OPINION – You’ve got to spend money to make money.
It’s a lesson most successful business owners have learned. Now, it’s time to pass it on to Congress, which is wrestling with a proposal from the White House to raise the hourly minimum wage from a miserly $7.25 to $10.10. It’s an idea that has traction from the public, with 71 percent, according to recent polls, embracing the idea.
Since the president initiated the push for a higher minimum wage by signing an executive order that gave those working for companies with government contracts a minimum hourly wage of $10.10, several states, which can set their own minimum wage level independent of the feds, have followed suit.
California, Connecticut, Delaware, New Jersey, New York, Rhode Island, West Virginia, and the District of Columbia have already given their workers a raise. Alaska, Arkansas, Idaho, Massachusetts, Michigan, Missouri, New Mexico, and South Dakota will have measures on the ballot this fall to, hopefully, follow suit.
Here in Utah the wage remains at the federal minimum of $7.25. Don’t expect changes any time soon from state lawmakers who are loathe to take direction from the White House, especially with Barack Obama sitting in the Oval Office.
It would also run counter to Utah economic growth principles of trying to draw light manufacturing companies using the lure of cheap land, cheap power rates, and cheap labor. High tech jobs? There simply aren’t enough skilled workers to go around. When it comes to Southern Utah, there is a preponderance of service industry jobs, which cater to a transient population of snowbirds and tourists, but don’t pay particularly well.
What more progressive nations have learned is that hiking the minimum wage spurs the economy. It just makes sense: if workers earn more, they spend more, if they spend more, it grows the economy.
In the United States, the argument against hiking the minimum wage is that it would harm the Mom and Pop businesses, but the reality is that the strongest opposition comes from the mega-companies who worry that it might reduce the profits for investors and stockholders. We can’t, by any means, put the fat cats on a diet.
There will also be those who will cite the recent vote in Switzerland to deny a minimum wage level. But, if you go deeper than the headline, you will see that the Swiss have a median hourly wage of $37 an hour.
What does this mean in all practicality?
It means that, according to a UNICEF report, the United States ranks second-highest in the percentage of children living in poverty among the 35 most economically developed countries in the world. Romania tops the list at 25.6 percent, followed by the U.S., which registered with 23.1 percent.
There is no excuse for this other than greed.
How, in good conscience, can an employer expect an employee to live on $7.25 an hour? And, as far as Obama’s target of $10.10, that is still below the $10.87 our minimum wage would have risen to had Congress kept up with inflation and cost of living increases over the years.
Our members of Congress will explain how they feel our pain so much so that they recently denied themselves an automatic $2,800 pay hike for the sixth consecutive year.
Of course, a rank-and-file member of Congress earns an annual salary of $174,000, which is more than four times the average income in the United States. There is also a huge disparity there as well when you understand that more people are closer to the fringes of the income spectrum than in the rapidly disappearing middle class that once was the backbone of this nation. In other words, the rich keep getting richer and the poor keep getting poorer.
It was once a valid life lesson that hard work was, perhaps, the most important key to financial success and stability. Today, however, the rules have changed as employees with many years of good, honest service are kicked to the curb because the corporate execs, whose pay is outrageously out of sync with what employee wages are set at, realize that cutting long-term employees at the upper end of the salary scale improves the bottom line. It may impact the goods and services offered, but it keeps the money flowing to investors.
So, they do things like offering early-out deals to those who have served a company for a long time; they furlough workers; they freeze salaries; and if you complain, well you are told that if you don’t like it, there are plenty others who would gladly take your job. So much for hard work, loyalty, and dedication, right?
We’ve really had only two presidents this century who understood economics enough to employ successful policies – Franklin Delano Roosevelt, who ushered us out of The Great Depression, and Bill Clinton, whose economic brilliance set us back up on our feet after about 50 years of fiscal irresponsibility. The others either exacerbated the problem with silly notions of righting the ship with a “trickle-down” economic policy or were hammered by politicians for offering a progressive fix, like hiking the minimum wage.
