When Minimum Wage Jumps: Raise Price, Hold, or Cut Costs

Your payroll sheet will show the new wage, but it will not tell you whether your price still covers the labor in one unit. On September 30, 2026, Florida's hourly minimum wage reaches $15.00, up from $14.00 on September 30, 2025, and the direct cash pay floor for tipped workers reaches $11.98 because the federal tip credit stays at $3.02 per hour.

That step is the final scheduled annual increase in a series that started when the rate reached $10.00 in 2021. The wage change is a unit problem, not a payroll total. You need the employer's hourly wage cost, the hours one unit takes, and the price.

The new wage changes the cost of one unit

Start with the employer's hourly wage cost. Use the cash amount you must pay per hour, plus any required make-up, payroll taxes, and benefits if you want the full cost. For tipped roles, use cash wage plus make-up, not employee tips. A tipped worker who works 40 hours in a week and receives no tips costs the employer $600.00, made up of $479.20 in cash pay and a $120.80 make-up payment.

Turn that hourly cost into a unit cost. Multiply the hourly cost by the hours one unit takes. Use that fraction for a unit that takes part of an hour, and the whole number for a unit that takes several hours. The unit cost is the dollar amount for the labor in one unit. Use the same hours for the old and new calculation so the difference comes from the wage, not from a changed estimate of the work.

Divide that unit labor cost by the price. The result is the labor share. It tells you how much of each sale labor consumes. Compare the new labor share to the old margin. A new share above the old margin means the price no longer pays for the unit. A share below the old margin may let you hold price. Write down the old labor share and the old margin before you change the price, because the decision is the difference between the old share and the new share, tested against the old margin.

Choose raise, hold, or cut from the difference

Raise price when the difference is larger than customers will absorb. Hold price when the difference is small and the remaining margin can absorb it. Cut costs when the difference is in hours, scheduling, or waste, not in the wage itself.

Raising price should restore the labor share, not just cover the hourly increase. Check whether the new labor share is back below the old margin. Holding price lets the margin take the change. That can work for a short time, but it leaves less margin for the next cost. Confirm whether the remaining margin can cover the next cost change.

Cutting costs should start with the hours per unit. A faster process can restore margin without changing the price. Verify whether the unit still takes the same hours after the change.

Do not cut the wage below the legal minimum. Florida employers must prepare payroll systems so that pay is correct for every hour worked from September 30, 2026. Check the payroll setting for each role, including tipped make-up, before the first pay period after the change. For a tipped role, the make-up appears when tips do not cover the tip credit.

Re-run the test when the wage is indexed to inflation

Starting in 2027, Florida's minimum wage will be recalculated each year using inflation. The state will calculate the rate on September 30, 2027 and each September 30 thereafter using the CPI-W inflation measure, the index the state uses for the adjustment. The first inflation-based rate becomes effective on January 1, 2028. When the wage changes again, run the same test with the new wage.

Keep the one-unit labor margin test: employer hourly wage cost times hours per unit divided by price equals labor share. Compare the new labor share to the old margin, then choose raise price, hold price, or cut costs.