When is Minimum wage minimum enough?

Don - May 27, 2005

Minimum wage in Utah is $5.15/hr. which is also the national minimum wage. In Washington state the minimum is $7.35/hr. That means for every two employees I can afford to hire in my business in Washington I can hire 3 employees in Utah. Can a Washington employee produce 50% more than a Utah employee? Can they be 50% more valuable to my company…as a minimum wage employee than one in Utah?

It’s obvious they can’t, I’m getting “screwed” in Washington!

But I’m getting just as “screwed” in Utah. If the minimum wage was even lower I could hire more people…and I would! Minimum wage jobs tend to be entry level jobs. Employment for those who don’t have an education, a trade, or haven’t completed their education. For most that we hire it is their first job. Minimum wage shouldn’t be intended to be enough to keep someone out of poverty. It makes it very difficult for employer’s to pay more than a person is worth just because the government has imposed an artifical minimum.

In Washington summer employment for High School and College kids is projected to be way down again this year. A recent newspaper article stated that only about 37% of them would be able to find summer jobs. Why, because at $7.35/hr. qualified people are sucking up those positions. Even for flipping burgers, would I rather have a high school kid or a 25 year old adult working for me?

Now I’ve had a chance to vent!! As an employer I find the high minimum wage is determental to me and to those entry level, unskilled workers who need a job.

1 Comment »

  1. Evan Kirchoff had an interesting take on this last year:

    On the other hand, I have a contrarian defense of Kerry’s proposal to increase the federal minimum wage from $5 to $7. The standard reply is that it amounts to a promise to create poverty, since $5 worth of labor will not magically become worth $7, and so the result will be a comination of fewer low-end jobs and increases in the cost of low-end goods and services, etc.

    But let’s be candid: somebody making $5 per hour is only $5 more productive than somebody sitting at home playing Tekken. You can’t argue that a job has some inherent value and call yourself any kind of a capitalist; the value of labor is just its market value. Furthermore, labor is the only truly limited national resource, and national prosperity is a straightforward function of total labor productivity measured in dollars per hour. Therefore, since the median American salary is now something like $38,000, anyone making only $5 per hour is really just dragging everybody else down.

    In this light, the Kerry proposal can be viewed as a kind of constructive “tough-love”. We’ll redefine what counts as “pulling your weight” in America, and that definition will start at $7. If your skills are only sufficient to produce $5 of output per hour, then you don’t deserve a job at all, you plodding slacker. Going forward, the government can slowly eliminate all low-end jobs by fiat, gradually chasing people up the socioeconomic scale at the point of a gun.

    I’m running out of sarcasm here, because the above is starting to sound like it just might work. I hereby grant the Kerry campaign permission to use the slogan, “Minimum Wage Ain’t Nothing But A Fancy Term For Lazy”.

    http://www.101-280.com/archives/…ves/ 000429.html
    John Mansfield | Email | Homepage | 05.27.05 – 11:04 pm | #

    I’m typically pretty lbertarian, having worked in France soon after the 35 hour work week was mandated. I, however, must disagree. I too am an employer of sorts (though not any minimum wage jobs). I firmly believe that paying people more than minimum wage will result in higher productivity and validate the expense. The bottom line is that there are many who subsist on minimum wage caliber jobs. Sure I would love it if everyone trained themselves to be a $250 an hour laborer, but the bottom line is that we need the minimum wage laborors to keep the machine turning.

    As long as we need these jobs to be filled and as long as people will be trying to make a living at them, we as a society can and should have a lower limit to which their value can be ascribed. While I truely believe in human capital as capital, it is also human.
    J. Stapley | Email | Homepage | 05.28.05 – 12:39 am | #

    Wow, not 15 minutes ago I fired off the following as a letter to Salt Lake Tribune editor:

    In a recent (5/26) unsigned editorial “Increase minimum wage to help plight of working poor” the Salt Lake Tribune attempts to convince the readers that increased the minimum wage reduces poverty. Has emotional biases blinded economic reality?

