The Minimum Rage

April 13, 2012   |   Tags:

Running a business is not easy. There is often significant personal financial risk involved. You have to be organized and responsive and your product or service has to be competitive both in quality and in price. Otherwise, your competition makes the sale. If you lose too many sales, you close your doors. That’s it, game over. It’s not for everyone. And it’s made harder still by government and special interest groups.

It’s beyond dispute that employees/payroll are the largest expenses for a businesses. If you don’t know this, you’ve never run a business. And if you’ve never run a business, I don’t think you should be involved with making or voting on business laws (how many politicians would that exclude – but that’s for another time). Nor should you be promoting government mandates regarding “how” to do business. Mandates, say, like the minimum wage.

In 1938, Franklin Delano Roosevelt, a notorious liberal (that’s just my conclusion) got the Fair Labor Standards Act passed with catchy statements like “a fair day’s wage for a fair day’s work,” (sounds sort of like Obama and his “rich paying their fair share”, doesn’t it?) If I recall my history correctly, back then the Supreme Court ruled it unconstitutional several times. Anyway, the point is it took much effort, turmoil and strong-arming for Frankie to pull it off. You can see why: telling a business you have to pay someone a minimum amount is a little weird. I mean, we’re not going to take into account the quality of the employee? Workplace concepts like productivity, resourcefulness or dependability now have no meaning? Now we’re basing pay on… showing up. And let’s not forget that super-sweet word “fair” in the catchy slogan Frankie used. What is a fair wage? What is a fair work day? Ask two people and you will likely get two different answers. So who defines it? You guessed it, politicians. But some politicians represent workers and some represent employers so how can…wait…we’ll get into that another day.

Anyway, the federal minimum wage in 2007 was $5.25 an hour. In 2008, it got raised to $6.55 an hour and again raised in 2009 to the current $7.25 an hour. States can require higher minimum wages – California’s is $8.00 per hour; Illinois and Nevada are at $8.25 an hour; Washington is at $9.04 an hour.  I wonder what color those states are on an electoral map? Can you guess?

Today, like back then, the minimum wage is a big deal with much shouting, chest-beating and fist-pounding from them that be important. Some common arguments for having a minimum wage include:

It is good for the country because a strong minimum wage reduces the gap between the poor and the wealthy.
So guaranteeing a yearly dollar amount to an unskilled worker will close the gap between the worker and Trump or Buffet or, even say, Obama? Makes perfect sense to me, how about you?

It is good for poor families and minorities and adds dignity to labor.

Yes, I see it. A few thousand dollars a year (arguably unearned because it’s mandated by the government) adds dignity to labor. Who said labor had to be dignified? Where I come from, you earn dignity as a sign of respect from others. Or you possess personal dignity. Digging a hole is an act, nothing more. The person digging the hole can possess dignity. Wouldn’t consistent or exemplary productivity add dignity to labor? Or pride in the job and in oneself? Increased responsibility? Isn’t that what promotions and pay increases are all about?

It is good for businesses. Minimum wage increases, it’s claimed, result in reduced absenteeism, and less turnover, which contribute to higher productivity.

So, the minimum wage reduces absenteeism? Wow, here I am thinking the possibility of being fired was the reason a worker showed up. Silly me. And since when does showing up for work mean you’re a productive employee? I’ve met enough “time-milking” employees in my travels to know they exist. And this argument also asserts minimum wage increases lead to less turn-over. So if you don’t quit, you’re a productive employee, too. Please, can we pile it on any thicker?

Finally, talking about Obama pushing to raise the minimum wage from $7.25 to $9.50, USA Today reported, “The Economic Policy Institute estimates such an increase would generate an extra $20 billion in economic output and 160,000 jobs.”
Really? Based upon what, exactly? Too bad this statement, like so many others, is tossed out as fact, but there’s no evidence provided to prove the claim. I’d love to see the math –  shame it was not included.

Here’s my estimate (it doesn’t have any math either): it will cost people jobs.

If you make a businessperson pay an unskilled/inexperienced worker more than the worker is worth, the businessperson is not going to hire the worker or worse, an employed worker could be let go. It doesn’t matter whether the worker is male or female. It doesn’t matter whether the worker is black, white or purple. It is a dollar and cents issue. It is a production versus wage issue. You can’t expect a business to pay someone $20.00 per hour to make beds. It is a business survival issue. And business people will not long over pay for unskilled labor. It’s already been proven, check your history. Here’s a hint: the act was passed in 1938 so start in the 1940’s.

It’s not rocket-science. Employers will let the worker go and assign the work to someone else. Maybe they will bring in an intern (they’re free). Or, perhaps they will stop providing the service. Do you remember the days when you bought gas and there was a gas attendant that pumped your gas and cleaned your windshield? Or maybe the business will just say to hell with this, and move operations overseas. To me, the minimum wage requirement, and the escalation of it, is bad for business. It is lazy and shameful policy designed by politicians more interested in buying votes than creating opportunities for their fellow citizens. Perhaps we should focus on giving these folks language skills if that is what is holding them back. Or more vocational training. And while we’re at it, perhaps we can replace some lazy and unskilled politicians.


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I. M. Citizen

I consider myself a typical American. I value my family, friends and personal integrity. I enjoy some sports and a cold beer on a hot day. OK, several. I'll put some money on a pony now and then, too. I feel that America, as outlined by the Constitution, represents the greatest concept of government that humanity has conceived. However, this sound-bite based, PC, half-truth environment that our leaders, celebrities, unions and special interest groups have fostered is a fallacy and a farce. It is mocking those that gave their lives for this country, insulting the citizenry and ripping this country apart. I question government's intent on all levels and doubt its' competency with all enterprises. I believe small government is good government, I just can't decide whether it should be small or infinitesimal. Drop a line at

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