What will occur, of course, is that at some point, people will be fed up enough to start an effort to unionize more jobs to help end the disparity. While it will not play well with the anti-union conservatives, it may be the only way to secure adequate and respectable wage levels for all because, more and more, the working men and women are realizing the truth in what social activist and folksinger Woody Guthrie said many years ago.
“Wall Street,” he said, “keeps you off Easy Street.”
No bad days!
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Ed Kociela is an opinion columnist. The opinions stated in this article are his and not representative of St. George News.
Email: [email protected]
Twitter: @STGnews, @EdKociela
Copyright St. George News, SaintGeorgeUtah.com LLC, 2014, all rights reserved.
Yet another idiotic article Ed. At least you’re consistent.
If a minimum wage actually works (genuinely increase prosperity and raises the standard of living), why stop at $10? Why not $50 or $100? Then we can all be rich. Why? Because raising it to such an absurd level reveals the underlying absurd notion that you can somehow legislate prosperity. Raising the minimum wage WILL hurt businesses, and hurting businesses WILL hurt employees. If you raise the minimum wage by 33%, do you think the money to pay that just magically appears? No, the company (out of necessity) will lay someone off, and everyone else will have to absorb the extra work for the same pay. This isn’t because businesses are evil (business owners are our neighbors, in most cases). It’s because of this little thing we like to call “math”. Ed, I read your “About the Author” profile and was shocked that I didn’t see “business owner” listed there. Oh, wait, no I wasn’t, because you clearly know nothing about owning a business, employing people, or dealing with myriad government regulations, taxes, and fees while trying to make the math still work for a positive bottom line. We do have a problem with big businesses in this country (because of corrupt connections to politicians), but raising the minimum wage won’t change that at all. The benefit of all that new money in their paycheck will quickly evaporate as prices rise and jobs dwindle to compensate.
Min. wage hike alone will not help. I don’t always agree with regulation, but something has to be done at the CEO level. Instead of laying people off, and putting employees on part time, the CEO’s need to take a pay cut! Never gonna happen.
I would like to see everybody make more mulah $$$! however doubling minimum wage no way!
The minimum wage jobs like fast food places were designed as part time for kids. After the economy took a dump especially out east coast adults took the kids jobs and now they want $15.00 bucks an hour ??? Now get off your can give the jobs back to the kids and get a real one! Give the kids back their summer jobs!
Hey Brian, lay off Ed. He is only writing what his handlers are instructing him to write.
Plus he’s good at his work. At one point in his article, he had me all teary eyed and wanting to castrate the first mom & pop owner I came across. How dare they want to make more than a 10% profit on a $150K / year gross income business.
We should follow Ed’s ‘humanitarian business sense’ in his handling his up keep expenses of his ‘casa in San Jose del Cabo. I’m sure he pays his gardener in excess of the Mexican minimum wage. (Maybe he shells out $25.00/ week. You think?)
Why would anyone have a desire or drive to go get the necessary skills to become something that is actually worth the money that they would receive? What you may be inadvertently promoting here Ed, is that to all you young people out there are discovering the importance of doing well in school and becoming responsible…is to not worry about it! All the jobs that don’t require a high school degree will get you a job that pays 10.10+! That will supply all the toys, small apartments, and fast food that today’s youth cling to for years to come. In other words…raising minimum wage to an amount that supports a family (WHICH IT WAS NEVER MEANT TO!!!) will further demonstrate to everyone that education (not just college, but apprenticeships and other forms) is nothing to strive for.
With all the ridiculous handouts and welfare s*** in this country, no wonder most people don’t “wake up” and act like actual adults. Some jobs Ed, like you mentioned Congress, are ridiculous, but the funny part is that it’s the same government who wants higher min. wage and pays themselves way too much. As a public educator this really strikes a nerve, both the minimum wage and the salary of people in Congress and other positions that don’t deserve near as much as they are getting.
No, it’s not corporate America to blame, it’s people being lazy. Offer a service or become skilled enough in something that makes you worth the money you get. People who are using min. wage jobs to get to that point, good for you. To those people who are relying on your min. wage job to support a family, you are getting paid EXACTLY what you deserve.
