The current minimum wage in Utah as of Jan. 1 2014 is $7.25, which is equal to the Federal level. Several other states have higher minimum wages, but Utah’s lower cost of living compensates for the difference. Whether you pay your employees $7.25/hr, $50/hr., or anything in between, labor is a significant part of your operating expenses. Understanding how to manage this expense can make a significant difference in your bottom line. This topic has long been debated and can boil down into a moral debate, but the content of this article will focus on creating a balance between offering competitive wages and controlling your expenses.
Securing People with the Right Skills
No matter how you look at it, you have to offer wages that attract the talent that you need. You may think that because you are keeping your costs low, you are situated above the competition. But instead try to think of labor as an investment. If you invest in a lousy company or industry, your returns will be low, and vise versa. The same holds true for your employees. Below-competitive wages not only make acquiring the right talent more difficult, but it inevitably makes keeping them motivated and ultimately retaining them a lot more difficult. Getting the right talent will simply make your business a better business, and you will get a higher return from your employees.
Jim Glassman, a senior economist at JP Morgan, said “Businesses are going to be finding it’s going to get more and more competitive as they try to find the right workers for their jobs.”
Labor in Utah
According to statemaster.com, Utah has the third highest concentration of people with bachelor’s degrees in the U.S. 0.806 per 100 people in Utah have a bachelor’s degree. If you look at this from an economic standpoint, there is a surplus of people with bachelor’s degrees, which lowers the market wage. Companies don’t have to pay employees as much because if Joe wants more money, they can just go to Bob who will work at the lower wage.
Some operations of your business don’t require as much skill or expertise though, in which case this isn’t quite as important. You have to consider which areas need more expertise and which areas need less expertise, and balance your budget accordingly. It is a balance that will not come overnight.
A Few Other Things
- Establish and clarify policies about your staff clocking in too early or taking lunches on the clock (if they are hourly).
- Avoid staff who “ride the clock” by socializing excessively or wasting time on the computer. You don’t have to be a productivity czar, but there should be a push for efficiency.
- Don’t over-hire. Hire enough people to cover your needs but not so many that they aren’t being kept busy. After all, it’s a lot more difficult to fire someone than to hire someone. Be slow to hire, quick to fire.