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The Minimum Wage Battle Lines

by Ken Vincent, Featured Contributor

Well the sides are firming up for the fight. Political parties, special interest groups, workers, economists, academia, unions, and even CEO’s are loading up to do battle. It seems the proposals currently on the table range from doing nothing, to raising the minimum wage to some $10.10 in stages, to going to $15 very quickly.

Cash BonusThose that claim to know what will happen under various scenarios differ, as is usual. The mere fact that several “experts” can look at the same data and come up with wildly differing projections should tell us that none of them have a clue.

On the one hand some argue that a significant increase in the minimum wage will cost the economy some 500,000 jobs. On the other side of the fence, is the theory that it will raise about 900,000 people out of the poverty pool. Of course, that assumes that there is some clear understanding of what constitutes poverty because that line isn’t the same in NYC or San Francisco as it is in Meridian, Miss. or Macon, Mo. It also assumes that an increase in minimum wage will not fuel inflation. Though, when payroll cost rise that money has to come from somewhere and that typically is from increased prices.

So, what is your position on the minimum wage? Will a major increase help solve the poverty issue, or close the gap between to top and bottom income layers even though that has not been the historic case? Would an increase result in lost jobs and weaken the economic recovery? If it were up to you , what would you do?


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Ken Vincent
Ken Vincenthttp://sbpra.com/KennethVincent/
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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CONVERSATIONS

  1. I agree with this observation completely. “The mere fact that several “experts” can look at the same data and come up with wildly differing projections should tell us that none of them have a clue.” I started on the U.S. Department of Labor website to understand the phenomenon.

    From a human perspective only, without statistic, calculations, and the bell curve, I know one thing is certain. Raising the wages from $7.25 to $10.10 per hour is not going to raise productivity of the worker. For individuals who work diligently at their task the $2.85 raise is a well deserved bonus. My guess is that they will continue to work more diligently at their task, but their smile might be a little broader and their debts a little narrower. For individuals who show up because they are getting paid and do the minimum to keep getting paid will continue to do the same – but they get the benefit of higher pay without the drudgery of having to do more or take on more responsibility. They get bumped to a higher pay scale without any effort on their part.

    I feel bad for the employers and the employees who find themselves entangled in the minimum wage debate. I feel even worse for employees who make just above $10.10 per hour now and have been anticipating a raise. If we’re thinking about the aspect of human and lifestyle benefit, what happens to them? You could fill a room with experts generating multimedia presentations spewing calculations, projections, and forecasts. You could list pros and cons of which there would be equity between them.

    It seems to me the jump from $7.25 to $10.10 is unrealistic. Why not a $1.00 increase? Why not treat this like a for profit organization and allow a gradual increase over time? It seems unlikely that an organization would assess the wages of their staff and give a $2.85 raise across the board. In fact, it’s possible that raising minimum wages for some workers means nobody else in the organization will receive a raise for the next few years while the organization adjusts to the new budget. When expenses increase on one line item, what does this do to the other line items.

    Maybe employees in Sales, Marketing, Product Design will get bonuses for bringing in more revenue. See? There are innumerable ways to dissect this opportunity.

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