All the talk in the media, as well as the houses of government, regarding an increase in the minimum wage is disturbing in the extreme. First of all, there is the questionable motivation. For those who still seek to be independent and self supporting, it appears to be a grandiose attempt to buy votes in an election cycle, to prove how much the common workers are valued by our elected officials. Secondly, it is pretty essential that minimum wage be increased to offset the government's recently expanded the poverty definitions under the ACA, for the purposes of Medicaid eligibility. It is estimated that in Illinois alone, those new definitions mean 1 in 4 residents of the state are eligible for Medicaid, a whopping twenty-five percent. Ooops! Now we have too many people below the poverty level, and that is simply not a good PR for the success of all the stimulus programs. There is the real question as to how states will absorb all this new financial assistance. Not to mention, it is certainly not in keeping with the fiction that the economy is improving.
One justification for increasing the minimum wage highlights the fact that it hasn't been raised in over five years. The logic flows that costs have escalated where minimum wage has not. That may well be true. However, few employees, at any level, have seen measurable wage increases in five years or longer. Wages across the board have been stagnant, and in many cases, folks find themselves earning less than they did five years back, significantly less. Everyone faces those same increased costs, but the premise contends that those on minimum wage should be receiving a long overdue, almost 30% increase in pay. The rest of us, above minimum wage, will receive much less or nothing at all, as has been custom for almost half a decade. By expecting employers to absorb the higher minimum wage costs, we also are assuring that salaries remain stagnant, because if business is paying more for the least skilled employees, it stands to reason that there is less budget for raises to employees, who are more skilled and have moved beyond minimum wage scale. It is foolish to look at the employers as an unending well of resources. Every single business has a finite point where they transform from expanding through profit to contracting to reign in cost. Many businesses have already reached that crucial point as they struggle with increased benefits costs of health insurance mandates. Many businesses have already collapsed, as evidenced by vacant storefronts and empty industrial parks.
And what about the workers that have moved upward in education, skill, and experience? They are beyond minimum wage, and the pay packets reflect their contribution relative to company success. There are many who started at the $7-9/hour figure and worked their way up, over time, with diligence, to $13-15/hour. IF minimum wage is unilaterally increased across the board, those workers have all been devalued, and their sense of reward diminished. They, also, want and expect to receive a commesurate increase, but I fear that they most likely are to be disappointed. How would anyone feel to know that another employee got almost $3/hr increase and yet doesn't have the same responsibility for workload as the person who may, if lucky, receive .25 cents/hr? The rhetoric talks about the income gap, and has us focusing attention on those at the highest levels of business, calling it unfair. What truly is happening is that the majority of us are being broken down to the lowest levels, which means that nobody is truly being uplifted.
Supposedly, the theory continues, raising minimum wage will make people less dependent on government support. Raising minimum wage does not address a culture that makes it entirely too easy to become dependent. Minimum wage workers are often not the most highly educated. Does anyone think that giving them an extra $3/hour is going to inspire them to go back to school or invest in skills training? And how much money should any company be asked to pay for positions which are not skilled, nor do they require extra education and training. Companies operate where the least skilled employees have the least number of work hours. Part time at $10/hour will yield less income overall than $7.25/hr for full time. How does that help people move out of dependency? In this example, twenty hours per week at the new minimum wage would be approximately $200 gross, and previously, the minimum wage earner, with full time hours, earns almost $300 gross per week. The full time worker could potentially receive holiday pay, sick pay, and even paid vacation. The part time worker receives none of those benefits, and also never qualifies for overtime pay. So which worker has a greater chance of supporting themselves without assistance programs?
Common sense says that as labor costs increase, so to do consumer costs. There was a time, as late as 1980, when your dollar bought both the burger and fries. And for a long while, walue menus allowed you to buy at least on item of the two. Now, most value menus do not include dollar options, with prices moving closer to the two dollar mark per item. Six dollars barely buys a sandwich, fries, and drink on the regular menu. If we accept, as fact, that the bulk of minimum wage workers are in fast food and retail industries, there must be an impact on the overall cost of end products. Everyone pays more, and increased costs result in the minimum wage worker being no better off than before. Their costs increase just as everyone else's, offsetting whatever ground is gained by the larger paycheck. And do any of us really want to spend even more for our "value meals", regardless of our income?
Consider the traditional restaurant and hospitality industry which includes those who rely heavily on gratuity for income. Etiquette demands that good service be rewarded presently at 15-25% of the bill. Many food service positions, by law, are paid significantly below minimum wage due to tips and gratuities. The expectation is the worker will make up the difference between what the employer pays and the minimum wage figure per hour, based upon tips. Employees can be fired for failing to fill the gap between salary and tips. In any case, their actual paycheck is taxed as if they did, in fact, earn minimum wage. This increases the amount of money a family spends to eat out, and the logical result is that they go out less often. If traffic volume is down, restaurants traditionally send wait staff home, even if they haven't completed designated hours or shift. If the business volume continues low, wait staff will be exposed to fewer hours and perhaps even a layoff of staff. So how does this improve the lot of the minimum wage worker? Restaurants are already the most vulnerable business in tough economic times, and restaurant start up businesses are the most likely to fail within the first two years. Do we need to lose more jobs and businesses?
If the gap between the stated minimum wage and tips earned increases, then we, as customers, are expected to increase our gratuity further. Perhaps the entire concept of gratuity goes by way of the dinosaur. We may find ourselves with that gratuity, which was previously a reflection of our satisfaction, built into the cost of our meals to insure everyone receives $10/hour. How will that impact the restaurant industry? And might we be looking at a situation where quality and service are no longer the goals, because the income is guaranteed?
It seems that we are creating a situation that does not encourage excellence, but keeps people marginally contented with the status quo. Why should anyone be educated or skilled? Why should anyone give their best effort? One can pay for additional education, investing time and money. One learns and develops skills, investing time and effort, but the end result is that they will not see a significant difference in their quality of life than the person who elected not to pursue these goals. Who is going to invest time, money, and effort to maybe earn $2-4/hour more than the person who hasn't made that same commitment? The whole concept of minimum wage as a starting point, or perhaps a supplemental income, becomes moot. If we move the starting point ever higher, what is incentive to achieve on our own?
Most of us have done our time in minimum wage jobs. Some were better than others. I always felt minimum wage jobs serve a wonderful purpose, convincing us why we might defer our immediate gratification for things so that we invest in ourselves instead. After many summer vacations, it became really evident that I wanted something better, something more rewarding, something more challenging. While school and advanced training might be costly and difficult, it is a means to a better work life and a better overall quality of life. It is a means for gaining independence from parents. Our society is now substituting government for parents. The larger societal issue is that we have devalued workers in America, making effort and hard work seem selfish and greedy, instead of the healthy growth from the dependency of children to capable and responsible adults. We no longer view salary as a reflection of our contributions, but an entitlement for existence. We no longer use material things as goals for achievement milestones. Human beings seem to thrive on tangible rewards as a means to stay motivated, so the psychologists say. If we continue to increase what is given without effort, then we diminish the ability of income to be a positive motivating influence for growth and development.
Filed under: The Job Search