    The effect of a law raising the minimum wage from $5.15/hour to $9/hour (as suggested in the article) is that only those who are worth $9/hour will be employed. A government decree can’t make a person worth $9/hour. A minimum wage deprives a worker of the right to earn the amount that his or her abilities permit, while also depriving the community of the moderate services that the worker is capable of rendering.

    Why doesn’t industry just charge higher prices for its products? This merely attempts to shift the burden of paying the higher wages to consumers. Higher consumer prices drive consumers to substitute a different product or to consume less. Either action results in less demand for the product, which causes workforce reduction or unemployment.

    This is not to argue that there is no way of raising wages, just that the apparent easy method of raising them by government fiat is not only wrong, but possibly the worse way (causes unemployment). Society cannot distribute more wealth than is created, nor in the long run pay labor more than it produces.
    The best way to raise wages is to raise productivity: Increase in machine use, efficient management, industrious workers, better education and training, etc. The more a worker produces, the more his or her services are worth to consumers, and hence to employers, and the more he or she will be paid. Real wages come from production, not government decrees.

    Daylan Darby
    West Jordan
    Daylan Darby | Email | Homepage | 05.28.05 – 12:26 pm | #

    Well said Daylan!

    Flipping burgers or shoveling popcorn is not worth $9.00/hr. The low skill level, training, and or education necessary for these entry level jobs should not be “rewarded” by governmental decree.

    I need “X” number of employees as minimum staff. Raising wages from $5.15 to $9.00 would close me down faster than a whorehouse on the BYU campus!!
    Don | Email | Homepage | 05.28.05 – 1:26 pm | #

    Raising wages from $5.15 to $9.00 would close me down faster than a whorehouse on the BYU campus!!

    Wow, I didn’t realize that you were in that kind of business!
    J. Stapley | Email | Homepage | 05.28.05 – 8:30 pm | #

    I only have a moderate understanding of economics and sociology, but as far as I’ve observed, there is very little anyone can do about this type of thing, at least in a capitalistic economy. There are always going to be people that will not raise their standards. There will always be a percentage of people who will only work enough to get by, no matter what we may try to do to influence them. That’s why (a whole other blog subject) there’s always kids in public school who fail or who fall to the bottom in test scores and such.
    So why should we put the burden on the employer and/or consumer to pay for their laziness. Capitalistic economies always have unequal wealth distribution no matter what “The Richest Man in Babylon,” says. People are just too lazy.
    Bret | Email | Homepage | 05.29.05 – 11:12 pm | #

    Well, I just got a job for the summer (my first job ever… I know I’m 19, but I’ve never needed or been forced to get a job before, so cut me some slack). And I’m definately getting minimum wage out of it. The job? Not flipping burgers. Not filing papers. Not bagging groceries. I’m working at a day camp from 8 to 4 every week day. A summer camp. I carry around a backpack, round up a group of between 15 and 40 kids a day, trek around the great outdoors in 90 degree + Alabama heat, get bit by bugs, burned to death by the sun, and get hoarse from yelling at kids to stop hitting, kicking, screaming, biting, stealing, crying, etc. This is definately not a job for the lazy or impatient. And I would lovelovelove to be paid more for it.

    Granted I would probably spend my extra money on clothes or CDs or something, but still, this is hard work and the money is hard earned. What is minimum wage in Alabama? I think it’s $5.15… we’re always skating by with doing only so much as we’re made to do.

    But I do agree that there are plenty of lazy people out there. But why punish the rest of us? Why not just fire the lazy people and have done with it?

    …Maybe I’m just a little bitter at all the rest of my friends who can do a lot less work in a nice air conditioned building and get paid more than me. It just doesn’t seem fair in my eyes.

