A possible new $15 an hour minimum federal wage – or a huge increase in the minimum wage – presents major challenges for associations and nonprofits.
The Labor Movement has been aggressively promoting increasing the federal minimum wage to $15 an hour.
No matter what happens, the minimum wage increase will impact associations and association finances.
Early in my ownership of an association management company, our receptionist came to me during an earlier move to increase the state’s minimum wage by $1 an hour. I was paying her a few dollars an hour more than the existing wage. “Steve,” she said, “If the minimum wage passes, I want a $1 a hour increase in my salary.”
It was then I realized that increasing the minimum wage increases wages up and down the line. And, it was then I realized I needed to budget for general wage increases for everyone any time the minimum wage was increased.
The Challenge for AssociationsAssuming this case is universal, the question for associations and nonprofits becomes:
- How do we budget for across-the-board wage increases?
- Where do we get the funds to support such increases?
- Will members accept the higher dues and increased fees needed to balance budgets?
Many businesses find ways to automate to “contain” the impact of wage increases. Throughout history the laws of economics have led to automation anytime labor costs increase to the point of making machines more economical. This can happen again. Here are some examples:
|Panera Bread ordering kiosks|
During recent visits to Panera Bread Company shops, I’ve noticed they have installed “customer-operated ordering machines.” Right now, they call them “fast line.” But, I’m pretty sure that when/if the minimum wage increases, Panera – and other fast food restaurants – will replace fast food workers with customer-operated “cash registers.”
Robots can replace workers whose higher wages now make increased automation more economic.
|New cotton picker (right) eliminates the need for this |
equipment (left) and its 3 operators
Associations are a people-intensive business. Most associations and nonprofits have automated key functions (computers, databases, switchboards, etc.).
At this time, associations and nonprofits seem to have fewer (if any) options to automate. If that assumption is true, how do they pay for higher labor costs associated with a higher minimum wage?