Q: Will minimum wage increases significantly affect my operations this year and beyond?

A: Your organization is likely to be affected. If the minimum wage of $7.25 per hour is increased, you will likely feel pressure to raise hourly wages for other lower paid entry-level employees. These employees typically like to earn about $1.00 to $1.50 per hour more. There could be a heavy concentration of them in your community. 

I analyzed the typical impact for a 110-unit community that increased entry level wages by $1.50 per hour. Total expenses obviously increased, net income and cash flow decreased significantly, and operating profit margin decreased. You need to run your own numbers. 

The minimum wage issue poses both an ethical and a real world business challenge. There is a win-win solution to this financial dilemma, however. You can address the unavoidable potential minimum wage financial impact by improving your community’s long-run financial performance. The solution involves three basic strategies: 1) Reducing operating expenses you can control, 2) Enhancing existing revenues, and 3) Optimizing organic growth through increased occupancy and expanded services within your community.

Jim Moore runs a national senior housing and healthcare consulting firm based in Fort Worth, TX. He has written several books about assisted living and senior housing, including Assisted -Living Strategies for Changing Markets