Should I raise wages?

Discussion in 'Growing and Managing a Business' started by geneiusxie, Mar 14, 2013.

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How much should I pay my workers?

  1. $7.50 an hour

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  2. $13/hour (btw, this is what Whole Foods pay their workers)

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  3. $10/hour

    0 vote(s)
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  4. something else (explain below)

    2 vote(s)
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  1. geneiusxie

    geneiusxie
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    Hey guys,

    I'm pretty new here, and am going to make a startup soon. But I'm not sure how much I should pay my workers. They will be cutting delicate fabrics, sculpting, sanding, etc. - pretty much basic manual labor with some basic specialized skills, but I want to build a reputation for providing high quality products for my customers. The question is - how much should I pay my workers? Minimum wage is $7.50 an hour, but I think I should pay them somewhere around $13 an hour so they might pay more attention to their work quality, etc. - happier workers are harder workers. But is that really necessary because I see a lot of people (especially teens) who are more than happy to work for minimum wage, especially after the recession. (Btw, my projected margins are pretty high, so I can afford paying them more if I wanted to, but don't want to throw money away that could be used for advertising.) Thanks.

    -Gene
     
  2. geneiusxie

    geneiusxie
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    Another proponent of higher wages is that workers might be less likely to file a lawsuit if they get injured, or for no reason at all. Might be cheaper than business insurance, and might also boost PR if you advertise that your workers get payed a lot more they should be.
     
  3. Ted

    Ted
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    Gene,
    There are many factors that come into play when determining how much you should pay your employees. The main factors being how much the going wage rate is in your area for people with those particular skills.
    Look at job postings for your area for those skills or similar ones. That will give you a good baseline to start with.

    Then you can adjust your wage offering up or down based on the other factors that will influence whether or not those people are going to be happy working for you. Other factors such as – how many hours per day, how many days per week, what time of day, how strenuous the job is, how noisy it is, how dirty it is, how tired they are at the end of the day, how many breaks they get, how long their lunch break is, etc.

    Plus there are other factors to consider such as company benefits like health insurance, holidays, vacation, personal/sick days, etc.

    All of those things can influence what base wage you offer people.

    Ultimately the market will set your price for you because if you pay too little in combined wages and benefits, then your workers will always be looking to leave your company to work elsewhere. High turnover is very costly to most businesses.

    My personal advice – If you can honestly afford to pay them more and offer them more time off, then do that because you will attract better employees.
    Keep in mind that employees will expect wages to increase over time too. You can’t expect people to work for the same wages for consecutive years even if it is higher than average. If you try to do that, you will have higher turnover. You need to find a way to give them incremental pay raises over time to help avoid that. It keeps them happy and makes them feel like you really value them.

    I recommend reading a book by Dan Kennedy called No B.S. Ruthless Management of People and Profits. Pay special attention to the part where he explains that your employees are there for a paycheck and aren’t there to be your friend. That part is so true. Keep that in mind.
     
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  4. Rocky

    Rocky
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    You should think about this logically. You have to pay them above the minimum wages. And you have to consider the industry average to find out what the workers with the skills you need get paid. So the average would be above the min wages. Now you need to make sure the wages you pay and other costs can be met easily without hampering your expected profits.

    If you think you would make good profit after paying $13 and the industry average is supposedly around $12 then that is good. It would get you the best of workers who would be happy to work for you.
     
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  5. TimeRider

    TimeRider
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    You can go for the average wage per hour. When the wage is too low, it will be something disappointing in your workers which may slow down your work. Keep it normal, not too low and not too high. Things should go normally.

    Also, you can give bonus to dedicated and hardworking workers. So, that other workers will also work at their best for the bonus and the title. This will also boost the quality of the work and also product.
     

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