Thank you for visiting American River Bank. Please note this site is not fully compatible with screen readers.  We are available from 9am-5pm to assist via telephone at (800) 544-0545 or via email at We look forward to serving you.
Featured Articles
SBA/Government Resources
Health Care
More Topics ▼
More Topics ►
Business Insurance
Customer Service
Dave Ramsey
Human Resources
Marketing, Advertising & PR
Selling Online
Susan Wilson-Solovic
Search the Library
All Topics
Content Type

Effects of a minimum wage increase

Effects of a minimum wage increaseFrom the offices of small businesses to the floor of the U.S. Capitol and many state legislatures, minimum wage is once again in the national spotlight. California is one of the leaders in increasing minimum wage, with the state minimum wage having risen to $9.00 an hour effective July 1, 2014 — compared with the current $7.25 federal minimum wage. The minimum wage is set to further increase in California to $10.00 per hour effective Jan. 1, 2016. Championed by those who see the increase as a way to combat poverty and the growing income gap, the increase elicits fear of negative repercussions including job loss and skyrocketing inflation in opponents. Economic and policy research suggests predictions from both sides might be right. 
People who read this article also read Low-cost ways to maximize your business success 

The Congressional Budget Office finds that although an increase in federal minimum wage would provide many with additional income, an estimated 500,000 workers could lose their jobs.* Companies, especially small businesses, could feel squeezed between maintaining competitive prices and higher personnel costs, resulting in employers being forced to eliminate jobs or cut back hiring. On the other hand, many see an increase to the minimum wage as a vital means of addressing poverty and closing the country’s growing economic divide. Increasing the national minimum wage would strengthen the paychecks of nearly 16.5 million workers, providing an extra $5 billion each year to families living in poverty and an additional $12 billion a year for those earning from one to three times the current poverty threshold.*

Be ready for changing wages
With California taking the initiative to increase minimum wages, and the possibility of a federal increase still to come, it’s important to take steps to prepare your business for changes in staffing and compensation policies. 
  • Work with a legal advisor and discuss employee pay compliance strategies and how they pertain to your business. A legal advisor can help identify ways to adjust your pay and hiring practices as necessary and identify helpful changes.
  • Stay nimble to adjust to changes in the economy and payroll regulations by creating a payroll cushion. By setting aside funds each month, you will be in better shape to address changes as they appear.

American River Bank offers a wealth of resources and tools to help your business succeed. Contact a Business Banking Expert today.

* Source: “The Effects of a Minimum-Wage Increase on Employment and Family Income,” February 2014, The Congressional Budget