As Congress grapples with federal budget negotiations, the golf industry faces minimal legislative threats outside of tax-related measures in the reconciliation package. However, potential changes to daylight saving time could have an impact if addressed.
The adage "all politics are local" rings especially true in the wake of COVID-19. States have increasingly taken legislative action to address issues left unresolved at the federal level, particularly in labor laws and regulations. Since the beginning of the year, states have proposed various bills impacting individuals, with minimum wage increases being the most pressing issue for the golf industry.
NGCOA tracks key legislation being proposed at the state level, and the number one issue on our list is bills impacting minimum wage. The golf industry, heavily reliant on labor-intensive services such as groundskeeping, hospitality, and pro shop staffing, is particularly vulnerable to wage increases. An often-overlooked consequence of these wage increases is their impact on businesses’ wage models and employee morale.
When minimum wages rise significantly, many long-term employees who previously earned above the minimum wage may find their pay close to or equal to that of new hires. This can lead to dissatisfaction and decreased morale among experienced staff who feel undervalued. To address this, businesses often have to adjust their entire pay scale, increasing wages across the board, which further raises labor costs.
This could mean higher wages for golf industry groundskeepers, pro shop staff, and hospitality employees. While this could enhance retention and attract skilled workers, it also financially strains operators. Additionally, wage increases can create tension if not accompanied by recognition or additional benefits for long-standing employees.
Among the states considering minimum wage hikes, Georgia stands out with the most dramatic proposal. SB273 proposes an increase from $7.25 to $22.00 per hour, effective January 1, 2026. This nearly 300% increase would significantly increase labor costs, affecting all wage tiers, not just minimum-wage employees. The impact on golf courses would be profound, necessitating increased fees, staff reductions, or operational restructuring to maintain profitability. Exempt employees could be impacted as their base wage could be below the proposed new minimum wage.
Arizona’s HB2899 also presents a substantial increase, raising the state’s minimum wage from $15.00 to $18.00 per hour. Additionally, it proposes a stepped increase in tipped wages by $3.00 per hour initially, then by $1.00 annually until it matches the full minimum wage. This move would particularly affect food and beverage operations within golf clubs, which traditionally rely on lower-wage, tip-based compensation structures.
The financial strain from these proposed wage increases would be significant. For example, if a golf course currently allocates 35% of its $2 million annual revenue to labor costs ($700,000), a 30% minimum wage increase would raise labor expenses to approximately $910,000, pushing labor costs to 45.5% of total revenue. For states with higher proposed increases, such as Georgia’s SB273, the impact would be even more dramatic, forcing course owners to consider fee hikes or service reductions.
While minimum wage increases primarily aim to support lower-wage workers, they also have indirect consequences on employees who currently earn well above the minimum wage. To maintain employee morale and fairness, golf course owners may need to implement across-the-board wage adjustments, further inflating labor costs. Additionally, employees who previously saw their wages as competitive may feel undervalued if their compensation does not rise in proportion to new baseline wages. This could lead to higher turnover, increased wage demands, and challenges in staff retention.
To mitigate the impact of rising labor costs, golf course owners may need to explore the following strategies:
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Membership and Fee Increases - Higher operating costs will likely translate into increased membership fees, greens fees, and cart rental prices.
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Reduction in Staff or Hours - To control expenses, some courses may reduce staff hours, move toward part-time positions, or rely more on automated systems.
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Outsourcing and Automation - Investing in automated check-in kiosks, robotic mowers, or self-service driving ranges could help reduce labor needs.
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Operational Efficiency - Golf courses might consolidate job roles, increase cross-training for employees, and reduce non-essential services.
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Reevaluating Caddy Programs - States like Hawaii, which are considering exempting golf caddies from minimum wage laws, provide an alternative labor model that may gain traction elsewhere.
A sharp increase in labor costs may have cascading effects beyond individual golf courses. Smaller and municipal courses with tighter margins may struggle to remain viable, leading to closures or reduced accessibility for recreational players. Additionally, higher costs could deter new course development and renovations, slowing overall industry growth.
For employees, while wage increases can improve financial stability and retention, they may also lead to fewer available jobs, reduced hours, or higher performance expectations. Striking a balance between fair wages and business sustainability remains a pressing challenge.
State-mandated minimum wage hikes will force golf course owners to make difficult financial decisions. Georgia’s SB273 and Arizona’s HB2899 present particularly steep increases that will drive up operational costs significantly. Owners will need to adapt by raising fees, optimizing labor efficiency, and leveraging technology to maintain financial stability. Additionally, wage compression affects existing employees and will require proactive wage restructuring to retain experienced staff. As these proposals move forward, owners and operators in the golf industry must actively engage in discussions and advocate for balanced policies that support both fair wages and sustainable business models.
NGCOA encourages our members to let their state representatives know the impact these bills will have on their business and the community they serve. Politics are local; sometimes, the solutions to our challenges are in our neighborhoods.