Earlier this week the Los Angeles city council voted 14 to 1 to raise the minimum wage to $15 per hour incrementally over the next several years. Labor organizers and other minimum wage advocates say the increase isn’t coming fast enough. Los Angeles area business advocates say that most small to medium business don’t have enough profit margin to absorb a 50 percent increase in the cost of labor on any shorter timeline.
Seattle has already passed such a law and the first incremental increase came last month, in April. While some minimum wage employees in Seattle say that they are seeing an increase in their paychecks and that this is improving their lives, it’s only temporary. Soon, if not right away, the businesses that depend on minimum wage labor will raise their prices, or cut hours and benefits, to compensate for the increased labor cost. We are already seeing all of these strategies implemented in the Seattle area business that employ minimum wage employees. Seattle restauranteur Tom Douglas has raised prices in his fourteen restaurants. Hotels around the SEATAC Airport have cut hours to their minimum wage employees and stopped offering them free food.
The next step for business who are being forced to pay employees more than the value they create for the business is to automate and eliminate some workers. Minimum wage workers will either have to improve their skill sets so that their labor is more valuable to the businesses that employ them, thus getting a better job, or they will have to become more productive in the skill sets the already have. Or they’ll have to get a second/third job. Momentum Machines made a splash in the news last summer with its gourmet burger making robot. This ‘bot will cook a higher quality burger that tastes better; plus it never misses work, never takes a vacation, never takes family or medical leave, and it won’t need a health plan. We have already seen the self-check lanes in some large retailers and automated ordering in chain restaurants. The self-check lanes allow one employee to run four check stands instead of just one. The automated ordering or automated payment in restaurants means fewer wait-staff covering more customers.
Here are a few other little known facts: only about two percent of the labor force even makes minimum wage and most of these are students or recent graduates in their first job. Furthermore, most minimum wage employees see at least one raise in their first year of employment.
So what does a minimum wage do? It makes it harder for unskilled employees to even find work at all. And raising it forces price increases throughout the economy so that eventually everything catches up and those minimum wage employees who still have jobs are right back where they were before, in their overall situation, for those still employed.
Here’s what else it does. For any employee out there who is depending on a government mandated minimum wage, on some level they’re believing that they can’t ever move beyond entry-level. On some level they’re believing that they can’t improve their skills to be more valuable to employers and thereby get a better job. This is what the politicians, organizers and activists are really saying: ‘All you fry cooks and housekeepers out there will NEVER improve yourselves, so we have to force employers to pay you more.’ Having that little faith in people — and people having that little confidence in themselves and their own dreams and ambitions — is really sad.
Thank you all for taking a moment to read my thoughts on the minimum wage. Do you have a minimum wage or entry-level job story? Share it with us in the comments.
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Any opinions expressed in these writings, not otherwise documented, are my own, and not necessarily those of my employers.