Michigan isn’t the only state with a minimum wage increase, so we looked to see what businesses in other places are doing to adjust—see what we learned.

Before Michigan’s Wage Act goes into effect in February 2025, businesses need to plan for payroll adjustments. Our state’s business owners aren’t alone in this challenge. From New York to Nevada and from Florida to Illinois, new laws have increased the minimum wage or call for an increase in the near future. Today, we look at what businesses across the nation are doing to prepare for these changes.

How to prepare for the minimum wage increase

Businesses are taking a holistic look at their expenses, cash flow and operations in preparation for a higher minimum wage. Advisors from HR consultants to accountants recommend these steps:

• Re-evaluate staffing levels before the increase takes effect advises RestaurantOwner.com. They write, “The biggest challenge to operators when controlling labor costs is not hourly wage rates, but productivity.” A balance of full- and part-time workers helps keep staffing at levels that maintain productivity during both peak and off-peak times.
• Clearly understand your cash flow says QuickBooks Express. “Understanding the cash flow of your business will help you know how many employees you can afford to pay.”
• Audit your expenses recommends Homebase. Do an across-the-board review of every outgoing dollar. Are there unnecessary services? Could other suppliers provide your supplies or raw materials for less? You may need to increase prices.
• Reduce your offerings is another tip from Homebase. A narrower range of products or service can help streamline operations, reduce waste and allow you to focus on your most profitable offerings.
• Step up your competitive edge is the counsel from Trüpp HR. Employers who previously paid more than minimum wage may discover they’ve lost an advantage over other employers. “To compete in this new labor market, dynamic employers will need to improve their employer brand (how they are perceived as an employer in the labor market) and shore up their employee value proposition (what an employer does that results in employees choosing to work and stay at your place of employment).”

More gain than pain

A higher minimum wage will be a significant adjustment for many Michigan businesses. However, new research from the University of Michigan and Carnegie Mellon University shows more gain than pain. “Most independent businesses can shoulder the added costs of higher minimum wages with new revenues, making only minor employment adjustments,” reports Michigan News. Furthermore, the research shows the wage increase will “even benefit some owners while meaningfully increasing both the earnings and employment of young and low-earning workers.”

As you meet the challenges of adjusting payroll to accommodate a higher minimum wage, remember there are tangible benefits for many. Namely:

• Higher job satisfaction that can contribute to employee loyalty and, in turn, lower costly turnover (Indeed)
• Lift some families out of poverty (Congressional Budget Office)
• More dollars in consumers’ pockets can boost the economy (Investopedia)

February is just five months away. The sooner you begin preparing for the minimum wage increase, the more time you’ll have to make adjustments that will allow for a smoother transition.

 

 

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