Consider that processing payroll in-house takes a considerable amount of effort on behalf of your already stretched-thin human resource and accounting team. Wouldn’t it be more feasible to let an outside PEO handle all these details, and keep your business compliant without having to hire on more experts?
How will a raise in minimum wage and increased overtime payments affect your business? Now is the time to take action and talk with a PEO in your area. Find out more by calling SourceOne Partners, a direct link between your small business success and qualified PEOs in New Jersey, Florida and throughout the country. Call us today at 561-674-0748 or contact us online.