Florida’s minimum wage rose to $10 per hour Sept. 30 as provisions of last year’s minimum-wage initiative began to kick in, prompting business groups to warn that small firms would likely try to get by with fewer employees.
The increase in the state’s minimum wage, which had been $8.56 per hour, comes as a result of voters’ approval of the $15 Minimum Wage Amendment. Spearheaded by Orlando attorney John Morgan, the initiative won the support of nearly 61% of state voters last November.
As a result of the initiative’s provisions, the minimum wage will receive a $1 bump every Sept. 30 beginning next year through 2026. The resulting labor costs have left business groups less confident about the post-pandemic economic recovery.
“Unfortunately, there will be unintended consequences including job loss, reductions in hours or benefits, or businesses closing,” Carol Dover, president and CEO of the Florida Restaurant and Lodging Association, told the Florida Record. “We are concerned for our hotels and restaurants who have already been through so much, and we will do all that we can to help them adjust as the wages continue to increase and industry-wide challenges persist."
The minimum wage hike adds to the challenges businesses have been facing while dealing with COVID-19, Dover said. She added that even though the current labor shortage has led to higher wages in Florida, last month’s across-the-board wage increase can’t be easily absorbed by all businesses.
“In the hospitality industry, many employees already make above minimum wage with tips, and raising the wage for others will result in wage compression that many businesses simply cannot afford right now,” Dover said.
Wage compression can occur in a workplace when there are very small differences in employee pay regardless of skill levels and seniority. Such compression can cause dissatisfaction among workers seeking professional advancement within a company.
“Businesses are still struggling to recover from the pandemic impacts and are facing historic labor shortages, supply-chain issues and rising costs on everything, and we are helping our members to identify best practices in response to current industry conditions,” she said.
Florida’s National Federation of Independent Business executive director expressed similar views about the burdens the new minimum wage will place on small businesses.
“Raising the starting wage will increase the financial pressure on small businesses that are struggling to get through the pandemic and could end up hurting workers as employers simply try to get by with fewer workers to offset the overall increase in labor costs,” Bill Herrle said in a prepared statement.