By now, everyone is aware that earlier this summer, the D.C. City Council passed a bill to increase the minimum wage in the District to $15 per hour. This does provide a mixed bag of expectations for the low income residents who were banking on the increase. Many people are expecting that their income is going to rise significantly, but remember that like any minimum wage increase, it will be phased in, so the effects will take a couple of years to be felt.
The business community will adjust their scheduling so that they keep their labor costs under control. That means a cutback in hours for many workers. This is something that many people who make the minimum wage cannot afford, but will have to ultimately deal with. If you think that is not possible, think back to when the Affordable Care Act was passed. Remember the tactics used by some businesses to reduce hours and number of employees to stay under the limits that were put in place to decide who would receive employer-based coverage. Employers will use any means available to them to protect their profits.
What are the effects going to be for District residents? First, you can expect that any business is going to really take a harder look at making tough decisions regarding personnel. You have heard the term “lean and mean” and that may come to fruition quicker than you think as companies will determine who is worth keeping and who should go. Your job, if it is one that can be switched to an independent contractor position, may very well become one. Making employees become an independent contractor shifts many of the costs and regulations away from the company and it may very well be a way that many businesses will get around the new minimum wage. Another possible effect could very well be that businesses that do not need to be in the District will go over the river to Virginia, which still uses the federal minimum wage of $7.25 per hour.
One way to deal with any potential cutback in hours is to focus your efforts on putting together several part-time jobs. It may be unrealistic to expect that employers are going to want to give you 40 hours a week at $15 per hour, but if you were to work 20 hours at $15 and then get another 20 hour job, you would get 40 hours at $15 per hour which amounts to $600 a week or an annual income of around $30,000. And also keep in mind that if you were able to get a third 20 hour per week job, your income would go to about $45,000. Employers will be much more likelier to consider 20 hours per week because it keeps their costs down (and also keeps them from having to offer you insurance through the ACA because of the 30-hour requirement for coverage) than if they had to give you 30 or 40 hours per week.
Another thing to think about is that if you need to work on your education, this is the time to do
it. If you have a two year degree, get your bachelor’s degree. If you only have a high school diploma, go to community college. The job market will be more competitive and employers will be more selective. It is very foolish to assume that just because your job seems safe right now, you will be unaffected by the increase. Many industries that will be directly affected have publicly been voicing frustration at the thought of having to pay higher labor costs, and some
companies in the fast food industry have even indicated they will use technology to replace workers.
The increase everyone wanted is coming and that can be a good thing if you take the proper steps. Things will be changing rapidly and the best way to deal with it is to stay a step ahead.
Arthur Johnson is a volunteer writer focusing on finance and economic issues in his column Moving Up.
