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February 2017

Maxed out by the Minimum

maxedoutbytheminimum.jpgWith the postponement in late November of a controversial boost to mandatory overtime pay, some employers have turned their attention to looming minimum-wage hikes.

It was a Texas federal judge whose injunction derailed the overtime initiative, under which the U.S. Labor Department had expected to double—to $47,500—the maximum salary a worker can earn and still be eligible for automatic time-and-a-half. Meanwhile, the recent, robust minimum wage escalations aren’t federally ordered, they happen state by state. Voters in places like New York, California, Colorado, Arizona, Washington and Maine triggered the hikes via ballot referendums.

“The way we operate is going to have to change, and just how it will change is a big unknown,” says Whitey O’Malley, general manager of Saddleback Golf Course in Firestone, Colorado. O’Malley is looking at a bump from $8.31—the 2016 minimum—all the way up to $12 over the next 36 months. “Paying a seasonal employee $8.31 for outside-services work is one thing,” he explains, “[but] paying $12 is unreasonable. It’s out of whack with what a cart kid can give you, in the way of value.”

O’Malley and his staff are brainstorming for solutions he’s certain they’ll need, meanwhile keeping a lookout for innovations percolating elsewhere. Some measures are straightforward: “We could simply raise prices across the board on golf or food, or both,” comments O’Malley.

Others are more structural, such as combining outside-services staff with maintenance and golf shop staff. “Fewer minimum-wage people means our senior staff will be taking on tasks they didn’t handle before,” he says. “We can look at raising their pay in return for that, and get a better return on our payroll investment.”

Already the Saddleback cart-staging process is being overhauled, with the addition of a roving refuel vehicle equipped with a 50-gallon gasoline tank, plus signage and additional barrels to transfer the trash-removal task to the golfer. “People have gotten used to doing their own grocery checkout,” O’Malley says. “They can probably get used to this.”

On a rotating basis during the day, he has turf and golf-shop employees check the parked carts for any sticky spills or other cleanup work beyond discarding food wrappers and empty cups. The operation is also considering a no-tip policy in the grillroom, replaced by a service fee to share among all food-and-beverage workers, with a portion of it kept by the house.

Some course operators look at these wage bumps and see a level-playing-field factor at work, easing the burden. “Our courses will respond to this through incremental price increases or possibly some maintenance cutbacks,” notes Michael Parlett, general manager at the Deer Ridge and Shadow Lakes complex in Brentwood, California. “It affects everybody, so at this point it’s not very high on my list of concerns.”

That view echoes survey data the DOL has published, showing a majority of small-business owners not objecting to a minimum-wage increase up to about $10, from the current federal level of $7.25. Benefits cited include lower turnover, increased productivity and greater customer satisfaction.

O’Malley would question that last outcome. “Raising minimum wages sounds good in theory,” he muses, “until you find out how the law of unintended consequences impacts your situation.”

—David Gould

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