Tips for Surviving a New Minimum Wage Increase

A spate of new minimum wage laws means higher labor costs in 2019.

Following a voter-approved ballot initiative in November, Missouri’s minimum wage will go up each year from 2019 through 2023, after which it will automatically adjust based on fluctuations in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers.

  • 2019: The wage increases from $7.85 to $8.60
  • 2020: $9.45
  • 2021: $10.30
  • 2022: $11.15
  • 2023: $12.00

Besides Missouri, 18 other states also raised their minimum wages effective January 1:












New Jersey

New York


Rhode Island

South Dakota




Michigan’s minimum wage goes up starting on April 1, followed by Oregon and Washington DC on July 1.

Here are some ways for affected businesses to cushion the blow of minimum wage increases.

#1: Crunch the Numbers

Start with the cold, hard data. Exactly how much would this increase cost if you did not implement any other changes to your business?

Review revenue, profits and expenses for the most recent time period, and recalculate based on the new minimum wage.

Would you still be making a profit, and if so, how much of a drop would you see? Or would you fall into the red?

This will guide your next steps.

#2: Update Recruitment & Employee Policies

Since the minimum wage directly affects labor costs, look for adjustments here first.

  • Adopt more rigorous requirements for new hires since they will be costing you more.
  • Set overtime limits for current employees.
  • Determine whether some full-time employees should switch to part-time.
  • Staff reductions may be necessary. To avoid layoffs, you might simply leave open positions unfilled. If layoffs become necessary, clearly explain to employees why this is necessary and how you will handle the situation as fairly as possible.

#3: Look for Productivity & Savings Opportunities

Let existing employees know that more will be expected of them now that their paychecks are going up.

Review workflows to identify inefficiencies that could be improved with new methods or tools. For example, switching from manual, paper-based record-keeping to automated digital systems will speed up the process and boost worker productivity.

Replacing outdated equipment with more advanced models can also introduce efficiencies that will save you money over the long term.

#4: Adjust Pricing & Promotion

Restaurant industry source Open Table has compiled a list of recommendations for food service operations in the wake of minimum wage hikes. Some of these tips are also useful for companies in other industries:

  • If possible, raise prices incrementally instead of all at once.
  • People are less price sensitive in early summer and at the beginning of the holiday season — these may be the best times to introduce the higher price points.
  • Test different price points.
  • If you have multiple locations, spread price increases around different markets.
  • Devote more promotional resources to your highest margin products or services, while de-emphasizing low margin offerings.

A higher minimum wage is a challenge for every business, but with the right strategy in place, you’ll be prepared to survive and even thrive as the new reality takes hold.

Questions? Contact Moresource, Inc. and learn how our cloud-based payroll solution helps with your wage and labor compliance needs!