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SoulCycle explains why minimum-wage hikes mean wage hikes for everyone
(REUTERS/Shannon Stapleton)
In its IPO filing, SoulCycle warns that statutory minimum-wage hikes could put the squeeze on the company's profits.
We should note that SoulCycle explicitly says that it pays employees above minimum wage.
This is why its warning is so interesting.
From the company's "Risk Factors" section (emphasis added):
Increases in the minimum wage could increase the cost of our labor and have an adverse effect on our financial results.
We have a substantial number of hourly employees who are paid wage rates above the applicable federal or state minimum wage in order for our wages to remain competitive. From time to time, legislative proposals are made to increase the federal minimum wage in the United States, as well as the minimum wage in a number of individual states and municipalities. Several states in which we operate have enacted increases in the minimum wage and legislation to increase the minimum wage is currently pending or being contemplated in other states in which we operate. Although we pay our hourly employees wages above the applicable federal or state minimum wage, as federal or state minimum wage rates increase, we may need to increase the wages paid to our hourly employees in order to remain competitive. Any increase in the cost of our labor could have an adverse effect on our operating costs, financial condition and results of operations.
So, even if any minimum wage hike is below SoulCycle's minimum pay rate, the company nevertheless will have to increase pay to keep employees from considering other jobs now offering more money. And that in turn will force higher-paying employers to raise their pay. And so on ...
Compensation and related expenses represented 36.7% of revenue during the quarter ending March 31, 2015.
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