Thursday, February 14, 2013

More basics of economics - The Minimum Wage

I didn't watch the State Of The Union. Every time I see or hear King Barry I, I get an animalistic urge to throw poo at the electronic device spewing his voice. That aside, I heard clips and the one that made me yell "FUCK YOU!!!" to the screen was the typical Progressive line that people can't live off the minimum wage and we can't have that so we need to raise he minimum wage.

My pretty much exact phrase that night was "Fuck you, you fucking dumbass retard! You have NO CLUE how business works!"

Why does the minimum wage suck and why it does nothing positive for "the poor" and only hurts?

Pretty much all companies have jobs that need to be done that are menial, ultra-low skilled, and 'entry-level'. As a business is small, these jobs are done by the owner (as they're the only employee at the start), but then it can become a team effort: Everyone refills the coffee pot. While she's handling all the accounting tasks, Pam also orders the office supplies. Karen, who's the senior sales person (because she's the only one), sweeps the floors before heading home. Dave, who's the software programer, buys and restocks the coffee supplies weekly. You get the idea. Now, as the business expands and these people work more and more, these jobs STILL need to be done. You, as the owner, decide that you need to hire someone. So, you need someone to sweep floors, clean the toilet, order supplies, restock the coffee, and maybe even answer phones.
Question: How many people walking the Earth can do that job? Excluding young children, language barred, the retarded, infirmed, and those just physically incapable of doing it, about 95% of the people out there can do this job. Efficiencies aside, I could hire a teenage kid, still in high school to do this job.
Second question: How valuable is that work when I can hire just about anyone to do it? Shoe-level low. So why should I pay any one with ZERO experience, ZERO work history, and ZERO background on how well they work, anything more than a couple dollars an hour?
"You can't live off that!" Cries the Progressive.
You're not supposed to! These jobs that are as simple as shitting are of such low value is that I probably could hire a retard and they'd perform most of the tasks just fine.
"So why should these people take these jobs?"
To get work history. To be able to show another employer, for a higher skilled job, that you're dependable, that you've worked 40 hour weeks, showed up on time, made your employer happy, etc... The $5.00/hour  ain't pretty, but it's something. It's $200 a week you didn't have before. Want more, learn a skill and find a better job.

Now, let's add in "The Minimum Wage". Right now, it's about $7.25. I have two people coming at me for this shit job. If I have to pay them $7.25 an hour, who will I hire - Joe, who's 15, never had a job in his life beyond mowing lawns, he's still in school, he's an average student. Or Jane, who's 32 with a child at home, who worked 3 jobs successfully, growing into new positions, and only left the job market because she had a baby, and she's a college graduate. Ding, ding, ding, Jane, you have a job. Why? Even without asking anything, if Jane says she's a mom, I can generally assume she's responsible (I know, that's definitely not a guarantee, but...) because she has to care for a child. I can make an assumption that she is looking for extra money for something; why come back to work if she didn't have to? She has a history of work, so I could ask for a reference and would maybe find she's been reliable. Joe has no benefits to me, Joe gets no job. BUT... what if Joe was willing to take $6.00 an hour and Jane wasn't? Now Joe is a benefit to me. I can get the same work done for less money. I give Joe a chance. Maybe Joe thanks me by staying loyal to me and as his skill increase, maybe Joe stays with my company and grows into new jobs for me.
How many kids are working at jobs that were open to teenagers before. My first jobs were shoveling ice cream, then stocking shelves, stocking produce, cleaning a charter boat. These jobs suck. But I earned money, I got work experience, I showed my value. Look around now and who's doing these jobs? Adults!
"They deserve a fair wage!" Cries the Progressive.
That is fair. Why? Because if I can't pay the wages these people want, I just don't hire them. I still have the rest of my staff performing the jobs because they still need to be done!
"You're a greedy business owner who is keeping all the profit!"
To be considered a successful business, you have to be maintaining an 8% net profit margin. This allows you to grow in the following year(s), re-invest in the company, maybe buy a new company etc...  About 4% is considered being stagnant. Anything less, but over 0, is struggling to survive. So if I take anything out of those profits to increase the pay of my employees and don't receive any additional benefit from it or increase my revenue, I'm losing money. The business will collapse. Or...
To increase the money I'm paying my employees, I increase my prices. If I'm one business doing this, not a big deal, people can chose to do business with me or not. Maybe my products are worth the additional prices I'm charging. Maybe not. If I don't get the increased revenue, I can't afford to pay my people, people get pay cuts, get laid off, etc... Now, what if ALL businesses do this? The prices for EVERYTHING go up. The additional money that person making minimum wage got by the government mandated increase, now becomes absolutely worthless because the price of everything increased by the same percentage their wage increased. If you don't think this is happening, you've got shit between your ears because it DOES happen. Every single time the minimum wage is increased, the prices increase.

The only way a person making a shit wage can increase their pay is to increase their skills, increase their worth to the person/people who have or are willing to hire them . If you're making $8.00/hr at Walmart, then A) Find a better job than stocking shelves at Walmart or B) Show you're more valuable to Walmart so they can put you into a job that is commiserate with your work.

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