A higher minimum wage might actually be good for your business.
You can find that argument in some unexpected places these days--including the peer-to-peer freelance service TaskRabbit.
TaskRabbit took the somewhat unusual step in July of ensuring a minimum wage floor of $11.20 per hour for the 30,000 contract workers it calls "taskers" who transact through the network. That dollar amount mirrors the San Francisco minimum wage, company spokeswoman Jamie Viggiano says, which is among the highest metropolitan minimum wages in the nation. Viggiano spoke with Inc. following an interview with TaskRabbit chief executive Leah Busque in the Wall Street Journal, where she discussed the wage issue.
As the nation debates raising the federal minimum wage to $10.10 an hour, plenty of businesses and business organizations are pushing back, saying the higher wage will cripple companies. The debate is particularly fraught in the service sector, where fast food workers have organized and protested for higher wages this year. But now increasing numbers of businesses and entrepreneurs are realizing the benefits of setting wages higher than the national $7.25 an hour.
"We want to protect everyone, so everyone gets a fair wage," Viggiano says, adding the response of "taskers," as TaskRabbit refers to its workers, has been overwhelmingly positive. But she is careful to note that the company doesn't ever set the price for jobs--both the contractor and the contracting party negotiate that through the network. So the new wage floor falls squarely on the contracting party.
TaskRabbit's approach is somewhat different from competitors Elance-oDesk, two companies that operate separately under a corporate umbrella. Elance has a minimum hourly charge of $3, while oDEsk has no minimum wage requirements. (Nevertheless, the company offers other benefits and protections, such as health insurance through a partnership with Freelancer's Union, plans for business insurance, as well as payment guarantees for workers.)
Somewhere between 40 percent and 60 percent of business owners favor increasing the minimum wage, according to various surveys. But small business groups such as the National Federation of Independent Business and the U.S. Chamber of Commerce are vocal opponents, and have lobbied extensively to fight the passage of wage reform bills in Congress. In April, a bill to raise the minimum wage to $10.10 failed in the Senate.
As to business cost, the Congressional Budget Office, in a report from February, estimated that raising the minimum wage 39 percent to $10.10 from its current $7.25 an hour might cost the economy 500,000 jobs, or 0.3 percent of the workforce by 2016. An increase to $9, which has been proposed as an intermediate step, might cost the economy 100,000 jobs. At the same time, the hike to $10.10 would lift nearly 1 million workers out of poverty, the CBO estimates.
There are about 42 million freelance workers in the U.S., according to a 2006 report from the Government Accountability Office, its most recent estimate. That number is likely to have grown substantially since the Great Recession, when unemployment shot to nearly 10 percent, and laid off workers have sought to make ends meet. Additionally, as the nature of work continues to change, prodded by technological advances that maximize worker efficiency at the expense of regular work schedules, more workers are seeking supplementary income.
About 80 percent of TaskRabbit's workers fall into the service category, Viggiano says. That includes handy-work, house cleaning and personal assistant work. While that's somewhat different from the fast food industry, the tie-in can't be overlooked.
One such worker is Sonny Nguyen, of San Francisco, who works as the general manager of a car dealership during the weekday, but supplements his income with freelance work from TaskRabbit in the hours before and after his full-time job, and on weekends. He does this to save for college for his two children, and for a third child on the way later this year.
"I actually think that $11.20 is too low," Nguyen tells Inc. He typically gets $89 per hour to do a variety of work, including light construction, deliveries, and home remodeling. "Here in the San Francisco Bay area, freelancers get a lot more than that, and people don’t mind paying for quality of work."
Nguyen says small business owners can all learn a valuable lesson from TaskRabbit about setting higher wages.
"Small business owners should not worry about [a higher minimum], because they will get a higher quality of work, and your business will get much bigger returns from happier customers if you have happy employees doing a good job for you," Nguyen says.