Among the thousands of laws affecting employers that are changing as the new year begins, employers in 21 states and several cities may see an impact on their bottom line as minimum wages increase.
Here’s what you need to know to keep your practice compliant:
In the past years, minimum wage increases have had little impact on the segment of health care that CEDR works with. Most of you have been paying well above minimum wage to compete and match your local market. However, over the past couple of years, as states and larger cities have raised the minimum, we have seen some of our members in higher-cost-living cities and states affected.
According to the Economic Policy Institute (EPI), this impacts the 21 states listed below and 48 cities and counties that raised their minimum wages above their state wage floors on January 1. Over 9.2 million workers saw a pay bump, and the total increase was $5.7 billion.
Arizona, for example, will see a minimum wage increase of $0.35, reflecting the cost of living increase in that state. This will have an average annual effect of over $ 400 per employee/per year. Arizona is just one of 14 states adjusting for inflation. Five states are raising their minimum wage based on laws passed in previous years, while Montana and Nebraska are implementing increases approved by voters through ballot measures.
The EPI believes that by 2027, minimum wages will increase to at least $15 in at least 19 states.
Good leaders take time to assess the cost of living for their teams.
Employees making the federal minimum wage often struggle to make ends meet. A full-time employee earning $7.25 per hour barely meets the poverty line for a single-person household, and those with dependents often fall below it. Businesses with employees who experience financial stress often experience higher turnover and absenteeism.
While minimum wage increases typically aim to address the vast gap between the federal and state minimum wage, they still often fall short of covering the rising living costs. Studies show that a “living wage” ranges from $20-26 per hour, depending on your state.
In its report, the EPI said that these increases most impact women and minority workers, who are key contributors in many healthcare settings. Nearly 60% of workers seeing a raise are women, 11% are Black, and 40% are Hispanic.
As an employer, understanding these shifts can help you anticipate the financial impact on your practice, plan for payroll adjustments, and potentially use these changes as an opportunity to boost morale and retention within your team.
For our Members
Even if you pay every employee above your local minimum wage, you’re still required to have a minimum wage poster displayed for your employees. Leading up to these changes, the CEDR Compliance team has emailed each member, based on your locations, these updated notices.
CEDR Members can log into BackstageHR to access all this information here.
For our community at large
The following chart provides the state minimum wage information that increased in your areas.
Members have been updated on the additional cities and counties that are affected.
Actionable steps you can take right now:
- Communicate – Let affected employees know that the raise has occurred. Many states and new laws require written notices of wage changes and obligations.
- Audit your payroll and know the rules – Double-check your current payroll systems to meet the updated minimum wage requirements. This is also a great time to evaluate whether other wage adjustments might benefit your team and practice.
- Revisit your budget – If payroll increases put a strain on your budget, look for ways to optimize other expenses or increase efficiencies. Small changes can free up funds while maintaining excellent patient care.
Discover how this directly impacts your team by contacting us today!
As a CEDR member, you gain access to our Solution Center, where trained HR and employment law experts are ready to answer all your HR questions. We specialize in supporting small, private healthcare practices like yours by providing customized employee handbooks, expert HR guidance, and powerful HR software, including timekeeping and PTO tracking. You can also add on payroll through our integrated partner and receive significant discounts.
Members also enjoy access to HIPAA training, an on-demand education platform, and a library of HR checklists, forms, and guides. We keep you up to date with wage and hour posters, compliance updates, and the latest changes in employment law. With CEDR, you’ll have the tools and expertise you need to stay compliant and confidently manage your team.