    But I am extremely excited that I’ll finally be able to tithe something at church instead of either giving nothing cause I’m broke, or giving a few bucks of my parents’ money. Hmm… not something you hear from teenagers very often these days, right? Excitement at giving 10% or more of their paychecks away to church every paycheck. Bur we’re getting a new children’s minister at church this year straight out of the Southern Baptist Theological Seminary, so I think the church needs a little extra funds to add a new name to the payroll.

    But I think the wage should fit the job. Compare the skill level of ringing up Icee’s at a gas station and keeping 41 ten year old girls from killing each other. Hmm. There’s that bitterness again.
    Annie | Email | Homepage | 05.30.05 – 1:06 am | #

    need “X” number of employees as minimum staff

    When I was at BYU (about thirty years ago) Utah had two different minimum wages. One applied to BYU students, the other to the rest of the state. The “student special” was lower.

    It did not result in any more employment in the vast amount of places students were employed, just lower wages in Provo. That observation got my attention then.

    Interesting, though, to watch the debates, especially as the minimum wage is a marker for a number of other things (many things are defined in terms of the minimum wage, or used to be, which is why the strong interest in it by people
    Stephen M (Ethesis) | Email | Homepage | 05.30.05 – 10:04 am | #

    “Why doesn’t industry just charge higher prices for its products? This merely attempts to shift the burden of paying the higher wages to consumers.”

    Oh. Right. Increasing expenses for consumers is the perfect answer to the problems consumers face of not having enough money to pay their expenses. Presumably, minimum wage is about raising baseline wage amounts to match standard of living, not about ensuring employees are worth more.
    Kim Siever | Email | Homepage | 05.30.05 – 2:52 pm | #

    If you are not happy with what you earn, increase your productivity. The other option is to convince others (i.e., government) to steal for you, via forced wages and/or welfare.
    Daylan Darby | Email | Homepage | 06.01.05 – 11:26 pm | #

    “If you are not happy with what you earn, increase your productivity.”

    That would work fine for jobs that pay via piece work. However, in an hourly wage job, benign more productive doesn’t increase one’s pay, it only increase the company’s return on the wage it pays out. Same goes for salary-based wages.

    I am not saying that minimum wage is a good or bad thing, I was just stating that passing on the cost of increased minimum wage to consumers only creates higher minimum wage in the future. The cause and effect of minimum wage is very cyclical.
    Kim Siever | Email | Homepage | 06.02.05 – 12:49 pm | #

    “…benign more productive…”

    That should be “being more productive”.
    Kim Siever | Email | Homepage | 06.02.05 – 12:49 pm | #

    “As an employer I find the high minimum wage is determental to me and to those entry level, unskilled workers who need a job.”

    It’s only a problem for the unskilled entry level worker if you as an employer feel that paying them slightly better is detrimental and thus raise the bar.

    We can’t all be rocket scientists simply b/c for some brain power gives out. We find a problem when the man on top really feels he is better and thus more deserving of money. I’m sure your burger shops wouldn’t do so well if you didn’t have us poor entry level workers. Us minimum wagers are just as important to the workings of society as the guy on top delegating power. While I am in a position where a low paying job is detrimental it also means I have to work at my college degree extremely slowly. I also get to meet the other bottom dwellers that seem to be beneath your notice that really DO have faimilies and this is how they make ends meet, they are a lot more dedicated and commited than me who views this as a temporary stopping ground, but people constantly ignore them. If I call out it means I miss a few bucks for college (which I’ll put in a loan I’ll pay back later or it means I take one less class the coming semester) if others call out it means their kids don’t eat. Minimum wage doesn’t keep us out of poverty, but if more employers think like you I am for darn sure glad the government even bothered.

    But you don’t have to listen to me who is a slightly overpaid clerical nobody. I wonder how many employees you’d still have if they knew you felt so… the sad thing is that job probably really is that important to some of them that they’ll even suffer listening to someone who can’t see beyond their own nose.
    eirann | Email | Homepage | 08.10.05 – 5:04 pm | #

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