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Tuesday, October 04, 2022
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©2022 by the Self Storage Association (SSA). SSA and SSA Magazine are trademarks of the Self Storage Association, Inc. Opinions expressed by authors and other contributors do not necessarily reflect those of the SSA, publisher or editors, nor do they represent the policy or positions of the SSA. Information contained within articles should not be construed as the primary basis for legal or investment decisions.

07

Minimum Wage Increases Impact Storage Industry

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Minimum Wage Increases Impact Storage Industry

Half of the country ushered in the New Year with higher minimum wages. In total, 25 states boosted their minimum hourly pay requirement in 2022. For self storage employers operating in multiple states, keeping up with the various minimum wage rate changes can be a formidable task.

Not only have half of all states set new rates, but some counties and cities have set new minimum wages within their jurisdictions. At least North Carolina, Oklahoma and Tennessee have active bills in their legislatures for minimum wage increases that could take place later this year.

“Bring it on. Make everyone be more efficient,” said Jake Ramage, CEO of Philadelphia-based Snapbox Self Storage of rising minimum wages. “The way I see it, our store managers are running multi-million-dollar businesses. They are so important. We are trying to be prepared with efficiencies, so we keep our employees in the game with better pay.”

Most operators across the industry report that they pay much better than the minimum wage. But a rising floor for all workers means wages across the economy adjust upward when minimums increase.

Of the 25 states boosting their minimum hourly pay requirement in 2022, and eight of those states and Washington, D.C. will increase the minimum wage based on the consumer price index. Other state rates will go up by a specific dollar amount enacted under state legislation, and eight of those will increase their minimum wage by at least $1 per hour. Virginia has the largest rise in its minimum wage with an increase of $1.50 per hour.

In 2022, California will have the highest statewide minimum wage in the US at $15 an hour, a $1 an hour increase from 2021. The $15 minimum wage only applies to employers with 26 or more employees. Those with fewer must pay $14 an hour.

Several New York counties — Westchester, Suffolk and Nassau — join California at $15, and workers in New York City began earning $15 an hour two years ago. The remaining New York counties are required to pay workers at least $13.20, up $.70 from last year.

Seattle is the city with the highest minimum wage at $17.27 an hour for most employers.

Minimum wages are on the rise across the political spectrum. Legislatures and governors in such conservative states as Florida, Missouri, Montana, Ohio, and South Dakota all raised their statewide minimum wage.

Minimum wage increases at the federal level have become less frequent, leaving state and local governments to take action. The federal minimum wage is $7.25 and applies in 20 states. It has not changed since 2009.

The Biden administration raised the minimum wage for employees of federal contractors to $15 an hour on new or updated contracts starting  Jan. 30, 2022.

Businesses typically decrease hours or hire fewer workers when minimum wages go up. But the job market is extremely tight, and employers have newfound power to demand higher wages. Layoffs are as low as they have been in 30 years. People across broad swaths of the economy are leaving their jobs, with a record 4.5 million workers quitting in November.

In response to seismic shifts in market dynamics, average wages were up almost 5% in November with even higher increases in leisure and hospitality.

Self storage operators say minimum wage hikes don’t necessarily create a challenge for their business, but a tight labor market demands innovation.

Denver-based FreeUp Storage offers health insurance, paid vacation and, in some markets, as much as $25 per hour base pay at the store level.

Ryan Gibson, CIO of Spartan Investment Group, which owns FreeUp Storage, said the brand is moving toward more contactless strategies, such as area managers monitoring activity at several stores in a region rather than having a single manager at each location. FreeUp pays those area managers more to oversee more stores, and the role requires fewer lower-paid workers.

“How badly do you need someone at a property that’s 90% full,” Gibson said. “We need people to go to the property, but we don’t need them there all day.”

Rob Berger, human resources manager for Amsdell Companies — which owns and operates Compass Self Storage — said new minimum wage rules in multiple states are not impacting business.

“Most of our positions are well enough above the minimum wage thresholds that these aren’t a concern,” Berger said. “I think the market forces are already driving up wages. The governmental action isn’t really affecting much of anything where we are in operation.”

Each year Absolute Storage Management audits its pay rates versus the minimum wage in the 16 states where it operates.

“Last year we increased 80% of our team member’s pay rate in response to the market,” said Amber Tyson, vice president of human resources for Absolute Storage Management. “We were challenged to find new hires in competitive markets like Nashville and Atlanta. Due to that, we did a salary review and increased our team’s pay rate, and moved our salary band and starting pay by an average of $150. We plan to do a similar exercise this year. We have seen a drastic decrease in our open positions and our overall retention rates are improving.”  

 

 

 

 

 

 

 

 

 

 

| Categories: | Tags: minimum wage, pay, self storage, legal, hourly pay, law | View Count: (6821) | Return
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