Minimum wage has been a touchy topic for a long time. People have to make at least some kind of a regular wage, so they have to take what they can get sometimes. Not everyone is qualified enough or even has access to the high-paying positions that most of us are always striving to get.
The whole reason that a minimum wage exists is to keep companies from paying employees less than a livable wage; however, the minimum wage is barely above that bar, as it is.
By paying your team more than minimum wage, you can hold on to exceptional people, get better work out of all your employees, keep them generally happier, and help the people whom you rely on to have a more satisfactory lifestyle for themselves and their families.
Just Because You Can Doesn’t Mean You Should
Many companies pay minimum wage just because they can. You’re of course allowed to do that, legally, but it’s really not a great practice because when you pay minimum wage, you’re bound to also get the minimum effort from employees, too. Not to mention, those people will be forced to struggle to get by.
People who need the work or really want to work for your company for whatever reason might take the very low wage, but they won’t be happy about it. Even if you’re struggling, yourself, to get a new business off the ground, you should do your best to at least pay whoever is working for you a little over the minimum scale.
Minimum Wage Doesn’t Attract the Best Candidates
If you want a successful company, you want to have the best people possible working for you. One of the best ways to do that is to offer a very good wage when you’re looking to hire people because the best candidates know that their qualifications make them worth more money.
Higher quality employees also know that they’re definitely worth more than minimum wage, so if you’re only offering minimum wage, then those people are probably going to pass right over you.
Furthermore, the people you want as employees are the ones who do exceptional work and who are worth paying them a competitive salary. Naturally, your business may not be in a position to offer candidates top pay, but you should offer the most you can, as it will attract the people you really need on your team.
It Doesn’t Exactly Inspire Excellence
It’s a given that some people have a great work ethic, no matter what they’re being paid. That’s a fantastic and somewhat rare quality to find in an employee, but that’s also exactly the type of employee that you want to take care of and keep for as long as you can.
Whatever position someone has within your company, they are going to give you better performance if they’re paid better, 9 times out of 10. It’s not as if employees consciously withhold their best work until you pay them more—that’s not exactly the reasoning behind it. People perform better when they know that they’re valued.
When you pay them more, even when you don’t have to, that shows the employee that you value them, which makes them want to do better for you. Think back to when you made minimum wage. Did you want to go out of your way for that company to do above and beyond what was required of you?
Maybe you did, but again, that’s the exception rather than the rule because it’s hard to take personal ownership of your part in a company when they’re paying you the least that they possibly can. Employees should obviously always do their job as part of a good work ethic, but they tend to do it much better if you pay them a decent wage.
You’ll Be More Likely to Keep Good Employees
As a business owner, it’s easy to forget that everyone who works for you is doing it for the money. They might like their job and the company, but ultimately, they are doing it because they need to make a living. If you have good employees already who have been with you for awhile and know the business well, you might want to pay them a lot better than minimum wage.
People will move on to greener pastures, pastures with a fair wage, eventually because they have to be able to support themselves and their families, which minimum wage doesn’t really afford them. Minimum wage is basically poverty-level, especially for someone who supports a family.
Aside from the practical benefits of paying employees above minimum wage, you don’t want to be one of those companies who has plenty of revenue coming in but refuses to pay hard-working employees above minimum wage. The key reason that you should pay your team very well is because your employees will be compelled to give you a higher level of excellent work. In general, if you take care of them, then they will take care of your business.
There may be times in the life of your business when it’s just not in your budget to pay everyone what you would like or what they deserve, but whenever possible, even paying a bit over minimum wage is a show of goodwill to your team and attracts quality people to the business.
Stephanie is the Marketing Director at Talkroute and has been featured in Forbes, Inc, and Entrepreneur as a leading authority on business and telecommunications.
Stephanie is also the chief editor and contributing author for the Talkroute blog helping more than 100k entrepreneurs to start, run, and grow their businesses.