Another Minimum wage increase, what that does mean to us?
As Jerry Brown signs another increase to minimum wage, we are getting the questions from all our brokers/clients, “What does that mean to us?” To be honest, we’re not sure either, but what I do know is it won’t be the same ever again. No matter what political side you are on, there is going to be consequences to this increase. And like most articles are saying, ”It’s the consumer that will have to pay.” Most articles that I have read take the fast food concepts and mentioning it will cost another .25-.50 cents a burger, but how will it really affect our industry?
In my opinion here is the breakdown of what is going to happen: The entry level jobs, such as the embroidery cleaners and the screen printing helpers, will be almost paid as much as existing 2nd or 3rd level employees such embroidery machine operators and screen printing printers. This will affect morale and we will have to increase their level of pay to compensate the different skill levels. Although the law was intended to help the minimum wage, in fact it will affect the entire shop. Depending on the number of employees, J6’s payroll will increase $90-$120 an hour, an estimated increase of $19000- $23000 a month!
To sustain this increase there will have to be an increase to match the minimum wage cost. We are diligently looking into different options to help our customers save money, but it’s not going to be easy. Since this is statewide, we assume this will happen to all the printers and there will probably be an equal playing field. We do expect:
- Longer turnarounds, timing is going to be essential and the cost of overtime will be a huge factor. The days of adding an extra hour or two to complete a project will have to push to the next day to help lower the cost
- Not only will labor go up, but the cost of supplies will too, which means that will also be added to your cost.
- The cut of clients that are not necessary, as a broker house we do work for brokers who are not as profitable as others. But we hopefully groom them in time so they can be ready for the limelight when their time comes. As I talk to other shops, most are choosing this route as their first act. At J6 we do hope this will be our last option if deemed necessary.
There are hundreds of more scenarios that can happen, but we will have to wait to see how the market reacts to these changes. What I do recommend is to start getting your customers ready for price increases and changes. The earlier you start, the less sticker shock your customers will experience. The times are changing and it’s going to be expensive.