How Wage Growth Can Affect Your Company
Wage growth in the United States is in the news, and it is taking a toll on businesses both big and small. Over the course of the year so far, over 18 states have put minimum wage increases into effect. Some businesses will survive, but others will experience serious drops in profit. Thanks to outsourcing, many businesses negatively impacted by wage growth will have a chance to survive.
The Practical Effects of Minimum Wage Growth
Significant increases in minimum wage, particularly in states that now mandate $15/hour wages, have already hurt businesses. Some businesses can pass the increase on to customers without a problem, but others need to maintain low price points to retain customers in a competitive marketplace. Currently, small businesses account for 54% of all jobs and 66% of all net new jobs since in the 1970s. These small businesses, who are the backbone of the American economy, are facing a squeeze unlike ever before.
A senior economic analyst with the Economic Policy Institute, David Cooper, stated in response to the wage increases that small to medium-sized business who “could not adjust prices and had low turnover to begin with” should be prepared to “look for new efficiencies.” One of those efficiencies is outsourcing.
Outsourcing is a Wage Growth Solution
Wanting to provide the best for your employees might mean downsizing your workforce and investing the money you spent on lower-level employees into outsourcing. Outsourcing allows you to use highly skilled employees at a fraction of the cost of employing $15/hour workers. It also allows you to access lower-skilled workers at a lower cost than local employees. You will have more time to focus on running your business and taking care of your mid- and high-level employees, while your skilled offshore employees can handle the rest.
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