Impact of Minimum Wage Increase on Small Businesses in Florida

payroll wages Jan 29, 2021

As most of you know, voters in the state of Florida have approved Amendment 2, which means that Florida will raise the minimum wage gradually to $15 an hour by the Year 2026. Florida is the eighth state in the country that will increase the minimum wage to $15 over the years; other states include California, Maryland, Illinois, New York, New Jersey, Massachusetts, and Connecticut.

How could this impact small businesses?

Currently, the minimum wage in Florida is $8.65 per hour, but that will soon change as it will go to $10 per hour on September 30th, 2021, then $1 per hour, increasing yearly until 2026. After 2026 the minimum wage will be adjusted annually for inflation.

Many have argued that the minimum wage increase can have adverse and devastating effects on jobs and businesses. According to Littler, many companies are concerned about maintaining profitability and managing wage compression issues when longer-term employees earn close to the same wage as newer employees.

On the other hand, many employees and businesses support this measure as it could bring financial benefits and stability to many families. Some employers have already raised their minimum hourly wage to $15 and have seen a favorable and enthusiastic effect on employees' workplace, such as higher productivity, better physical and mental health, and improved employee retention, performance, and job satisfaction.

The scheduled increases are as follows:

How can employers prepare?

It is essential for businesses to start planning, budgeting, and assessing the effects this increase will have on compensation, overtime pay, workers' comp rates, taxes, benefits, and more.

Be transparent and upfront with your employees, explain and discuss the upcoming changes, and relieve any stress or misinformation.
Send out announcements well in advance of the scheduled changes.
Update employment posters with new minimum wage and display them in appropriate areas.
Train managers, supervisors, human resources, and payroll staff on the increase.
Educate and teach your managerial employees on how to respond to any questions or concerns employees may have.
Plan, budget, and plan again, as these changes could make or break your business.

We have put together this simple but mighty spreadsheet

to help you get started on some projections. It calculates current wages as well as changing rates, giving you a Year Over Year (YOY) outlook on the impact of these changes.

The sheet has two tabs:

Tab # 1. The Information Page

Explains how to use the sheet as well as other information.
It also has a link to a short video that explains how to use this sheet.

Tab # 2. The Projections Sheet

This sheet comes with prefilled formulas and sample employees, but it's 100% customizable to fit your needs.

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