How Would Continued Minimum Wage Hikes Impact Car Washes?

HB 395, a Virginia bill aimed at gradually increasing the state’s minimum hourly wage to $15 an hour cleared a major hurdle earlier this month, passing through the Virginia House along a party-line vote of 55-45.

The most immediate impact would come on July 1 of this year, when the bill, first introduced by Del. Jeion Ward, would see the state’s minimum wage raised to $10 an hour.

The state’s current minimum hourly rate is the same as the federally mandated minimum wage, which sits at $7.25 an hour and hasn’t been altered since the jump to that level in 2009, more than a decade ago.

Though HB 395 is a step closer to the governor’s desk, SB 7, introduced by Senator Dick Saslaw, could be the bill to actually reach that desk for potential passage.

That bill would see minimum wage work its way up to $15 per hour, then be allowed to rise further depending on the consumer price index and other regional factors.

Recent conversation around the bolstering of minimum wage rates has been polarized, with proponents pointing to cost-of-living increases and the potential boost for consumer spending that would come along with more money being injected into workers’ pockets. In theory, proponents also argue that higher wages would lead to less turnover and boosted employee satisfaction.

However, opponents of a hike say there could be unintended consequences of a measure that seems straightforward on the surface, arguing that higher wages could lead to employers absorbing costs through layoffs, elimination of entry-level positions, and other measures.

The car wash industry is certainly not immune to a spike in minimum wage, particularly a nationwide one that could follow on the heels of decisions in states like Virginia. Prices could jump, requiring specific communication to customers as to why to keep them receptive. Other benefits, such as express lanes, loyalty programs, and more could help offset these rising costs.

It’s also critical to continue to research and stay abreast of ways to invest in innovations and technology that can propel your business forward without requiring a significant boost in expenses, and other ways of saving money, such as water conservation, will prove key.

To learn more about how operators have already adjusted to minimum wage hikes, check out the Foundation for Economic Education’s look at the impact of such a spike on car washes in New York here.

To read more about tips, trends and equipment from the car wash industry, be sure check out Iron Fox’s blog.

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