Minimum wage

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BenThere
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Minimum wage

#1 Post by BenThere » Thu Mar 26, 2020 6:26 pm

I've long held the view that raising the minimum wage tends to lock out young and inexperienced workers, potentially employees, from jobs because they aren't productive enough to justify paying them the minimum wage. Today the US minimum wage is $7.25 per hour. In some higher cost locales that has been raised to $15/hour. This is inadequate to live on if you're not living at home with your parents providing shelter and sustenance. My argument has always been that minimum wage jobs are the avenue to gain experience, work ethic, respect for authority, industriousness and other virtues.

Further, when minimum wages go up jobs go down. Marginally productive or problem workers are abruptly let go. In many cases, small businesses like Mom and Pop restaurants, non-chain boutique retailers, and such, already operating on a shoe string, can no longer pay the freight and shutter their enterprises, throwing everyone associated out of work.

I've been reading various accounts about how the lower level employees in the US economy have stepped up during the Covid-19 crisis as literally the backbone of the US economy and our well-being. These are the store cashiers, Amazon (and pizza) delivery people, Uber drivers, fast-food restaurant employees and many more. They work hard for low pay but they are indispensable.

The hardest job I ever had was my first payroll position as a 16 year old new hire at McDonalds restaurant in St. Louis Park, Minnesota. In 1967 starting pay was $1/hour. The store manager was a hard-driving boss, demanding constant effort from every employee. That man, Gerry Bamberry, instilled a work ethic in me that lasted a lifetime. I learned every station in the shop, from making milk shakes, french fries, working the grill, and serving customers, taking in their cash. I was promoted to 'manager', wearing a red hat when working as opposed to the white hat everyone else wore. I was ultimately, after two years, entrusted with opening and closing the shop, recording receipts, inventorying and ordering supplies, training and evaluating junior employees. My pay rocketed to $2.75/hour. At 18 I went off to college but I needed a job to stay in school. I went to the local McDonalds in Norman, Oklahoma and applied. The manager of that store called Gerry Bamberry for a reference and I was immediately hired at the $2.75/hour I made in Oklahoma and got to wear the red hat again. I had to work there a few years but then left McDonalds for good. My association with McDonalds was more enriching than my entire educational experience I think, looking back. My friend at the St. Louis Park McDonalds was on the same track as me, but he stuck with McDonalds and now owns about a dozen franchise stores and is worth multiples of what I am.

Sorry for that digression, but there is a point I wanted to make. A lot of people work very hard performing critical tasks for little compensation. My epiphany, from my experience and the new realization that these little people are just as, if not more, important than the bureaucrat working a worthless government job, or the professional with a gender studies degree holding down a six figure position as a diversity officer of some hospital or bank.

My solution? Keep the entry minimum wage at today's low level, but increase the minimum wage after one year of employment, then again at two years, and again at three years. I would peg the minimum rates at $7.25 year one, $9.50 year two, and $12 year three, adjusted upward/indexed for cost of living. Employers would be free to pay more for valuable employees but should remain free to let go, without cause, those employees who don't measure up in the employer's opinion.

Any flaws in my argument?

By the way, the maids at my Mexican resort condo, working as hard as anybody cleaning condos, washing sheets, scrubbing floors, etc., make the equivalent of $12/day - 8 hours. To help them out I bought 100 Mexican silver Libertad coins that I paid about $15 each for. Every maid that cleans my condo gets one, doubling their pay for that day. I explain that each coin I give them is building their wealth and tell them to never sell it but save it for their children. The payoff is that I feel good about it, am helping them, and every time I return to Mexico (they clean the place before I come and after I leave) the place is spotless. I also know that they keep an eye out for me and have my back if anything comes up while I'm gone, sometimes as long as two months. Plus I get an inevitable bright smile whenever I come into contact with them.

