#agratepost

Over recent years I’ve seen a lot of material posted throughout social media about raising the minimum wage for purposes of enabling service industry workers to have the necessary money to meet their or their families’ financial needs. Given the generally downward direction of the economy in recent years and the seeming hopelessness of being able to find and keep good work, it’s not entirely unreasonable that people would turn to the government to seek a unilateral solution to the problems of poverty and underemployment.

The problem with this is that it’s not a well thought through solution.

A common argument for the increase of the minimum wage is that people deserve all of the money they need to live just by virtue of being human. I don’t have any issues with holding in high regard the dignity of human beings. Such is their right, and we ought to think this way when it comes to our charitable giving to those truly needing it. But, speaking in the case of able-bodied people, simply existing does not make one deserving of the money they need to live. To get something of value from the world, generally you must input something of value. This is economics at its most basic. The major points here will be: what it takes hold a business up; what increasing minimum wage does to a business and community; what to think about to get more out of a job.



To get a sort of picture of what it looks like to manage a business’s money, simply think of what it looks like to manage the money in your own home. The starting point is what your household income is. Now how much is the rent/mortgage? What does it cost to buy food? What does it cost to supply the bathrooms and kitchen? What do your utilities cost? And what, of that, do you lose to taxes you pay to the government? It’s a pretty steep bill after all of that, isn’t it? Now think about it, but with kids. Do you pay money to clothe them? You let them partake of the food for the house and use the utilities, right? And finally, do they get an allowance, whether from chores or just the kindness of your heart? Money’s looking pretty tight after adding all that, doesn’t it? What if a law was passed that required you to give your kids X amount of money per week? I know that last bit sounds preposterous, but it gives us a starting point for thinking about what messing with a minimum wage looks like. For the sake of our post, let’s plug these things into, say, a restaurant context. The household income is now your store’s income. The base expenses all stay. Instead of kids, you have employees. The clothing costs become uniform costs, and the allowance becomes workers’ wages. And you already have a federally-mandated amount of money you must pay your workers, and no lower. Just like running a household, you’re going to look for ways to keep expenses low and maximize profits. You don’t want any food wasted. You don’t want any of the utilities to be used unnecessarily. Uniforms are going to need to be well-kept and replaced as little as possible. Supplies for the kitchens, bathrooms, and dining areas all need to be taken care of and used conservatively. All of these things are going to cut into the money that’s made from sales, and can only be controlled so much. After all of this, you have your human resources and how much it costs to pay for their labor. You already have a federally mandated minimum wage you must pay workers, and no lower, no matter how unskilled a worker might be.


After all of this, when your business needs to increase their profit margins you are left ultimately with two options: Increase the price of your goods/services, or lay off workers. If the federally mandated minimum wage is increased, your business is shunted into one or both of the previously mentioned courses of action. 

Laying off workers places more strain on your business. The people that remain have greater stress placed on them to hold the place up, which becomes exceptionally difficult if you have a large business. This can result in the quality of your restaurant’s product and the quality of it’s upkeep going down, which negatively affects sales. If your restaurant increases the price of the product, it is met with immediate customer backlash. Customers my become disenchanted with your product and look elsewhere. for a comparable product at a lower price, which hurts sales. This negative financial impact on your store likely ends up resulting in layoffs happening anyway.

Increasing the minimum wage also carries with it the consequence of making getting a job more difficult to begin with and limiting unskilled job opportunities by automating them. Higher mandatory labor costs means that employers are going to want workers who already have skills they can use to add value to a company, and will be less likely to take inexperienced workers who require training, and who will need to be paid anyway throughout that training. Just within the microcosm of a single business, a higher minimum wage decreases the amount of help you can keep or hire, and potentially increases the cost of the goods your business can sell. It’s not just you, however. Any business relying on wage jobs, be it retail, restaurant, or other sort of service, will have to do the exact same thing. This causes the cost of living to rise where the minimum wage is forced to increase. The cost of goods and services has to keep up with the expense involved in providing those goods and services. This is a basic principle, and tells us that the purpose of a forced minimum wage increase will be quickly defeated by the consequences.

So what’s the solution? How does one get the money they need to make a living?


The answer is simple, though not necessarily easy. You must do work that is worth the money you want. The pay of a job is generally proportionate to the demand for that kind of work, as well as the skill and risk involved in the work. An oilfield worker will make more money than a fast-food cashier, and an engineer will make more money than an oilfield worker because of this. To continue within the restaurant environment described earlier, an employer will pay more money to a worker who can either do their one job exceptionally well, or a worker who is not just a server, but can do other jobs around a restaurant, such as hosting, busing, washing dishes, cooking, managing, and so forth. The better you do the job you have now, or the more skills you possess relevant to a job, the more money you can negotiate or demand from an employer. This of course places greater demand on a you, the worker, but directed effort at self-improvement is much more feasible for economic advancement than trying to force your employer to give you more money by way of federal coercion. If you cook, cook the most delicious food in an expedient way. If you bus tables, be fast, and leave your tables with a jewel shine and thoughtfully place the napkins and seasoning. If you serve customers, go the extra mile to satisfy them. Do the best work you can. Seek greater responsibility and prove you can handle it. If your current employer does not notice and pay accordingly, you can take your labor elsewhere to an employer who does.


Not only that, but you don’t need to wallow in the stress and frustration that are bound to come with a restaurant or retail job. There is no shortage of blue-collar jobs that are willing to train and hire to meet the demands of their customer base. HVAC, plumbing, electrical, and so forth. They’re not cushy office jobs, no, but they seem to be fulfilling, well-paying work. Perhaps it’s not fun to work harder and try to take up more responsibility at your job, but it’s more expedient and more fulfilling than waiting on the government to “increase” your paycheck for you.

People grouse about executives and how they possess a disproportionately large amount of the wealth in the world. They try to act like these men are the problems, using cheap metaphors such as “taking the entire cake and leaving us to fight over the crumbs”. Not everyone in the tower offices of the world is squeaky clean, no, but no CEO, COO, partner, or any other high-profile professional has the job they have for no reason. If someone brings in millions of dollars, has responsibility over millions of dollars, or otherwise handles millions of dollars, they will be paid their worth. Simple as that. If the minimum wage isn’t satisfying your needs, it’s on you, not your government, to overcome it, and that may not be as staggering a task as you think.

As a general rule, just remember: The more value you bring to a workplace, the greater a return you will receive from that workplace.

Further consideration on the matter by others: