Alright, I simply can’t keep my mouth shut about this one. Whenever people talk about raising the minimum wage, Bill the economist (his alter-ego, what he actually has a degree in, because our college didn’t offer majors in tanks, gunnery and fashion trends of tankers through history) pushes it to the next illogical step and asks why not raise the minimum wage to $100/hr? For some reason, most people who support a $2/hr raise balk at $100/hr thinking it too high, that perhaps it might harm businesses…but raising it by a couple of bucks won’t?
Yeah, ok, so even if you are stuck in the feel-goodness of raising the minimum wage by a paltry amount thinking that it might actually help people rise from poverty (in other words, if you live in a make-believe fairyland where you think all we have to do is make someone else pay more and you won’t have to see homeless people begging at that red light you always get stuck at) certainly you must understand that employers are not forced to only pay the minimum wage, right? Surely you realize that the legions of burger-flippers and toilet scrubbers have the potential to make above the minimum wage if their employers feel they are worth it, right?
“This bill completely ignores that fact, and as a result small businesses may be forced to eliminate jobs, reduce hours, and cut employee benefits,” Josten said.
But Wal-Mart Stores Inc., the world’s biggest retailer, reiterated its support for an increase, saying it would help working families.
OK, Wal-Mart, knock yourself out. Pay higher than minimum wage for those 16 year old clerks you’ve got working there after school. Mr. Josten specifically said “small businesses” and Wal-Mart certainly does not qualify. And if Mr. Josten is correct, and small businesses suffer, this law only promotes big corporations with deep pockets at the expense of small, hometown businesses.
Situation: Ms. Single-Mom with no car works during school hours for the Mom N Pop Diner in rural Small Town for $6/hr. Mom N Pop has 6 or 7 employees who share the 30 man-hours per day (they’re only open for breakfast and lunch) 6 days per week. Suddenly, Mom N Pop have to cough up $1/hr more for every man-hour: that is $1/hr times 30 hr/day times 6 days/week times 4 weeks/month which equals $720/month. Mom N Pop’s business loan for the diner and equipment is $800/month (they’ve been in business for 22 years at that location, so the mortgage is pretty low…good thing, too since net profits barely cover their personal grocery bill).
Mom N Pop is forced to close their doors (they tried selling, but nobody was fool enough to buy it). Small Town has precious few businesses because everyone drives 20 minutes away to Slightly Bigger Small Town which actually has a mall (woo hoo, 28 stores!). Alas Ms. Single-Mom has no car because she only makes $6/hr and couldn’t afford gas or insurance if someone gave her a car. So Mom N Pop have no business (and hence, no income) and Ms. Single-Mom has no job. And the local old folks have nowhere to gather on weekday mornings for a cheap cuppa and a few rounds of Euchre.
But McDonald’s over in Slightly Bigger Small Town is thriving. And this is progress?
If you see some fallacies in my scenario, please point them out. But do so only if you or someone you know has attempted to run a small business in a small town or if you have actually yourself lived in a rural small town or if you are a single-mom making minimum wage working for a small business or if you are a small town business owner.
Reit This Way 
We were talking about that over lunch yesterday, as well. It’s painful for a small business to have to cough up that much extra money that quickly. My beloved suggested that it would be better to raise the minimun wage annually at the rate of inflation, instead of all at once every ten years…
Well, I live in a state (Washington) that has a pretty high minimum wage that adjusts with the cost of living increas, and I’m very happy with it, and our economy is doing well.
Yes, but what workers in Washington earn should not be equal to what workers in Alabama earn, since it is much much cheaper to live in Alabama.
I used to be all for this but have changed my mind a little for different reasons.
The biggest being so many of the minimum wage earning jobs around here are filled with people who have the work ethic of a tree stump – I can’t truthfully classify them as teenagers or college kids because it is just as often adults as well. It blows my mind that people actually think they can not show up one day without even bothering to call in with a fake “(cough cough) I’m sick” and still have a job the next day. I’m appalled that even a measly $6/hr is being wasted on people who barely grunt at customers. So the idea of paying them even more is insane in my opinion.
I realize that not every minimum wage employee is like this but around here that’s a hard thing to remember!!!
My parents had that small “mom and pop” kind of restaurant when they were living in SE Texas a few years ago and they ran into many of the same issues. If they’d paid most of their employees according to their worth (as an employee) most of those people would’ve owed my parents money!!
