The country and economy can expect changes under a new administration. One of those areas could be an increase in the federal minimum wage.
In 2019, the U.S. House of Representatives passed a bill, the Raise the Minimum Wage Act, which would raise the minimum wage to $15 an hour by 2025. With President-Elect Joe Biden taking office next year, this could soon become a reality.
President-elect Biden tweeted about this on November 16, saying, “When we build back better, we will do so with higher wages—including a $15 minimum wage.”
With this possible historic increase (the minimum wage has been $7.25 an hour since 2009), what will the impact be to small businesses? Let’s explore the topic.
Can Small Business Survive Wage Hikes?
Small businesses are already fighting against a calamity of disruption related to the COVID-19 pandemic and its economic consequences. Given these circumstances, a minimum wage increase may not be an event many small businesses would be willing to embrace.
On the flip side, according to a Congressional Budget Office (CBO) report from 2019, an increase in labor wages would bring benefit to a segment of our population living at or near the poverty level.
It would lift some families out of poverty and impact over 17 million U.S. workers. It would allow these workers to save and invest, possibly providing them the opportunity to become homeowners or invest in training to advance their careers.
Despite these advantages, the same report acknowledges that some workers would lose their jobs, most likely because businesses would have to run leaner operations to cover the wage increases.
The study directly notes a negative impact on small businesses. If small business owners pay more out to employees, they are taking less in themselves and the company, in general. To counteract the costs, a small business would have to raise prices to consumers, which in many cases may not be feasible.
With an inability to raise prices and possibly employing less staff, many small businesses could be forced to downsize, or in the worst of scenarios, close their doors.
So, what can small businesses do to survive and thrive should wage increases become law? For many, the answer could be automation.
How Automation Can Level the Wage Increase Impact
For any business that depends on hourly workers, automation could help address labor wage pressures. Investing in automation enables businesses to optimize in-store labor and deploy it where it is needed the most. Many examples of this exist today, most notably with self-checkout kiosks seen in grocery stores and big box retail stores. Retailers like Walmart and grocery stores are now using autonomous robots to restock shelves and pick product ordered online to be picked up in-store. Walmart has also deployed robots to automate shelf-restocking efforts.
Beyond these areas of automation, which relate directly to customer support, fulfillment, and merchandising, there are also opportunities for businesses to automate the ways in which they handle their cash. Smart safes and cash recyclers deliver a seamless and secure way to do just that. By automating these functions, business owners can optimize their labor, pivoting it away from non-value adding tasks such as manual cash handling and more toward their core business.
Getting Started with Cash Automation
Tidel has been a proud partner to retailers for over 40 years, providing solutions that automate and secure their cash operations. Our solutions have helped numerous retailers optimize their in-store labor and drive greater overall efficiencies, giving them a competitive edge during times of unprecedented challenges.
For businesses that are facing labor pressures today, or potentially in the future due to the prospect of a Federal Minimum Wage increase, cash automation is one of several ways to counteract these challenges.