Maximum Wage for Minimal Skill Level?

The man who will use his skill and constructive imagination to see how much he can give for a dollar, instead of how little he can give for a dollar, is bound to succeed.
— Henry Ford

The Minimum Wage Hike

There’s a lot of talk lately about raising the minimum wage. It’s been all over the news since McDonald’s and other fast food outlets’ workers staged a huge strike from New York to California. Here in California we raised the minimum wage back in January of 2008 to $8 per hour, then $9 per hour in July of 2014. It is scheduled to rise again to $10 per hour beginning on January 1 of 2016. The way we deal with these things in the restaurant industry is typically we will raise prices a little bit just to be able to afford the minimum wage increases.

The is actually the only choice restaurateurs have in these circumstances: either to raise the prices a little like I just mentioned or to somehow decrease quality. As most ethical and sound businesses will refuse to reduce quality (like us), prices are raised. The philosophical question is this: Do minimum wage increases really raise the standard of living, or are they just a mechanism that makes living more expensive for everyone and thus reduces the price of the dollar thereby exasperating the situation for the poor? I mean if we all make more, doesn’t inflation make up the difference? Perhaps minimum wage increases are necessary sometimes and do help the poorest of the poor, but if I was in their position I would not go in strikes. I can give you 7 reasons why strikes are terrible ideas and almost always backfire for the American workforce.

  • The economy and the general income level of restaurant employees is not restaurant owners’ fault. Just imagine if people had to pay $20 for a burger and fries. Most consumers are not willing to do that. Starbucks has made it a point to pay for their workers’ health care, which is great for them. Starbucks does this by charging us $5 for each drink. I am a fan of Starbucks; I drink their coffee every day and I am also a stockholder, however having said that their “formula” by charging a steep premium to be able to afford health insurance is difficult to replicate for restaurants.
  • If people want to make more money, they need to go to school and work hard to increase their skills. Don’t expect to make more money when you are at the same skill level for 20 years. Nobody is going to do this for you. You can go to night school, take online classes, read multiple books and audio books, and so on. It’s entirely up to you; but don’t blame your employer if you are unwilling or unable to do this. Most people are just not willing; the real issue is not ability it’s the lack of desire to excel.
  • The reaction from the media and the general public is extremely negative when it comes to labor disputes and walk-outs, particularly when services and transportation is negatively affected. If you want people on your side, try to do it the nice way. Ask for a raise. If the ownership says no, ask why not. Show the owners through determination and hard work that you are producing 10x what they are paying you, and chances are they will be willing to pay you more. Why does the CEO of Disney take home a $75 million salary? Because he is making Disney a $1 billion more in profit per year. Is that a fair amount to pay someone for helping make a company $1 billion per year? Yes it is. You too can work smarter not harder. Same amount of hours per day, only more skill involved.
  • Think of the customer more than yourself. We do this as owners all the time. If you think I am being facetious or hypothetical I am not. Many restaurant and café owners live on very meager means. They work so hard for the customers, pay off all of the employees fairly, and often don’t have much left for themselves and their families. This was true of us for the first few years. Even to this day this is true of every new restaurant we open. Typically they don’t make a decent profit until after year #3. We absorb that cost, the employees don’t. And just as you won’t see owners protesting on the streets in situations like these, employees should also take heed and make sacrifices for the organization.
  • Labor disputes and long legal battles only benefit one class of people; the lawyers. As anyone that’s been involved in a protracted legal dispute will tell you, there are no real winners. It is much better to negotiate and come to terms through mediation than to fight long legal battles over salary and such.
  • Public labor disputes tarnish the brand long after the dispute is over. Think of Ralphs and the other supermarkets with their long dispute with cashiers and other employees in _________________________(find date). The dispute took years to resolve, and by that time many of the customers had moved to Whole Foods and Trader Joe’s for their grocery needs. One estimate put the total loss to Kroger and Ralph’s at over $1.2 billion. After the dispute was over, most of those that had walked the picket line were either fired or never rehired. Ralph’s simply hired temporary staff that were so unskilled it was truly pathetic and a sad site to behold. I recall old ladies with tattoos and fake gold jewelry coming to work at Ralphs in slippers. I’m not sure if it was funny or sad. Needless to say they lost customers forever. It’s not a good place to be when both sides dig in their heels and will not talk to the other side based on emotions or stubbornness. Both sides lost in that dispute

(get more facts and figures)

  • As business owners it is our duty and responsibility to allow for growth within the company. If the owners are fair and there is adequate room for growth, there should be no reason to protest.

Protesting against owners for low wages is like protesting against God for the rules of gravity. Just as there are rules in science in terms of gravity and that those rules cannot be broken, so too are there rules in economics. In economics, you are not being paid for your time. As Jim Rohn famously says, you are being paid for your skill and contribution to the company. Increase your skill level and you will also see your income rise. Raise it exponentially and your income will rise exponentially. Stop blaming others, especially your boss, for your problems. We all need to look in the mirror and realize we are exactly where we are in this life because of the decisions we have made. Blaming others will only prolong your pain and misery. If you are not happy with what you are doing, your boss, or even working in the food industry at all, by all means move and do something different with your life.

An empowered organisation is one in which individuals have the knowledge, skill, desire, and opportunity to personally succeed in a way that leads to collective organisational success.
Stephen Covey

Questions to Consider

1) Do you think personal growth and education is important? Why or why not?

2) Do you think the minimum wage should steadily increase every year or every two years? Why or why not? Would you feel the same way if you were the employer?

3) How do you think people can form a positive opinion about this topic in the future without getting into these negative positions? Is there a possible “win-win” scenario when it comes to this issue?

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