Monday, December 9, 2013

Fifteen Bucks Is NOT A Living Wage; Why Not Strike For Fifty?

I know, I am not a big, successful business executive so I probably don’t know much.  But I have been a business owner and an employer for nearly 48 years and I do know that staging an organized strike is NOT a smart way to increase your pay nor is it an effective way to improve your life.  At one time, I employed about 78 people in a low-skilled, low-wage, non-profit, service industry.  So when it comes to the effects of a minimum wage hike, I know from personal experience, that the employees are hurt by them much more than business owners.

Several years ago, when the Federal government and the State of California both piled on simultaneous, scheduled minimum wage adjustments before my employees became aware, I jumped the gun and gave everyone a raise equivalent to the coming mandated adjustment.  (That was incidental to the reality; it did not do anything helpful except to give me the personal satisfaction of diverting the warm fuzzy feelings of my employees to me, rather than the Democrat Party or Uncle Sam.  By doing so, I was perceived to be caring and benevolent before the reality set in.) 

Then, before anyone really knew what was coming, I immediately sat down to determine how my company was going to pay for the added expenses.  The government was not going to fund their folly; we would need to pass on the increased costs to our clients or decrease our expenditures by cutting operational costs.  Since our clients were elderly and mostly living on low, fixed incomes,  I chose to do the latter.  I conducted formal evaluations of each of my employees, I analyzed their work schedules, and I planned internal adjustments to maximize productivity and minimize paid hours.  When I was certain that I could cut 20% of my staffing time and still function adequately, I began a systematic process to reduce my staff.  Yeah, that’s right.  I fired the non-productive and non-essential personnel (NEP).  After all, a marginally productive employee who may be tolerable at $6.00 is certainly NOT worth 7, 8, or even $15.  I may have been born at night, but it wasn’t LAST night.

By the time the mandated increases became effective, I was able to absorb the additional costs and still realize a satisfactory bottom line.  I would imagine that most businesses must have done similarly.

But the real, negative affect impacted much more than just those few people who were laid off.  Initially, all the employees were riding high on the excitement of their “newly acquired wealth.”  But then they found themselves much worse off in just a few short months. 

Here’s how - Even before any, of them, were laid off, when they first became aware that their benevolent, white-haired and bearded uncle in a funny red, white, and blue suit was giving them a raise, they immediately started making plans for how they would spend the extra buck an hour.  By their calculations, that dollar meant an extra $160-180 per month in disposable income.

And that’s when they got stupid.  They went shopping and most of them obligated themselves for additional interest-bearing payments for a plethora of unnecessary items they really could not afford.  Some even bought cars; most of them just thought they could add frivolous consumable items to their high-interest credit card debt because now they could afford to pay higher minimum monthly payments. And they didn’t stop to think that their gross increase would be subject to income taxes and other deductions.  Even some of those who were terminated spent it before they even knew they were getting pink slips. Surprise, SURPRISE!  I think I recall some proverb about counting chickens.

But the biggest problem for them is the truism that, “a high tide raises all boats.”  For a short time, all minimum wage earners think they are ahead but the reality is that, whenever the government rolls out a minimum wage increase, ALL other wages, and salaries, in the market, are soon, proportionately increased.  And the economic reality of mandated wage increases is that ALL costs of goods and services must be increased to pay for the additional costs to businesses.  Within a very short time, minimum wage earners begin to realize that their own out-of-pocket costs for groceries and other essential goods and services cancel out (and in most cases exceed) the value of their wage increases.  To put it simply, their paychecks don’t quite go as far as they once did.  By the time reality hits them between the eyeballs, their monthly obligations for the stuff they bought buries them in new debt. 

The moral of the story for any unskilled, entry-level, minimum wage earner who might be able to actually read this and think about it is this – If you want a meaningful raise, EARN it.  Show up on time, dressed appropriately, and ready to work. Work hard. Do what you’re told.  Show your boss some respect.  Demonstrate that you are willing and dependable.  Learn your job well.  Acquire new skills.  Trust me, you will become an asset worthy of your hire (That’s not an insulting word.  It means something of value.).   

Once you have established legitimate grounds, ask to speak to your boss in private and respectfully ASK him for a raise.  If he gives it to you, thank him and then KEEP YOUR BIG MOUTH SHUT.  The rest of your idiot compatriots don’t need to know about it.  If he doesn’t give it to you, you still have some options- be thankful for the job you have and continue to do it well OR resign and go find a better one.  That's the Christian way to do it.



Ron Livesay said...

Wow... You really nailed that one. But... how can you call people "non-essential." After all, everyone is essential because everyone is a winner. I think they teach that in school these days.

Glenn E. Chatfield said...

Thomas Sowell gives example of this very thing:

“Intervention by politicians, judges, or others, in order to impose terms more favorable to one side - minimum wage laws or rent control laws, or example - reduces the overlapping set of mutually agreeable terms and, almost invariably, reduces the number of mutually acceptable transactions, as the party disfavored by the intervention makes fewer transactions subsequently. Countries with generous minimum wage laws, for example, often have higher unemployment rates and longer periods of unemployment than other countries, as employers offer fewer jobs to inexperienced and low-skilled workers, who are typically the least valued and lowest paid - and who are most often priced out of a job by minimum wage laws.

“It is not uncommon in European countries with generous minimum wage laws, as well as other worker benefits that employers are mandated to pay for, to have inexperienced younger workers with unemployment rates of 20 percent or more. Employers are made slightly worse off by having to rearrange their businesses and perhaps pay for more machinery to replace the low-skilled workers whom it is no longer economic to hire. But those low-skilled, usually younger, workers may be made much worse off by not being able to get jobs as readily, losing both the wages they could earn otherwise and sustaining the perhaps greater loss of not acquiring the work experience that would lead to better jobs and higher pay.”

Too bad politicians don't listen to common sense.

Ralph M. Petersen-Always Right; Sometimes Wrong! said...

The problem is that the Progressive Left is never interested in facts, truth, or common sense. They are working an ideological takeover of the country. That's why they seem to never learn lessons from history. Their ideology is the supreme objective regardless of damaging results. Does anyone remember that "fundamentally transform the United States" and all that other "hopie changie" crap?

Glenn E. Chatfield said...

Yeah, I know. They don't ever want to be confused with facts and reality.