Saturday, April 3, 2010

Why I HATE the Minimum Wage

Why I Hate the Minimum Wage

(NOTE: All names used herein are fictional and do not refer to any known real life person.)

Back on October 24, 1938, when the Federal Government set the first minimum wage at twenty-five cents per hour people lost the right to negotiate for themselves how much their time and effort were worth. It was no longer an "experience counts" and hard working employees make more verses inexperienced, or lazy workers thing. It became "everyone starts at the same rate" and no choices were offered.

That amount rose steadilly and became a source of discrimination in 1961 when there were different categories of workers: "large retail and service enterprises as well as to local transit, construction, and gasoline service station employees" or employees of farms or "nonexempt" workers. Depending upon where you worked in 1968, you could be paid as much as forty-five cents more per hour because the minimum wage dictated so. Does that sound like a fair practice?

Nowadays, it's an exception between the nonexempt workers and the exempt workers and the federal government participates in age discrimination: "A subminimum wage -- $4.25 an hour -- is established for employees under 20 years of age during their first 90 consecutive calendar days of employment with an employer." If you are a day over twenty, you must be paid -- according to federal law -- $7.25 per hour. That's a three dollar difference decided by one day. Is that fair?

Did you know there were differences? There are.

The thing that minimum wage earners do not seem to understand is that they could be worth more if they negotiated on their own behalf. When people get high-powered, high paying jobs, it isn't because the federal govermnent was involved and decided what their wage was going to be. It was because they knew their education, their experiences, their insight, their qualifications made their services more valuable than a government set wage. They walk into a potential employer's office and know that they want $80,000 for their base pay, full benefits including medical coverage, vacation pay and flex time (or PTO). They get it there, or they move on to a company that will pay them what they think they are worth (or they have to re-evaluate their self-worth).

Let's say that Sam Smith went to Harvard and got his degree in Mechanical Engineering with secondary studies in Business Management. He graduated in the top twenty percent of his class and he has some work experience but it was working at a fast food restaurant and a paper route when he was in his teens. He's now twenty-four and he's going on his first job interview since he was sixteen. He walks into the "Manufacturing X" company in time for his appointment, gets shown in and shakes hands with the personnel manager and the department head he would be working under. They talk and the "Manufacturing X" company likes what they see. Do they offer Sam Smith minimum wage because this is his first job in years and he's basically starting over, and it is the government mandated wage? No. He gets to say what he is expecting to earn. They get to say, "Well, yes, we can do that," or, "Sorry. We could offer you fifty. Would you take that?" It's then up to Sam Smith to decide his own value.

Same holds true with someone just getting their first job at a fast food restaurant, a grocery store or a car wash. Ken Kirk is perpetually punctual, hardly ever gets sick, is good at making change, is driven to succeed and is shooting to be promoted at least once (preferably twice) within the next six months. Lenny Ladd walks into the same establishment, has a track record of working for a similar establishment, but has been sick often, has a history of putting nominal effort into his work and sometimes was as much as $5.50 off in his drawer count at the end of the day because he has a problem making change. There are two identical jobs available. Ken Kirk talks to the manager and impresses him very much. Lenny Ladd has experience and the manager needs experience. They both get hired and they both get paid minimum wage for the first six months of employment.

Problem is, the manager has to pay Lenny Ladd the same wage as he has to pay Ken Kirk when it is Ken Kirk who has made a huge difference in the first two weeks of his being employed and Lenny Ladd has done just about nothing extra. Due to the minimum wage, there is no money to give Ken Kirk a raise; nor can Lenny Ladd be fired because a second worker is definitely needed; even if it is a nominal worker. Ken Kirk has to wait until there can be more money in the budget for his raise. Six months pass. Ken Kirk has been noticed by other employers and he is being offered other jbos. Loyalty makes Ken Kirk want to stay; money makes him want to go. Ken Kirk makes a decision to stay for two more months, just in case things get better. Two months later, Ken Kirk is still making minimum wage and Lenny Ladd is getting lazier.

Even though Ken Kirk absolutely loves working there, and loves what he is doing he decides to leave the company because he can't see himself going further up the ladder due to Lenny Ladd's employment costing his employer equal pay for less work than Ken Kirk was putting into the job. Ken Kirk leaves his employer and makes two dollars more per hour at his new job because of his positive work attitude, drive and contribution to his employer. Lenny Ladd is still at the store and still making minimum wage with his boss trying to decide whether Lenny Ladd is worth it because the boss can't find anyone else to take the job.

Ken Kirk's decision was right for him only in the dollar and cents mode. Emotionally, Ken Kirk felt like a traitor because he respected his boss and had a fond attachment to him. He felt resentment toward Lenny Ladd for costing Kirk his dream job, and he considered his first job a failure because of his decision to leave and he carried that with him the rest of his life.

This isn't as far fetched as you might think. There are employers out there every day who have a similar situation: go-getters who cannot be given a raise due to minimum effort minimum wage employees who take up pay and space and do just about no work. Yes, they could be fired (as long as it's not a union job), but they would only be replaced by someone else making a minimum wage and the people who deserve more money wouldn't be receiving it because of that minimum wage being forced upon the employer. The employer is stuck with the inability to reward good workers for their effort; or to discipline bad employees for their lack thereof. Money is supposed to be a good motivator, but for some it is not. Firing those who do no work only begins the cycle again and means training another new worker and making the HR department work harder to do the processing out and in. Training time means down time and that means money lost; at least with the slacker he was already trained, even if he's producing 3/4 of what he could be doing.

Minimum wage is a trap for both the employer and the employee. There is no negotiating, no figuring out what you are worth, what the job is worth. It's here: take it or leave it because this is what the government says we have to pay. Minimum wage depletes creativity (who wants to be more creative and make more effort than the Lenny Ladds of this world and still receive the same pay?), depletes initiative, depletes drive. It's a job that will pay you no matter what as long as you show up and you can always get another job that will pay you that same amount as a newbie, so why bother with effort?

Minimum wage is a vacuum of despair. I heard so many people at my last job complain that they were "stuck" there because they couldn't get anything better (no matter what their pay was). I have heard so many people in other jobs decry their pay because they "couldn't do better". They never tried. They heard that the minimum wage job they were in was basically their only choice because if they changed jobs, it would just mean downtime and they'd be paid the same thing at the new job -- no matter how long it was between jobs -- and they are raising three children on that minimum wage job and it's hopeless.

Even though minimum wage is said to be ensuring a "living wage" for everyone, it is a farce. With gas, food, electricity, water, housing costs as high as they are, the "living wage" has never been a "living wage": never. In 1938, at twenty-five cents per hour, the minimum wage earner made $520 per year. The average cost to raise a family of four with food, shelter and clothing outstretched the minimum wage (see the chart on the third page) and it has every year since its inception.

The minimum wage is an useful tool, however. It keeps people believing that if they rely on the government to do things for them -- to "give" them health care, to "pay" for their car, to "demand" a living wage for them -- then all they have to do is show up at work and do minimal work. They don't have to meet standards and they don't have to work hard to get ahead. They will -- probably at the next big election cycle -- get a raise automatically when the minimum wage goes up to buy more votes for re-election. Very useful for those who are willing to keep people down and to keep them ignorant of the true price of their vote and of their own willingness to let others do things "for" them. Remember, it's not always "for" you. When it is a politician doing it, it's usually "to".