Main Street Businesses and 2024 Minimum Wage Hikes
Since 2009, the federally mandated minimum wage in the United States has remained unchanged, prompting states, counties, and cities to independently enact laws to address increases in the cost of living amid rising inflation. 22 states will see minimum wage increases this year, impacting over 9 million employees. In addition to state mandates, 39 cities and counties are implementing new minimum wage laws surpassing their respective state minimums.
In 2023, speculation on whether the United States could fend off a recession dominated business news. Treasury Secretary Janet Yellen believes that the U.S. economy is going through a "soft landing" as a result of sustained low inflation and an upward trend in wages. With the December 2023 jobs report exceeding economist expectations by adding 216,000 new jobs, Yellen notes consumer spending patterns suggest confidence in the economy. Despite the optimistic economic outlook for 2024, small business owners continue to grapple with the challenges posed by the evolving wage landscape, necessitating a delicate balance between rising wages and business sustainability.
Rising Wages: Challenges for Small Business Owners
BizBuySell’s Insight Report, a nationally recognized economic indicator that tracks the health of the U.S. economy, surveyed business owners about a wide range of issues, including minimum wage increases. 48% of business owners report negative impacts from recent state-imposed minimum wage increases. Many small business owners are adapting to the escalating costs of operating by rethinking scheduling methods and implementing higher rates for customers.
The impact of a more expensive labor force extends beyond immediate expenses for small businesses. Owners report challenges in hiring, with 47% stating that in their experience, the labor market is not improving, making it difficult to hire and retain employees at a reasonable rate. This underscores the intricate dynamics small businesses face in response to the evolving labor landscape.
Positive Impacts for Small Business Owners
Main Street businesses, despite facing escalating costs, are realizing positive outcomes as they adapt to new minimum wage increases. Rising wages and a robust job market are hallmarks of a growing and healthy economy. A higher minimum wage provides increased financial stability, strengthening household finances. This enhanced spending power has the potential to drive economic growth through heightened consumer spending, benefiting small businesses with increased demand for products and services. With consumers having more money in their pockets, Main Street businesses have an opportunity to reap the rewards.
Higher wages often correlate with increased job satisfaction, fostering a more engaged and productive workforce. Navigating minimum wage adjustments highlights the need to strike a careful balance between ensuring worker well-being and maintaining the sustainability of small businesses.
Navigating the Labor Landscape in 2024
The labor landscape for small businesses is evolving with not only with minimum wage adjustments but also upcoming changes in overtime rules. The anticipated release of a new overtime rule by the U.S. Department of Labor in April 2024, proposing an increase in the salary threshold requirement, adds complexity to labor issues Main Street businesses face.
Despite challenges, the overall economic picture for small businesses looks promising. A robust labor market, coupled with the positive effects of increasing played a role in fostering modest economic growth, helping the economy avoid a recession in 2023. Small businesses will see nearly 50 hikes in minimum wages through state, county, and city mandates this year. Main Street business owners must not only stay informed about evolving labor laws but navigate the complexities of the labor market by balancing the challenges and opportunities associated with increasing wages.