Minimum wage argument

Which side is right and which is wrong? Is there a wrong side to this argument? Hopefully through logic, I will provide factual arguments that help you determine what side of the argument you should be on.

Let’s first look at the argument for $15 an hour. From a family’s perspective a person earning a higher wage is always a good thing. A family that makes more is less stressed, and has more to contribute towards the economy. That in turn creates more revenue for other businesses. Also, a worker making the same wages as a competitor’s company worker will have less desire to switch companies, which drives down costs for business dealing with attrition.

First let’s both agree on one thing.  Whether we are for or against a $15 minimum wage, we agree that a family with a higher wage is good for the economy. The method in which a family receives the wage is where conflict comes into play.  Employees should not demand a set wage from employers, and employers should not use minimum wage as a guideline for determining the employee’s worth.

The ugly truth about minimum wage is that it forces companies to cut costs or wages elsewhere to make up for the mandatory minimum increase.  What most proponents of the wage increase don’t realize is that the companies decide the wages based off several factors, including production, sales, customer service, logistics, and employee benefits to name a few. So to raise a salary for a particular position, there should also be a beneficial factor to increasing the businesses production or sales proportionally.  Unfortunately, a minimum wage increase does not guarantee that production will increase.

What am I saying when I say that the increase must justify the means? Well let’s take a look at a few examples. I will use a fast food burger place to state many of the examples. So a worker that makes 8 dollars an hour must be able to produce almost two times more than normal to justify the increase. For every one burger the employee’s made before, it must now make 2. For every customer served in line, they must serve an additional customer. For every minute spent on cleaning the bathrooms, they must now do in half the time. Now imagine what the company must do, not just for one employee, but for all of them that receive a mandatory increase.

Not convinced yet? Do you think that the distribution of wealth should come from the top, down? Well let’s look at why this doesn’t work.

Ask yourself this fundamental question. Do you think that all employee positions are created equally in terms of wage? Does a person that can manage people efficiently have the same wages as an employee that just flips burgers? If you answered yes, then you are naive to the obvious reality. There is a reason that management and higher level positions have different pay brackets. For one, the manager has a different, but necessary skill set to ensure that am employee is properly trained on their job, knows how to order inventory, make schedules, sends hours of all employees worked to payroll, and even flips a few burgers or sweeps the floor when it’s closing time. So, now that you see what a manager that is already making $15 an hour does, let’s now give Joe who only flips burgers and fries French fries the exact wage of Jim the manager. How will it effect Jim’s desire to efficiently manage Joe if he now makes the same as Jim? What about Joe’s desire to do all the things that Jim does? Would Joe want all the responsibilities of a manager that makes the exact amount of money that he now makes? If you said yes, then you are just fooling yourself.

There would be no desire or drive to accept more responsibilities of a person that makes the same amount. That is why wages need to be competitive in terms of responsibility and skill level.

So to offset a $15 an hour minimum wage, Jim’s wage would need an increase to offset wage competition. Otherwise, there would be no desire for managers everywhere to compete for a higher position. So more costs to the company that has to pay the wages must be considered. Should it come from the CEO or another higher position? Do you not remember me discussing the desire to make a higher wage based on skill level? 

Let’s take Jill as an example. Jill is a district manager for 5 burger restaurants. She provides reports to her boss about how much revenue her stores are making, which sites need more or less employees, strategies about how to market to new and existing customers and provides feedback to her store managers to name a few of her responsibilities. Now, because of a minimum wage increase, the company decides to pay Jim the same as Jill who pretty much manages Jim and 4 others. Jill has a bachelor’s degree in business management and Jim does not. If Jill that spent 4 years getting a bachelor’s degree now makes as much a Jim, what desire to get an education at a college is there if an entry level burger flipper, who worked up to management makes as much as she does? There would be a decrease in the desire to be educated and would cause a considerable blow to the education industry.

So let’s go higher up the pay chain. The CEO s and other officers that are at the top of the pay scale. Should the wages of Jim Joe and Jill be paid out of Jason’s pocket? What incentive does Jason, the CFO have to do his job if he is now taking a pay cut and making as much as Joe the burger flipper? Is it too unreasonable to suggest that Jason makes as much as Joe? Remember, Jason is having to take a pay cut to pay Joe and everyone at his skill level their new $15 hour minimum wage.

Let’s say there are 5,000 employees who were making 10 an hour but would have to pay out 15 an hour for wages. To pay all 5000 people that exact wage would cost the company $52,000,000. Jason only makes 400,000 for his position. How could he possibly supplement the income of the other 5000 employees not making the minimum wage? Simple answer is, he can’t, and exactly why the minimum wage is a detriment to a company. 

If you want a higher wage, earn it. If you are still in favor of minimum wage, then by all means, please explain to Jim Jill and Jason what you are willing to do to offset the 52 million dollars the company will lose to pay in increased wages.