I’m starting to pay attention to some Twitter comments, as that will be part of my job in the week ahead.
This one popped up, Pat Sajak (the host of Wheel of Fortune) Tweeted the following:
When I had minimum wage jobs, my goal was to better myself, not to better the minimum wage.
It’s stuff like this that warms my heart. Because, in the minimum wage world, there are two groups of people: people who have mental/physical disabilities and everyone else.
The first group, people who have disabilities generally have some kind of public assistance supporting them. They work because they want to work. I commend them for that. To push or expand beyond their disabilities makes me very proud of them. If I was hiring, I would take someone with disabilities who push themselves 104% versus a non-disabled person who does the minimum to get by.
“Everyone else” actually have a couple of sub-groups. You have these broad categories:
- Teenagers in their first job
- Adults 30+ who have been laid off and are working to get a better job
- Seniors who are supplementing their retirement
- People who have worked minimum wage for 5+ years
The teenagers group get minimum wage jobs because they are still living at home. All they need is “gas and date” money, as probably their parents are paying for everything else. They have zero job experience and are looking to start their job history.
The 30 and older adults, they have experienced a setback by being unexpectedly laid off or whatever. They are doing whatever it takes to support their family, even if it means being a line worker in a fast food restaurant. Today, it is easier to get a job if you already have a job. It is assumed that if you have been unemployed for an extended period you are either A) a slacker or B) you are being too picky about a job. I experienced that during my nine months of unemployment last year.
Seniors, our third sub-group are looking to supplement their Social Security and stay active. Due to age discrimination, they can’t stay in whatever field they worked in during their younger years.
The last group are generally the ones who want the “living wage.” If you have worked in a minimum wage environment for 5+ years and are not disabled, let me put it to you bluntly: YOU ARE A SLACKER. Because this means you have not received a useful college degree or have not graduated from a trade school, thus upgraded your skills and become a more valuable worker because you have a knowledge and skill set that is in demand.
For several years back in the 90’s, I had a job installing point-of-sale computers in fast food restaurants. Because of the “back office stuff” I had to be knowledgeable about the industry. Here is what I found:
A $2.00 hamburger has the (roughly) following costs:
- 50 cents: Materials (bread, meat, cheese, etc.)
- 80 cents: Labor (workers, management, maintenance, etc.)
- 46 cents: Overhead (Main office workers, rent/mortgage, utilities, etc.)
- 14 cents: Franchise fees (the store owner paying the brand name)
- 10 cents: Net profit (what the franchisee receives)
- 200 cents: Total
Now, jumping the minimum wage from $7.25 to $15, that’s doubling it and then some. It would not be out of bounds to think that keeping the same amount of staffing at the higher rate would jump the labor costs probably about 48 to 50 cents. The result would be this:
- 50 cents: Materials (bread, meat, cheese, etc.)
- 128 cents: Labor (workers, management, maintenance, etc.)
- 46 cents: Overhead (Main office workers, rent/mortgage, utilities, etc.)
- 18 cents: Franchise fees (goes up because of the price increase)
- 10 cents: Net profit (what the franchisee receives)
- 252 cents: Total
So, because the labor costs almost doubled, the total price of the item jumped about 25%. It is math, and no matter how much you whine about it, that won’t change the numbers. This business will sell less of that $2.00 item because it will be “too expensive” for some people and they will probably choose another place, because all of the prices there will jump up a similar amount.
So, in order to reduce the labor costs back to the original 80 cents, a combination of two things is necessary:
- Reduce staffing levels (less jobs)
- Increase automation.
So, the result of increasing the minimum wage will result in either higher prices or less people working and more automation like this:
That is the result of artificially inflating wages. Any questions?