The minimum wage is a hot topic.
People need to earn a living wage!
The cost of living has gone up!
It can be a gradual increase!
You can’t expect people to work for pennies!
The current minimum wage is $7.25 per hour. That can’t even buy you a quality takeout lunch where I live. Raising the minimum wage to $15 would be an incredible raise for anyone who’s at $7.25 today. $15/hour would be cause for celebration back when I was working at Hat World, General Cinemas, and CVS.
I won’t argue the politics of this proposed increase (which is the crux of whether it happens — or when it happens). I will address the practicality of it.
First, let’s be clear: “Minimum wage” is the least amount you can earn. The least you can earn is not $7.25/hour. The least you can earn, the real minimum wage, is $0.
Ask a homeless or a jobless person what the minimum wage is.
Second, in a capitalist society like the USA (for now, at least), the market determines value. You’re worth what you accept, negotiate or demand. The government can’t manufacture an increase in your value (though they will try). Even if they manage to do so, the market will “correct” itself, along with correcting your wages.
If a worker accepts $7.25/hour now, their worth is $7.25/hour. That’s what they accepted. Why would a business owner give them more?
Trick question: They don’t.
This is how all industries operate, by the way. From McDonald’s to the NBA; book publishing to Facebook ads. You pay the least amount that you can get away with paying to get what you need. On the other side of the table, the entity offering the services angles to get the most they can get. This is the fun of the game.
Let’s say you’re a business owner. One of your employees earns $7.25/hour. Soon, this employee must receive a minimum of $15/hour. As the check writer, how would you respond?
Here’s how I would respond.
1) My expectations of this employee would change. For more money, I’ll need more production and higher efficiency.
2) If this employee cannot perform better at $15 than they did at $7.25, they’ll be replaced with someone who can.
3) Since I must spend more on staff than before, I raise prices to cover the extra expense. My customers pay the difference.
4) I may consider cutting staff to save on expenses. Instead of paying two people $30/hour combined, I’ll pay one person $15/hour, and make that one person handle the workload of two employees. If they can’t do it? See response #2.
An increase in the minimum wage doesn’t mean everyone automatically makes more money. People lose jobs. Prices go up. Work becomes harder. With the job now worth more to the worker, the worker needs the job more than ever. That means the job demands even more of their time, attention, and energy. The handcuffs get stronger.
If you’re earning the minimum wage today, you are the lowest-valued worker in the marketplace. You are the least in-demand, and the easiest to replace. This is not an opinion, but a practical economic fact.
The minimum wage may indeed go up. Maybe you’ll get lucky and keep your job in the process. But that’s a precarious situation to gamble on. As I explained, the market will respond in ways that you don’t see coming.
Position yourself to where the minimum wage isn’t on your radar. Keep YOUR earning floor above THE earning floor. When the minimum wage is $10, be worth a minimum of $11. When the minimum wage is $20, be worth at least $21. You don’t want to compete at the bottom of the pyramid. It’s crowded down there.
Otherwise, you may become the victim of a good thing.
Speaking of value, go claim your FREE copy of my book The Mirror Of Motivation so you can maximize your contribution — which means you’re not concerned about minimums.
Get it here: http://MirrorOfMotivation.com