NATIONWIDE — Fitness facilities in New York, Washington, Oregon and Florida face new state laws that increased the minimum wage last month.
Because the health club industry generally pays above minimum wage for most positions,the effect on the industry should be minimal, but the increase does push up the starting wage, said Rick Caro, president of New York City-based consulting company Management Vision.
“It pushes up the whole structure,” he said. That could cause some clubs to review their staffing hours and perhaps reallocate one person to two departments, he said.
Dennis Tan, president and CEO of two Gold's Gyms in New York City, followed New York State's legislation closely as the minimum wage increased from $6 to $6.75 on New Year's Day. The increase is one of three hikes scheduled over the next three years in New York. The next raise to $7.15 is set for Jan. 1, 2007.
Tan's 54th Street club has 50 employees, three to four of which are paid minimum wage. Most of his employees earn $3 to $4 more than that, he said.
“If you want to run a successful club, you have to pay more,” Tan said. “It's the issue of getting proper help, and you get what you pay for. [The minimum wage increase] is not going to affect us much in New York City.”
It pays to keep abreast of your state's politics and legislation to avoid any surprises, said Mark Alesse, New York state director of the National Federation of Independent Business. Following state laws is of vital importance to the health club industry, he said.
“The best thing to do is to realize that your business is operating in a political economy,” Alesse advises club owners. “What goes on in your state capital dictates the name of the game.”
Sabrina Slusser, general manager of the RiverPlace Athletic Club (RAC) in Portland, OR, said her state's minimum wage increase to $7.50 from $7.25 will not have much of an effect on the RAC. Typically, she starts employees at $8 an hour and then increases that based on performance after 30 to 90 days. The higher wage helps attract better staff, she said.
“Of course, our highest turnover is in our club attendants,” Slusser said. “Most of our other positions are fairly stable, and we don't have a lot of turnover.”
Slusser followed the minimum wage legislation by checking state Web sites and watching the local news, although she saw little coverage on it, she said.
Oregon is one of three states that adjusts its minimum wage according to a national index covering the cost of goods and services needed for day-to-day living. That index rose 3.8 percent during the 12 months ending Aug. 31, 2005, said Elaine Fischer, spokesperson for the Washington State Department of Labor and Industries. Under this index, the state of Washington raised its minimum wage to the highest in the country at $7.63, and Florida increased its wage by 25 cents bringing it to $6.40.
The federal minimum wage is $5.15, although Congress has debated raising it in the past few years.
On Aug. 1, 2005, Minnesota raised its minimum wage to few complaints, said James Honerman, spokesperson for the Department of Labor and Industry. Large employers (annual gross volume of sales made not less than $625,000) must pay at least $6.15 an hour, and small employers (annual gross volume of sales made less than $625,000) must pay at least $5.25 an hour. Employers must also pay employees younger than 20 at least $4.90 for their first 90 consecutive days of employment.
“I think the general feeling is that it was tough on some smaller businesses who hadn't planned on that in their budget for the year,” Honerman said. “However, we've received no issues since we rolled it out.”
Many small business owners are too busy to remember to keep abreast of political issues and adjust accordingly, especially when the economy is doing well, Alesse said.
“I can honestly say that not enough of them pay close enough attention to what's going on and that's totally understandable and acceptable when things are going well,” Alesse said. “It would be great if you could ignore it, but you can't.”