Monday, August 5, 2013

Don't Raise the Minimum Wage

Posted By on Mon, Aug 5, 2013 at 4:00 AM

I recently saw a story about fast-food workers who were demanding $15 an hour. At first I thought it was an Onion headline and then I realized they weren't joking.

Now, if an employer willingly wants to pay you $15 an hour or $150 an hour to make cheeseburger then more power to them. I am all for what a willing employer and willing employee can negotiate. However, when you start talking about using government to mandate what people get paid, I have a little bit of a problem, especially when it comes to raising the minimum wage.

Let me give you an ECON 101 lesson. If I have 10 employees and I pay them $7 and hour, my payroll costs are $70 an hour. That means my business must generate at least $70 an hour to break even on those costs. If we increase the minimum wage to $10 an hour, my expenses just went up $30, because each employee is now making $3 an hour more. Please note, to earn that extra $30 I have three options:

1. Raise my prices to cover my costs.
2. Cut back on staff or hours to cover my costs.
3. Reduce my own take home pay and profits to cover my costs.

With self-preservation being the first law of nature, I can assure number three ain't happening. I am also not raising my prices on my customers either if I can help it. That leaves me with option number two - cutting hours to avoid a loss. Sorry, but that's how business works. If you don't like it, start a business and pay your employees $100 an hour if that floats your boat - just don't insist I do the same.

Now, I would gladly pay $100 an hour to an employee if they had the skill set to go along with the salary. No offense, but flipping a cheeseburger is not the same as splitting an atom, interpreting a 7th Circuit Court of Appeals decision or curing cancer. Actually, if I'm paying $100 an hour for those guys and gals, then I am probably paying way too little. Fast food is not rocket science, nor is sweeping a floor, nor is any other menial labor job, that's why they pay very little. And please spare me the "I can't raise my family on minimum wage!" Minimum wage was not invented to raise a family. It was to help folks get started in the workforce and they would eventually move up the ladder. It was also made to help senior citizens who want to supplement their retirement income. Nowhere in that formula is raising a family.

I fully understand taking a minimum wage job while you are in transition, but the point of transition is that it's temporary, not permanent. Of course, the best way to avoid being paid minimum wage is to have something other than minimum wage skills. It doesn't take a nuclear physicist to make two all-beef patties with special sauce, lettuce, cheese and pickles and onions on a sesame seed bun, so don't expect to make more than minimum wage for doing it.

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