Your Guide to Texas’ Minimum Wage

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.

What’s the minimum wage in Texas?

The Texas minimum wage in 2020 matches the federal minimum wage of $7.25 per hour. Keep in mind, this means tipped employees must be paid at least $2.13 per hour and $5.13 in tip credits.

Are there plans to change the minimum wage?

While there are no laws in play to change the Texas minimum wage, there are people pushing for an increase. Texas Democrats, union leaders, and activists want to increase the state’s minimum wage to $10.10, and eventually $15.

There are also some proposals on the table to empower local governments in Texas to set their own minimum wage. Cities like Austin, Dallas, Houston, and San Antonio are likely to take advantage of this.

How should small business owners prepare for a potential Texas minimum wage increase?

Although there’s no minimum 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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