I’m not a big fan of unions – which is what ( i think) walmart is fighting against now…but I won’t get started on that 🙂
All I know is that when I worked at the grocery store in college, our minimum wage was raised to the $5.15 from $4.25. A few months later we saw a distinct rise in everything retail, groceries, supplies, even clothing. Related? I think it is. This raise is even higher, so at best it will end up being a wash for the poorer economic class, not much difference for higher incomes, and a hardship for the middle class.
It blows my mind too. My first job, Burger King, stuffing the broiler and cooking fries after school and on the weekends, and I worked for 9 months making $4.25 an hour. I was happy to have a job…16 years old I had enough after 9 months to buy a car (67 ford Mustang to boot) and was able to get a better job the next summer. If you had to pay a teenager $8 an hour, whould you hire them? Probably not.
Doing it that way, earning it myself, working hard and accomplishing better was a far more effective boost to my station in life then if someone would have enforced a pay raise. I wasn’t going to get a raise at BK…but I wasn’t going to stick around for the rest of my life either.
It ultimately goes back to what side of the fence you sit on:
Do you believe in Giving a man a fish or teaching the man to fish?
It’s amazing how often polititians forget that knowing how to fish yourself is so much better than relying upon someone to fish for you.
I live in that beautiful state of Washington, too, and am APPALLED by the entitlement of some. My husband and I continue to be shocked that state legislators think that raising everyone’s taxes, increasing minimum wage and increasing government funding are actually going to HELP people get off their keisters and become financially and economically responsible.
Whoa. Hot button for me I guess.
I should also say that we live in the Eastern part of the state, where our viewpoint is a little more widely accepted. On the West side, it seems the majority of people think it’s just economicaly irresponsible to have more than one child, let alone only pay someone SEVEN DOLLARS AND NINETY FIVE CENTS AN HOUR. Period.
That whole cost of living thing that our minimum wage “adjusts” for only applies to about 400 square miles in this state. Seriously. The rest of the 71,000 or so square miles are CONSIDERABLY cheaper in which to live. I suppose, for the record, I should state that my husband and I lived in Seattle for a little over 4 years. We loved the city but, man, it got old being in the minority politically.
Yes, but what workers in Washington earn should not be equal to what workers in Alabama earn,
Why not? As someone behind me pointed out, the COLA adjustment in Washington is much more geared towards the Western side of the state (where I live) where it is more expensive to live, but those who live in the Eastern part of the state should reap the economic benefits of living in the state.
Therefore (and I’m really not an Economics major at all – I switched out of my Political Economy and Social Change class after one mindnumbingly boring quarter to indulge my love of Russian History and Literature) why shouldn’t those in Alabama reap the benefits of the strong economy of the entire country?
Although, I do come from the Left, I do not feel out of place in Western Washington, politically, shall we say.
Mimi, businesses are going to try to make money. If you make them pay their workers more, than their profits will fall. To offset this, they will then raise the cost of their goods and services. So the clerk at the grocery store gets a dollar more an hour, but she has to pay more for thier milk, bread, diapers, gasoline, etc.
Net sum zero.
Or, in my case outlined in my post, their employer chooses to not raise the price of the items on the menu but closes their doors instead. That’s a huge loss to a local community.
I can suggest a number of small towns in Ohio, and I’ve seen a few in Alabama too, that I highly recommend you spend a week languishing in to really get a taste of what small town life is like. Or, you could talk to my dad who did the small town diner gig for a bit and perhaps you could offer some ideas for where he went wrong in trying to make that place profitable. Although he’s a CPA and has decades of food service and restaurant management experience, he found that these tiny towns can barely support their own businesses and there’s not much in the way of attracting other customers who live a half hour away.
I grew up in a small town, I’m well aware – I don’t need to spend time with anyone to understand it, thanks – , but what I’m saying is that statistics do show, based upon the nearly 10 years of Washington experience, that that is not the case.
http://www.thenewstribune.com/news/story/6318526p-5508602c.html
The long and the short of it is, in my opinion, that it is a tempest in a teapot, as most jobs realistically aren’t minimum wage.
But, mileages vary, I understand that.
Forgive me, Michelle – I cleary was a bit huffy, and I apologize. I didn’t even realize I felt this strongly about this issue.
I enjoy your blog and our online interactions very much, and I apologize for being forceful. This is a good reminder that we all don’t see things the same way, and that’s ok.
Mimi,
no offense. I hurt my back and can’t sit at the computer much. And I’m sick too. Just shoot me, please.
I don’t restrict friendships to those who think just like me. You should hear some of the heated discussions between my husband and I.
Ouch, you feel better soon. I will keep you in my humble prayers.