Recently many people have latched on to the idea that raising the minimum wage will help to lessen inequality. The President has made a lot of noise with this "populist issue" declaring it only fair. Unfortunately raising the minimum wage will make America less competitive and it will reduce opportunities by giving employers less incentive to hire. It will cause small businesses to cut hours and reduce the number of employees working at any one time. Shorter hours and a drop in service will add to the reasons that small businesses often fail to compete and are forced to close their doors.
It should be noted that the price of living varies considerably across the nation and from community to community. This means changes in the minimum wage will destroy and impact jobs in some areas far more then others. Money is a short term motivator, while people getting higher wages might
boost their performance and production it is often temporary at best
but raising the minimum wage will usher in a host of higher prices and these tend to effect low wage
earners the most. Cost shifting, subsidizes, and high minimum wages all increase prices and
are key causes of income inequality.
If people are willing to work for a little less money more jobs would be created at a time when many
Americans claim they have been looking for employment and will do
almost anything for work. Yet the President
issues a call to raise the minimum wage. How do we reconcile
issues that seem at odds? This could be called a
"tale of two cultures." The crux of the employment
problem, is both cultural and structural in nature. Much of it derives from
created over the last decade by our growing government centered economy.
Government employees are often paid better than in the private sector
because government does not need to make money to exist.
Currently big box stores, fast food franchises, and hotels often pay low or minimum wage,
while other small businesses are often forced to be more generous. The
difference in wages is often because
many small businesses need more from an employee. They must invest more
in time, energy, and training, and they are hurt when employees leave. The
fact is when
people work in an environment where they must show more then minimum
responsibility, and make even minor decisions, the mistakes and errors
they make can be very expensive, and can make the cost of the worker far
then he or she is worth.
Raising the minimum wage is a strong negative to hiring in
a small business where the owner or manager has to deal with the employee
directly, this ties up their valuable time. Large companies often have
departments or discipline channels that serve in the role of
"babysitter." Most employees generally do not recognize the cost of
their working with constant cell phone interruptions, logging in on Facebook, shopping online, repeatedly
plugging up a toilet, stopping to buy cigarettes, or the habit of always
rushing off to use the restroom while a truck full of paid workers wait
to leave for a job.
Many people forget it is not just the hourly wage we must look at, but
the hidden cost of hiring must be factored in, such as the cost of
training and all the liabilities of being responsible for their actions.
Now add to that wasted time,
risk, insurance, and
more taxes. Hiring an employee is often a hassle and a marginal benefit at best. After a worker takes a job, and has proved their skills,
reliability, and that they are indeed an asset and not a liability, only
then are they be entitled to more rewards. Far better than expensive government job training programs that don't work these businesses are the "real training" ground for workers seeking jobs.
Like many employers I have become skeptical,
of the benefit of adding staff in the current environment. I
have been told many times by job seekers of their outstanding skills to
later be disappointed. I have found that many workers
that lost good paying jobs from better times when
employees were harder to find are in reality slow, sloppy, or allow
personal problems to keep them from showing up for work. They often overvalue their skills and that is why they are not working. In the end these people will be forced to accept lower wages or the
alternative is they will
just continue not to work.
Bottom line is if the minimum wage is increased do not be surprised if many businesses chooses to pass on more
hiring or move towards automation and other labor saving alternatives to increase output. How to better share a societies work load and divide the fruit of our
labor is an important issue but raising the minimum wage is not the
answer. Yes, many people will do anything for a job, but it seems, they
won't do that! By "that" I mean, do enough productive work that their
employer actually "makes money" and profits from their labor.
Footnote; For more on the effect of long term unemployment on society
and our culture see the posts below, comments are welcome and