Everone who made poor decisions in their life, and are in the situation they are in deserves to be overpaid?
This also means that those of us who have worked our butts off to get the current wage we have, will never get raise. Even worse hire somebody at the new lower wage and give the older employees raises. Or does that mean a small fries at macdonalds will cost $12.
Higher wages = higher prices for goods and services = something has to give which usually means hours and/or employees = unemployment for some to accommodate a few. It’s easy for Obama and his cronies to pander to the ill informed and spout off about higher wages yet they never tell the entire story about WHERE and HOW.we will get those higher wages. It’s not rocket science.
BTW, here are the Swiss vs. U.S cost of living comparison from Numbeo
http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=Switzerland&country2=United+States&displayCurrency=USD
Yeah, Ed praised Switzerland for their ridiculously high minimum wage while conveniently leaving out their 40% (!!!!!!) personal income tax rate and the fact that everything costs more than twice as much. So where is the gain by having a $25 minimum wage? There isn’t one, unless you’re a socialist or a politician trying to get the youth vote.
Really, The United States ranks second-highest in the percentage of children living in poverty among the 35 most economically developed countries. All you people bitching about the minimum wage going up should be ashamed of yourself. I don’t see how anyone can support a family on $290.00 a week. And thats before taxes.
I would love to see Ed take part in the comment section of his articles. For anyone who is familiar with reddit… Ed, change my view.
Ed, obviously you have never owned or operated a business. Minimum wage is not meant to be a Living Wage, it is meant for low skill ENTRY level jobs. It is so easy for non business owners to say that the business owners should make less money, yet they never look at or even understand the true reality. Let me help you understand from MY real world situation of business ownership. First off, let me say that if you have ever had to deal with higheirng people than you know that good, harworking employees are had to come by. So many have no work ethic and waste so much of the businesses time and money. Ed, why do you not address that as a problem. The other big issues comes into the fact that I have yet to see an article address the additional costs that come with higher minimum wage, not only would a business see an increase in the cost per hour but payroll taxes and my Workmans Comp costs are directly related. So lets look at REAL numbers. I own a small business that employees 14 minimum wage people, after I pay all of my liability insurance, WCF, payroll taxes, property insurance, ETC. ETC. I am struggling to stay in business. Here is how an increase of $2/hr per employee will play out for me. 14 employees spots in a month equates to 2,464 man hours. So my costs will go up by $4,928 per month, Which is nearly 50% of my actually take home per month, from my business. BUT, it doesn’t stop there. My WCF charges 38 cents on the dollar because I have one employee that does higher risk job and they won’t separate that. So now my WCF will now increase by $1,872.64 per month, Now due to lack of time I get lay out the other increase, but here in my REAL World a $2 increase. Along with other expense This will make it not viable to be in business anymore and I will have to chose to close the business.
Ed I will always be rich, you and your friends will always be poor. It’s the facts of life. Do you really believe people like you of whom really don’t work in a needed field should be paid more. If min wage goes up I will just raise the price of everything you need to live on at my businesses. Uno dos tres you understand right.
If you want more bacon……..get a better job and work hard.
I had a similar conversation with a old school chum about this subject a couple weeks ago. he outlined the reasons for the increase ( almost the same as Ed outlined). I, outlined my concerns of the consequences for everyone involved.
My friend, being a retired union preacher type with a $110K/ year retirement package and myself being a less modest conservative type, ended our debate with him saying ‘WELL, WELL, BUSH STARTED IT”. (When I bought the drinks on the 19th hole, my friend left a whopping 3% tip for the under payed waitress. Go figure.
An increase in productivity creates an increase in wages. Oil and natural gas production, tech developments in Silicon Valley, et all……these endeavors create jobs and raise wages/salaries as the producers compete for people with skills that can help the company produce more/better products.
Raising the minimum wage for its own sake is counterproductive and will only result in the loss of min wage jobs