Saturday, January 4, 2014

Restaurants Prepare For The New Minimum Wage

If you are a restaurant owner you can probably remember working for less than $2 an hour. As of January 1st, 2014 the minimum wage will exceed $8.00 per hour in thirteen states1. The suburb of Seattle-Tacoma, Washing ton, an area surrounding the SEA-TAC International Airport will have the highest minimum wage in the country at $15 per hour but does not include workers in the airport1. While restaurant accountants across the country are gearing up for a new round of tax and wage changes.  The current Federal minimum wage was set at $7.25 back on July 24, 2009 and as of 2014 some states are still adhering to the 2009 wage limit while others have made small increases and nine other states are still fighting it out. You can check out what the minimum wage is in your state at the Department of Labor, Wage and Hour Division. They have a clickable chart by state here:

If you are not currently using a restaurant accounting service then you should retain one right away as the minimum wage issue is a serious matter not to be ignored. You have to deal with the Department of Labor, Wage and Hour division plus your state’s labor department. One of the best reasons to have a restaurant accountant is just to keep government off your back and out of your life as much as possible.  It is your accountant’s job to keep you in compliance and out of trouble.

The higher minimum wage will affect everyone whether you live in a state that has an increase or not. Restaurants located close to a border with a state that has a higher wage may need to match it in order to retain qualified help. Labor costs will go up which means food costs will have to go down or prices raised in order to keep margins level. If you are an owner you will be faced with the dilemma of reducing staff or increasing prices.  All small businesses that rely on minimum wage workers will feel the pinch this year.  The economists have their ideas of what is going to happen to the economy as a result of these wage changes. Some say that the new increased earnings will be injected back into the economy as workers buy more stuff. Other economists point out those small business owners will likely have to reduce hours or staff to maintain profits as large price increases cannot be made without adversely affecting sales.

President Obama is pushing for a federal minimum wage of $9 per hour but it remains to be seen if he will get it. Here is a list of States with minimum wages over $8 per hour as of 20142:
  • California  $8.00 ($9.00 July 1, 2014)
  • Colorado $8.00
  • Connecticut: $8.70
  • Illinois: $8.25
  • Massachusetts: $8.00
  • Nevada - $7.25 for employees who receive qualifying health benefits, $8.25 for employees who do not receive qualifying health benefits.
  • New Jersey: $8.25
  • New Mexico: $7.50    (The Santa Fe Minimum Wage is $9.92 per hour. The Albuquerque Minimum Wage is $8.60 per hour.)3
  • New York: $8.00 ($8.75 on December 31, 2014, $9.00 on December 31, 2015)
  • Oregon: $9.10
  • Rhode Island: $8.00
  • Vermont: $8.73
  • Washington: $9.32
Ultimately restaurants and other small businesses will pay the price and make the tough choices forced upon them.  Looking at Washington State and especially SeaTac and its $15 per hour wage you can’t help but wonder how a small business will be able to sustain such a large expense.

1 Source: -
2 Source: Dept. of Labor, wage and Hour division -
3 Source: -

CFO Business Growth Solutions, LLC provides Nationwide Restaurant Accounting, Restaurant Bookkeeping Services, Menu Engineering, POS Business Intelligence and Restaurant Consulting Services.  For more information go to
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