Friday, October 24, 2014

Finding Middle Ground in the Minimum Wage Debate

I'm trying very hard to be as objective as possible with the minimum wage issue. Small business has a valid concern when it comes to keeping costs down, and profits up. One of the biggest cost to business is labor.

Wage earners have a valid concern when it comes to wages, and the effects of inflation causing the net value of their wage to decrease. They also have a vested interest in keeping costs down and profits up for their employer. Likewise the employer has a vested interest in keeping their employees well fed, housed and healthy.

Right now the federal minimum wage is $7.24 per hour. With that hourly wage, plus Social Security and Medicare matching funds that causes a total cost to the employer for 1 worker to be $311.75 per week.

It has been proposed that the minimum wage be increased to $10.10 per hour. With that hourly wage, plus Social Security and Medicare matching funds that causes a total cost to the employer for one worker to be $434.91 per week.

That is an added cost of $24.63 per day, per employee. This is $3.08 per hour extra for a 40 hour week.

There has to be some middle ground here. Either that or, there has to be a way that employers can pay an updated minimum wage. I think one way of doing that is for the employees, and employers to be more efficient. If the employee wishes to raise the minimum, can they find a way to add $3.08 per hour of added value to their labor? Could the employer find a way to bring into the business $24.63 more per day, per employee? (Note: Consideration was not given to the fact that labor efficiency has risen every year, but wages do not increase because of it)

I'm no accountant, but I'm good at finding relationships between several seemingly unrelated things. One thing I'm finding here is the relationship between well paid employees and a successful business. Also the relationship of motivated, hard working employees and a successful business. One can not be had without the other. Both the employer and the employee depend on each other and have interest in each other's success.

So the solution IMHO is in the behavior of the employee and employer. Here is an example. When I was in the aircraft industry, I hated it when people would take my time with idle chatter. Unless they could keep their hands working while they run their mouths, I would rather them not talk at all. I remember times of when I had to leave the aircraft to get materials, or tools. On the way sometimes a friend would stop me and start telling me some long story about this or that, and it had nothing to do with the job. I would tell them to cut it short, I had work to do. I didn't mind the passing conversation like "How's the kids. They are good. Cool, talk later." Then the later was at break times. That time standing in a hallway having a long drawn out conversation about non-work related things is an unreasonable cost to the employer. Don't do that.

Same with things like unauthorized smoke breaks. All this idle time adds up big time over the course of a week, a month or a year. You want a raise? Make it worth it to the employer. You have a task that is supposed to take 2 hours? Try your damnedest to get that task done in 1.75 hours. All that efficiency adds up as profit for the employer. That is good motive to get more money to the employees.

How about the business? How are you running things? Are you taking advantage of the hours worked by your employees? How about the process? Is it efficient? Is there room for improvement? Can you look around and find ways of cutting basic operating costs? Turn that thermostat to 68 degrees in the winter, and 78 degrees in the summer. Use water more effectively. Switch to more fuel efficient vehicles in your fleet. Start an employee suggestion program.

There is a solution to the minimum wage problem that can work for the employer and the employee, but the onus can not be placed completely on one or the other. It takes a partnership between employer and employee. Both of them working together for mutual success.

Are you a minimum wage earner? Can you think of ways to add value to your labor to the employer?

Are you the employer of minimum wage earners? Can you think of ways to add value to the labor you employ? Ways of running your business more efficiently or effectively?

I think this is food for thought by all concerned. Input is encouraged and welcome.

Also if my figures are off, please inform me. Indeed inform me because the way I see things, we are talking about the the employer and employee finding $3.08 per hour extra. Facts and creative solutions go hand in hand.

Note: Updated figures up due to a correction in the math.rying very hard to be as objective as possible with the minimum wage issue. Small business has a valid concern when it comes to keeping costs down, and profits up. One of the biggest cost to business is labor.

Wage earners have a valid concern when it comes to wages, and the effects of inflation causing the net value of their wage to decrease. They also have a vested interest in keeping costs down and profits up for their employer. Likewise the employer has a vested interest in keeping their employees well fed, housed and healthy.

Right now the federal minimum wage is $7.24 per hour. With that hourly wage, plus Social Security and Medicare matching funds that causes a total cost to the employer for 1 worker to be $311.75 per week.

It has been proposed that the minimum wage be increased to $10.10 per hour. With that hourly wage, plus Social Security and Medicare matching funds that causes a total cost to the employer for one worker to be $434.91 per week.

That is an added cost of $24.63 per day, per employee. This is $3.08 per hour extra for a 40 hour week.

There has to be some middle ground here. Either that or, there has to be a way that employers can pay an updated minimum wage. I think one way of doing that is for the employees, and employers to be more efficient. If the employee wishes to raise the minimum, can they find a way to add $3.08 per hour of added value to their labor? Could the employer find a way to bring into the business $24.63 more per day, per employee?

I'm no accountant, but I'm good at finding relationships between several seemingly unrelated things. One thing I'm finding here is the relationship between well paid employees and a successful business. Also the relationship of motivated, hard working employees and a successful business. One can not be had without the other. Both the employer and the employee depend on each other and have interest in each other's success.

So the solution IMHO is in the behavior of the employee and employer. Here is an example. When I was in the aircraft industry, I hated it when people would take my time with idle chatter. Unless they could keep their hands working while they run their mouths, I would rather them not talk at all. I remember times of when I had to leave the aircraft to get materials, or tools. On the way sometimes a friend would stop me and start telling me some long story about this or that, and it had nothing to do with the job. I would tell them to cut it short, I had work to do. I didn't mind the passing conversation like "How's the kids. They are good. Cool, talk later." Then the later was at break times. That time standing in a hallway having a long drawn out conversation about non-work related things is an unreasonable cost to the employer. Don't do that.

Same with things like unauthorized smoke breaks. All this idle time adds up big time over the course of a week, a month or a year. You want a raise? Make it worth it to the employer. You have a task that is supposed to take 2 hours? Try your damnedest to get that task done in 1.75 hours. All that efficiency adds up as profit for the employer. That is good motive to get more money to the employees.

How about the business? How are you running things? Are you taking advantage of the hours worked by your employees? How about the process? Is it efficient? Is their room for improvement? Can you look around and find ways of cutting basic operating costs? Turn that thermostat to 68 degrees in the winter, and 78 degrees in the summer. Use water more effectively. Switch to more fuel efficient vehicles in your fleet. Start an employee suggestion program.

There is a solution to the minimum wage problem that can work for the employer and the employee, but the onus can not be placed completely on one or the other. It takes a partnership between employer and employee. Both of them working together for mutual success.

Are you a minimum wage earner? Can you think of ways to add value to your labor to the employer?

Are you the employer of minimum wage earners? Can you think of ways to add value to the labor you employ? Ways of running your business more efficiently or effectively?

I think this is food for thought by all concerned. Input is encouraged and welcome.

Also if my figures are off, please inform me. Indeed inform me because the way I see things, we are talking about the the employer and employee finding $3.08 per hour extra. Facts and creative solutions go hand in hand.

Note: Updated figures up due to a correction in the math.