The $15 Minimum Wage: Why It Will Harm More Than Help

The $15/hour minimum wage will not help the majority of people in America; in fact, it will hurt the lower and middle classes in a substantial way.

Having said that, I just became very, very unpopular among the people in the Pacific Northwest. I feel like there’s a ton of people here that want to support a higher minimum wage… I just think they’re being very, very short-sighted.

In fact, if we approach a minimum wage increase in such a cavalier way, we are going to end up hurting the people we’re trying to help and shrink the middle class at the same time.

DO NOT WANT.

Jobs are about work. In normal situations, the better at your job you are, the more you’re rewarded. Sure, it doesn’t always work like that, but as a guideline it’s the norm. When it doesn’t work that way, we instinctively blame the manager… other times through, it’s the worker’s overestimation of their success that prevents a raise. Regardless, another aspect of the equation is the job you do: the more valued the job you’re in, the more you’re rewarded. Notice that I didn’t say harder jobs get more rewards or the harder you work, the more you’re rewarded? While we would want this to be the case, it’s often not the reality of things. I look at what teachers have to put up with and, well… they are underpaid for the level of bullshit they have to deal with and for how hard they work. But they’re also outside of this conversation since they are making more than minimum wage.

Having worked since I was 14, I think the hardest job I’ve ever had was working in the kitchen for a fast food joint. It was definitely the most stressful gig, in the sense of “do this immediately or else” type of stress. Tell someone they have to make four Whoppers a minute for two hours straight – and every 6th sandwich has no mayo and every 18th sandwich needs to be cut in half – and most people will go cross-eyed. Given time and practice, I believe most people can do the job. There is way more stress in working in software, but it’s a different kind of stress. Software stress is usually not as immediate kitchen stress and the challenges are way more complex – remember, you’re dealing with more consequences than a single $2.99 Whopper. Given time and practice, I believe most people can do the job. The difference between the jobs is the amount of time and – based off skill set – experience in the role. Making a Whopper quickly can be learned in an afternoon; software takes several years of training – college or otherwise – and then you have to learn all of the ancillary stuff that goes into publishing software…

Guess which of the two jobs is more valued in the workplace? Hint: only one of the two jobs described is being offered at minimum wage globally.

Why is any of the fast food background important?

Fast food is a subsection of retail and retail as a collection is a good set of jobs to look at for this conversation. Odds are that if you’re looking at a retail position, you are looking at a minimum wage worker… you’re not buying a car from a minimum wage guy but you are likely buying socks or a game disc from one.

What does minimum wage mean anyway?

To me, we’re talking about the minimal amount of wage that an employee can earn. Does that mean that the worker has to do just the bare minimum to get a paycheck? That may be the case. When I worked fast food, I didn’t make minimum wage. I was hired at the minimum sure, but then I worked my ass off to make more money. I learned things that I wasn’t asked to learn and trained on new things to make myself more valuable. When I got a raise, I was being told that I was doing a good job. That I worked hard and I was being rewarded. The shlump next to me that came to work late, didn’t do extra work, and left before he was “done” got the minimum wage.

So what’s wrong with raising the minimum wage?

For this we have to look at the repercussions of what this means for the businesses that employee people.

I own a business with 40 people on the payroll; some make minimum wage, some a little make more because they’re good at their job.

As a business owner, what do I do if the minimum wage pops from $8 to $15? I have some people making $8 but other people that are hard workers, I’m paying them $11.50. The day this goes into effect, everyone starts making $15/hour… sure, everyone gets a raise, but the great workers are being told they are worth the same amount as the dead weight… do I have to bring the top people to $16.50 or do I let this lay?

Translation:

Small business suffers in two different ways… one is salary. If he’s got 40 people working 40 hours a week, 52 weeks a year, that are now making an average of $5 more an hour, he’s paying out an extra $416K in salary a year. That’s no small amount. In fact, a good way to think of it is that if the business has all 40 people on from 1-2pm, that business needs to make an additional $200 in that hour, just to stay afloat.

I own a business and now I need to make more money each day.

As a business owner, I have a much larger payroll to content with… I need to do something.

Translation:

People are going to get laid off. Or people are going to be working less hours with the hope that less people doesn’t make for a drop off in customer service. Or the price of things just increased with the hope that people don’t stop shopping and buying.

Since I don’t want to lay anyone off, I’ll raise the prices of my things

Depending on the business, this could have really far reaching issues. Using the example of fast food, the price of all menu items will be increased in various amounts. Since the markup on soda is huge already – and it’s an optional item – assume the increase will hit the food pricing more than anything else.

Translation:

Now things cost more. As it’s fast food, who does this impact the most? The minimum wage worker. The increase that just went into effect just became a little less. At the same time, the city had to increase wages for workers, so they’ve passed along an increase to the bus pass. Light and power has a bunch of support workers that make minimum wage; they can’t let their profits dip, so they increase the cost of natural gas and electricity. Little by little, this massive bump to the minimum wage is being whittled down to a nub.

And now… the Rant:

Take another look at the paragraph above. It might take one month or three months or six months, but this whole outcry of “I can’t live on $8/hour” will march towards becoming “I can’t live on $15/hour.” And when that happens, now what? Ask businesses to eat the cost and not raise prices, like they would in socialism? Fuck that. It would be fine, if we were running a socialistic government but we don’t. We can’t apply socialist price capping for retail and not for other business… it’s an all or nothing philosophy. And if we do want to swing socialist only in terms of pricing, we’re getting screwed out of all the benefits of socialism because we’re only embracing part of the ideology. Even though Occupy Wall Street wants us to equally divide the wealth among everyone, we are still a capitalist based government. OK, so the minimum wage worker will have a small amount of time to get ahead before they are back in the same situation they are in now – what about everyone else in the meantime? The middle class is the real loser here, because no one is bulk raising their wages. Do people think that if the minimum wage goes up that we all get a bump? No, if you’re middle class and working on salary, your net effect here is you are making the same while the price of many things increase around you.

By raising the minimum wage in this cavalier way, we are going to shrink the middle class further and push the mythical 1% further higher up the stack.

On top of that, have you been out in stores lately, to get a sense of how hard the minimum wage worker works? I was in an Old Navy this weekend. Eight people in line and only two cashiers at noon on Saturday. Prime time shopping and the store is short staffed already. Next store; ten people in line and one cashier who was also running the returns desk. Later, I wanted to get a router from Best Buy; called the store to check the stock… they tell you to check the web site. Web site has one in stock; drive to the store… out of stock. Of course it is. My recourse? Go to the next store which shows it’s in stock. Go to the further away store: out of stock again.

If customer service already sucks – and worse, in some cases where it’s on a decline – why on earth are we willing to pay people more? And before someone pulls out the “well not everyone sucks” card, stop and see the first few paragraphs: there have always been hard workers and shitty workers, so this is not a new premise even if it does feel like more people are sucking lately. What is true, is that by making it more painful for business owners to reward the people that do a good job, they will stop rewarding those people. Those people – if they are smart – will stop working harder because of the lack of incentive. Why shouldn’t they? The minimum is reward enough to live on and since there won’t be raises anyway, why should they work harder?

Raise the minimum wage? Sure. Raise the minimum wage to reflect the cost of living, spurting ahead a bit if we don’t have parity, but it needs to be relative to the current rate. A wholesale 88% increase of the minimum wage? No. This is not the right thing to do.

DO NOT WANT.

Leave a Reply

Your email address will not be published. Required fields are marked *