I keep seeing people talking about minimum wage and how it needs to go up because we cant survive on minimum wage, but you arent understanding the problem with that logic: Minimum wage jobs are usually in the service industry and are jobs which the workers hours and the success of the company are dependent on a balance of labor costs, overhead, supply costs, and income. So, if ANY of these variables is altered, the end equation is altered. Lets say that you have 10 workers making $7.25 an hour working for 6 hours and 4 workers working for the other 6. Now, you work in a high end pizza shop that sells pizzas for an average of $20.00 per pie. Lets say your overhead (which isnt unrealistic) is about $1,500.00 a week. You are open from 11AM to 11PM. The cost in ingredients to make one pizza then averages to be about $5.00. Lets get our totals for a week: $1,500.00 (overhead) $4,200.00 (labor cost averaged out) So now you have $5,700.00 you have to make AFTER ingredients costs just to break even and have ownership make NO profit. How many pizzas is that you have to sell? That is 55 pizzas a day to break even. Not unrealistic or too difficult to achieve but remember, this is to break even and also doesnt include any extra costs of packaging (boxes), of maintenance, of any surprise expenses, OR of the huge chunk that Uncle Sam takes. So realistically, you would have to almost double that number to break even. Probably around 100 pizzas a day. Now lets increase minimum wage to $9.25 an hour! $1,500.00 (overhead) $5,400.00 (labor cost averaged out) NOW we need to make $6,900.00 just to break even. So that turns into 66 pizzas per day, *1.81 to incorporate in taxes, maintenance, packaging, etc (the same increase ratio from before) bringing us to about 120 pizzas a day. 20 pizza increase. Not that big of a deal, a lot of people would say. However, how long does it take to make a pizza? How hard is it to do in a hurry without sacrificing quality? Many times businesses cannot justify price increases to their food in the eyes of the consumer, so they have to find other ways to make the equation balance out again. Most common solution is to cut labor, but then you have less people doing more work. You COULD increase prices, but you would honestly lose more customers than you would gain profits from the change and thus still have to cut labor and/or completely fire an employee or two. So how do you combat this? Well, if you are a small business, you can try to run on a skeleton crew but your quality will eventually suffer and thus you will lose all your business. If you are a big company, you will probably do a price increase, but then so will EVERY OTHER big company, and yeah, I am making $9.25 an hour, but since EVERY BIG COMPANY increased their prices, it STILL costs the same percentage of my paycheck to survive, being around 120%. Furthermore, lets say someone goes to school for six years and earns a Masters degree. They get out of school and get a salary job paying the equivalent of $20.00 an hour. Yet, they have $100,000.00 of student loans because our higher education system is BROKEN. Now, they USED to be making $12.25 an hour above minimum wage. This means they will have to work 8,165 hours to pay off that $100,000.00 if they use EVERY PENNY over minimum wage they make to pay it off. You work 40 hours a week and there are 52 weeks in a year. So that is another 4 years they have to work just to be able to make the money their degree earned them. They wont start seeing the benefits of a college degree until they are about 30, and that is given the assumption they can even find a job using their degree. Keep in mind, most Masters programs require an unpaid internship, so while you were making money they were falling further in debt. Minimum wage goes up to $9.25. They still make the equivalent of $20.00 an hour, so $10.75 over minimum wage. Now they have to work 9,310 hours to see benefits of their degree. So add another six months onto those four years. Keep in mind, this is assuming they can survive on minimum wage and use EVERY CENT beyond what minimum wage would be to pay back their student loans. Realistically, that is unrealistic. Honestly, with this system, you will probably be closer to 40 before your student loans are paid off, and by then you are wondering if it was even worth it... SO the simple solution? There isnt one. However, this is what I would like to see: Keep minimum wage where it is, but hold companies accountable! It is called MINIMUM wage. Make it mandatory for ALL companies to do reviews of their workers progress, to document their development as an employee, to write them up when they do poorly and praise them when they exceed expectations. Make companies recognize that their employees ARE HUMAN BEINGS and make them acknowledge all that they do to keep the company in existence. Then require that every six months, they review their work and are given FAIR raises based on their work ethic. If the company feels they do not deserve a raise because they are consistently late, they are lazy, they are incompetent, etc. then the company terminates them at the review and finds one of the thousands of people looking for work who will be willing to do what they have to. Quit allowing companies to say you deserve a raise but we arent going to give it to you because we cant afford to pay you more than minimum wage. If you have six months experience of going in and doing your job every day, then you are faster, more efficient, and more focused at the end of that six month period. By that logic, you are saving them in labor even WITH a raise because you can do more. This will also give people an incentive to stay with their employer and develop a relationship with the company because they grow as the company does. We need to make it to where minimum wage is a STARTING wage, not a LIVING wage. I know many companies, including my own, already do review systems and raises after each six month block, but it needs to be enforced across the board. This is my proposed compromise and though this post is probably longer than every status I have ever posted combined and I am sure very few people will read it, I hope at least some of you realize that the problem is MUCH more complex than just Give us more money. Thank you. Ben (Dad), what do you think about this? Keep in mind I know it does cost a lot more to run a business, I was just trying to keep figures at a comprehensible level
Posted on: Tue, 30 Sep 2014 15:52:50 +0000