The beginning of 2018 was characterized with the rising minimum wages in 18 states and 20 cities in the United States. Of course, this is a heavy burden for business owners. They need to find the right survival strategies in high-wage environment. However, reports showed that many businesses are still setting the ways survive, while some others are trying to thrive amidst the hikes.

According to Vice President of ADP, Chris Ryan, the pressure to raise minimum wage is commonly driven by some factors. They include rapid job growth in high-cost areas, new focus of economic development in the community, and aging workforce, which leads to tighter labor market. As a result, the business owners are faced with pressure for wage raise with or without regulation.

Survival Strategies in High-Wage Environment: The Benefits

Actually, Chris Ryan said that the raise in minimum wage can provide the business owners with some opportunities to make more money. Economists believe that this higher-wage environment actually benefits both companies and workers. How?

• Higher minimum wages mean higher consumer spending in the community. This directly benefits local businesses.
• Higher wages encourages young talents, particularly millennial, to enter workforce. This eventually improves labor supply, thus lessening the competitions to attract young talents. More candidates apply for the available job opportunities.
• Higher wages positively affects revenues and labor conditions as a whole. This provides the companies with positive environment to more forward and grow the businesses, as young talents support them.

Here Are the Survival Strategies in High-Wage Environment

As mentioned above, minimum wage raise does not always bring negative effects for the companies. Instead, they can benefit from some aspects. So, higher-wage environment actually enables to company to survive and even thrive. The following are some survival strategies in high-wage environment.

Re-Think the Business Models

The best thing the companies can do in response to the minimum wage raise is to look at new opportunities and re-think the businesses models. They may design strategies to streamline the business process and optimize the available resources. Instead of thinking about price increase and relocation, this is the time to maximize the customer value. instance, the company can design product mix, improve productivity, and scale the business.

Boost the Company’s Value

Ryan said that smart leaders can be better off than their competitors when the labor costs raise by means of two ways.

• Commanding more from the customers. The company can invite the customers to test new products or services. Then, it can decide whether to increase price points or not based on the market research.
• Attracting better workers. This means increased productivity and better customer service. These eventually boost the company’s value in the customers’ eyes.

In this modern era, customers can pay more for high-quality products or services. They prefer values than prices. Therefore, the best thing the company can do is to find ways to offer more values to the customers.

In conclusion, increased minimum wage is not always negative in meaning. Creative business owners can thrive as they have smart survival strategies in high-wage environment. Again, the main key is company’s value.