Texas hasn’t seen a minimum wage increase since 2009, but that may change. As other states move toward a $15 base pay, some Texans want to follow suit. Read on to learn the latest about minimum wage in the Lone Star State in 2023.
What’s the minimum wage in Texas?
The minimum wage in Texas is currently $7.25. This is the exact same amount per hour as the federal minimum wage. The last time Texas chose to raise its minimum wage was in 2009 when the mandated hourly pay went up to the current $7.25. Local governments in Texas continue to raise the minimum wage at the same rate as the state. For this reason, Texas cities like Houston have also not seen increases in the minimum wage since 2009.
There are exceptions to the Texas state minimum wage, including tipped employees earning over $20 per month in tips, student workers, employees with disabilities, and workers under 20 years old working for an employer for less than 90 days. Additionally, Texas implemented specific minimum pay rates for several occupations including farmworkers, seasonal workers, newspaper deliverers, and “informal” workers (babysitters, etc). Lastly, in Texas nonprofit and educational organizations can choose to send an application to the Department of Labor to pay employees less than the state-mandated minimum wage.
Are there plans to change the minimum wage?
While many states increase the minimum wage in accordance with the cost of living or inflation, Texas has not increased its minimum wage since 2009 when it went up $0.70 from $6.55. There are currently no bills that have been passed to increase the minimum wage in Texas.
In Texas, some organizations are showing efforts to try and increase the minimum wage quicker than the state. For example in San Antonio, the Security Services Federal Credit Union decided to raise the minimum wage for nearly 400 employees from $15 to $20 per hour as of September 2021. This is over double the Texas state minimum wage and federal minimum wage. Even so, the state of Texas has yet to pass a bill aimed to raise the state minimum wage to $15 within the decade. As proposals to increase the minimum wage in Texas continue to be considered at the state and local level, it is not yet certain when and how the Texas minimum wage will change in the future.
How should small business owners prepare for a potential Texas minimum wage increase?
Although there’s no increase to the Texas minimum wage just yet, it’s good to be prepared in case there’s a future increase. Here are a few options you may want to consider:
- Audit your expenses: Check your cash flow in detail and create a hiring plan that you can afford. In some cases, you may find that hiring temporary workers as needed is less expensive than taking on full-time regular staff.
- Make sure you hire and keep the right employees: Replacing an employee costs a lot. You decrease the total cost associated with recruiting and training when you hire and then retain good employees. Look for candidates with good track records, who come recommended, and who fit in with the company culture. Once they’re onboarded, make sure you build a relationship and provide paths for growth; it makes it more likely that they will stay in their role and will increase your employee retention.
- Increase prices: This is a great way to increase cash flow. Customers are rarely happy with a price hike, but keep in mind that your competitors will be forced to do the same. Just make sure you keep track of trends, and don’t raise prices too high.
- Update tech: Consider automating certain aspects of the work (like payroll), and find ways to reduce production costs.
As always, to make sure your business is prepared and stays in compliance (such as by getting an EIN, we recommend that you discuss any upcoming changes to the Texas minimum wage, paid family leave laws, and Texas payroll taxes with your trusted accountant and lawyer.
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