Contrary to what our politicians like us to believe, these problems are more complex. Throwing other people’s money at any issue is rarely the answer. True problem solving requires the dissection of the issues at hand and an understanding of the root causes while focusing on the elements that are easy to agree on. Afterall, giving a diseased tree fertilizer may help it flower one more time, but it won’t eliminate the disease.
First, let’s explore “compensation”.
The definition of compensation is something given or received as an equivalent for services, debt, loss, injury, suffering, etc. The employee provides a service and gets paid an equal amount of compensation. So, it is reasonable to conclude that what you get paid should be related to the value of the job completed. Caution: this point is equally important in the fight for equal pay for women so don’t be led to believe it only impacts the lower wage worker.
The term value is tricky because it is related to the price you can charge for the item or service being produced. Value is also impacted by the relationship between other jobs being performed doing more or less to produce that widget or service (or an equivalent). Another factor considered is what others in the industry, state, community and company are being paid. But at its basic level, let’s focus just on the price of the widget.
Let’s take a company that has 10 employees, the owner and a manager who take care of the non-production aspects required for a widget to be made; human resources, accounting, sales, facilities and vendor management, etc. and let’s say it takes 8 people produce 10 widgets an hour. By all accounts, this is a pretty lean company. If they have to increase the minimum from $10.10 to $15, that is 32.67% increase in costs to produce the same number of widgets. Most companies do not have an extra 32.67% profit available so there would be no choice but to raise the price. That price can only go as high as a consumer is willing to spend so either the consumer pays it or the company who cannot afford it, goes away along with their widgets. The size of the company and the price of the widget do not change these results.
Now let’s explore the types of positions that historically get paid the minimum wage.
- Employees with disabilities. This group of employees should be assisted and protected from being taken advantage of. They often have a positive impact on an employer and their community but not without an added burden of management & oversight. So perhaps the employers, who are willing and able to provide opportunities, should be incentivized to do so and that incentive should widen as training and further development is provided to the employee. The employee would still have to be paid the amount equivalent to their production value. Perhaps with this type of incentive program, Walmart would reinstate their greeter program that gave so many disabled citizens a sense of purpose and belonging and joy to the shoppers as we entered their stores.
- First jobs for students. Could be a summer job or job during the school year, but a student’s first job has always been a way for him or her to learn the responsibility of working. Along with this responsibility, he or she earns a dollar, appreciates the value of that dollar and becomes equipped and ready for future opportunities. Likely, the employer has to offer flexible schedules, lots of training to accommodate the natural high turnover, and must provide a lot of management oversight for the beginner employee. All of this equates to a cost for the employer beyond the hourly rate they pay to the new recruit. The value of this employee’s production must outweigh the additional costs incurred to manage them.
- Unskilled laborer. This employee has not yet invested in their own development of skills (college, trade school or learning from family member or friend or mentor). While obviously there are some who are satisfied with a life in the system, many of the people in this category have potential and desire but have either not seen the path or have not been given an opportunity to advance. No matter the reason, the employee pool has similar weights on the employer as the student employee so the cost and risk to the employer remains high.
What if we considered this: for those who are committing to a permanent position and have the attitude and aptitude to increase their production value rather than guarantee their hourly rate, perhaps we should invest in their future and provide them with workforce development. The old saying, give a man a fish, he eats for a day, teach him to fish, he eats for a lifetime, rings true. Incentivizing businesses to invest in the development of their labor force turns an unskilled laborer into a skilled professional and advances their career and lives in ways far beyond what the 32% increase would offer. It provides freedom from long term poverty and changes the future trajectory of not only the employee but his entire family. The resulting investment in their communities by their purchases and their role modeling of the power of hard work are added, unmeasurable bonuses.
No one is arguing that a family can live off $10.10/hour, but in the United States you have the choice to make more income if you put in more effort. Let’s turn our united attentions and resources towards workforce development programs, educational opportunities, apprenticeship programs and rewards for the employer and employee for actively participating in the improvement of lives. Giving the money away simply adds to the nations problem of entitlement. We are only entitled to what we are willing to work for – not what our parents worked for, and not what someone gives us. Let’s create a nation of skilled labor, proud of their accomplishments and invested in their futures.
The Sunny Side: We don’t have to prepare to pay more for Maryland made goods and services or risk losing jobs because businesses can’t afford to be open in our state. You have the power to initiate change by contacting your representatives. Tell them they made a mistake overturning Governor Hogan’s veto on the minimum wage increase and ask them to go back to the drawing board to develop solutions that differentiates between part-time summer help and full-time permanent positions and includes incentives to teach, those willing, to fish.