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Rwy in Sight
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Re: Minimum wage

#2 Post by Rwy in Sight » Thu Mar 26, 2020 8:10 pm

I see two points here but I may be wrong:

The first one is that people who follow the gender studies road AND end up in an excellent position need either a good deal of luck or strong connections (business or political). The first "quality" is just that; the second requires skills because often a person would not help someone who they didn't appreciate. So the diversity officer does have some skills/capability (not sure what is the right term not from a lack of understanding the difference) albeit useful only to him/her they.

And those low paying jobs exist, as you very correctly say BenThere, because they are low paying and can be performed more or less satisfactorily by unskilled people - I understand McDonalds have checklists for their front line staff and call-center operators have scripts. Offering better money at a worker who performed well after a year, it wouldn't be beneficial to the business owner because it would cost him/her they more for little benefit*. Although I think most business owners would offer a raise particularly if they are confronted by a resignation of a valuable worker.

*They can hire and fire people easily enough so they may hire someone, put him at a job with minimal training who could turn really apt.

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Re: Minimum wage

#3 Post by John Hill » Thu Mar 26, 2020 9:35 pm

I like your idea Ben, let's put the burden of supporting young adults back on the parents where it belongs.
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Re: Minimum wage

#4 Post by llondel » Fri Mar 27, 2020 12:42 am

When there's a downturn, a lot of places will look to shed the more expensive staff, so at some point an automatic raise becomes a millstone around the neck. Ideally a lot of the low-paid stuff is for young people just starting out and who have other means of support, but things don't work like that. I started with a Saturday job in the local hardware store, and a variety of paper rounds, although I do remember declining one because it was one of the free papers and required 3x my time than the other rounds I'd done for less money. The poor chap trying to get me to take it was fairly desperate but at that point I valued my time more than he was able to pay.

The whole system is broken, because when Walmart (to name but one) gets a subsidy from the taxpayer (as in they pay low wages and their full-time employees qualify for food stamps and other welfare benefits) and makes a huge profit for the few at the top, one thinks that perhaps there should be a tax levied on larger organisations based on the size of the welfare bill for their employees. In a purely capitalist society, if said organisation can't make it work then they shouldn't be in business. Obviously it's not quite that simple, but anyone working a full-time job should be able to live on the income it generates.

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Re: Minimum wage

#5 Post by Rwy in Sight » Fri Mar 27, 2020 5:16 am

llondel wrote:
Fri Mar 27, 2020 12:42 am
one thinks that perhaps there should be a tax levied on larger organisations based on the size of the welfare bill for their employees. (...) Obviously it's not quite that simple, but anyone working a full-time job should be able to live on the income it generates.
Maybe the first phrase is a key to push salaries (and benefits) up rapidly. As once I was told for a company I worked for with great benefits, salary and a general feeling, they preferred to give money as benefits to us rather than pay taxes and of course those benefits created jobs either directly by buying those benefits (an excellent lunch) or as spending that extra money. However the taxes should be calculated inversely on how much money is spent on salaries (and benefits) for middle grade and lower staff not income for top-executives.

The second phrase is rational too and should prohibit from salaries below a level.

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Re: Minimum wage

#6 Post by BenThere » Fri Mar 27, 2020 7:29 am

When there's a downturn, a lot of places will look to shed the more expensive staff, so at some point an automatic raise becomes a millstone around the neck
That's the whole idea. The raw recruit is tasked to improve his skills to justify his higher wage. It's not dissimilar to the wages accorded to novice, journeyman, and master designations in the industrial trades. In essence it places the burden on the employee to improve his skills, and at the same time tasks his employer with assessing his employee's progress, skills development, and general suitability and ratify the raise. The best employees will be worth it, but some will fall by the wayside, hopefully having learned lessons and taking other jobs at the starting point and doing better.

There is a bottom line. Most unskilled,some poorly educated with no experience applicants seeking their first job have little to offer other than potential. $7.25/hour is apt. It's incumbent upon those new hires to prove their worth and grow in the job; and it's equally incumbent upon the manager/owner of the business to make calculations as to whether the employee is worth the additional cost to retain.

Editorial comment: Just because you need $30/hour to survive in NYC or SF doesn't mean you're worth it just because.

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