Survey: SCV businesses not ready for wage hike
A survey conducted by the Santa Clarita Valley Economic Development Corp. revealed that over 70 percent of the companies surveyed hadn’t incorporated minimum wage increases into their financial plans.
Business owners should prepare to face risks if they don’t keep an eye on the recent county and state mandates for employment, said Brian Koegle, a partner at Poole & Shaffery LLP, in an informational meeting Wednesday for the local business community.
The information, which was tailored for the Santa Clarita Valley’s businesses — many of which operate in the Santa Clarita city limits, which has one wage scale, as well as the county, which has a different wage scale — was shared to a room of about 100 business representatives during the California Minimum Wage Forum. The discussion, which was followed by a roundtable for business owners, was presented by SCVEDC, the SCV Chamber of Commerce and Poole & Shaffery, at College of the Canyons University Center.
After receiving multiple questions about increases in the minimum wage and how other companies are dealing with changes, the agencies launched the survey to answer some of their concerns. Among the questions asked was whether companies were experiencing the ripple effects of the rising wage.
Holly Schroeder, SCVEDC president and CEO, said they received 140 results, mainly from manufacturers.
“When we looked at the overall question, the surprising answer was, ‘No,’” Schroeder said, with respect to how businesses were dealing with the increasing costs. The question had multiple layers,
asking whether a business had reduced new hires or employment base and promotional opportunities — but over 80 percent still answered no. The data only changed significantly when results from retailers and hospitality sectors became the focus.
“What we are predicting is that (the minimum wage increase) will hit the retail and hospitality sector first,” Schroeder said.
Data showed that as a result, 24 percent of all respondents had experienced issues with employee morale, particularly within retail and hospitality. Social events ranked the highest (over 50 percent) as a method to restore this issue.
But that’s not enough, Schroeder said.
Education is a key, Koegle said. “The more you know as a business owner, the more you can take back the management, and you can educate (employees). We’re never going to eliminate them, but we can mitigate those risks.”
As an example of those risks, he brought up the lawsuit Troester v. Starbucks Corp., in which a former shift supervisor won the case after the coffee chain initially sued him for theft.
Over the course of 17 months, the plaintiff was owed over $100 of unpaid time due to finishing minor tasks after clocking out.
The California Supreme Court has ruled that employers are required to pay minute-by-minute, and any underpayment is a violation of the law.
Koegle also raised the question of demographic boundaries. For example, if a driver from outside a Los Angeles County company is within the city of Los Angeles for two or more hours, the employer is required to pay the driver the L.A. minimum wage of $13.25 and not $11 for that period.
Most of the audience in the forum confessed their unawareness of the minimum wage application geographically.
Other results presented showed that while most companies have not fully incorporated the scheduled wage increases (one dollar higher every year until reaching $15 by 2022) in their growth plan, the majority, or slightly over 40 percent, indicated raising prices on products and services as a way to manage the wage change. The next highest was to absorb the cost increase, followed by adding fewer employees.
Koegle suggested companies work with a human resources professional, legal counsel or attend information meetings to better address the future wage increases.
Jeffrey Forrest, vice president with COC’s Economic Development Division, offered three pieces of advice to achieve success with the minimum wage increase: recruit the right people by making the job description clear for applicants; retain talent; and invest in one’s workforce.
“We must expand our vision on what a qualified employee looks like,” Forrest said.
We must expand our vision on what a qualified employee looks like.”
Jeffrey Forrest,
vice president with COC’s Economic Development Division
Among the free and low-cost help available at COC is a business course for HR professionals. For more information, contact Justin Wallace, director of educational partnerships at 661-3623788 or at justin.wallace@canyons.edu.