Thursday, December 5, 2013

Let's Talk About The Minimum Wage: A Manufacturer's Take

There is move afoot to raise the minimum wage to “a living wage.” Right now, the federal minimum wage is $7.25/hour. Individual states also have minimum wages that in some cases are higher and some are lower. When you add in minimum wages for “tipped” employees, you get a witch’s brew that is ripe for contention.

I will fully admit that $7.25/hour is not a whole lot of money. Multiply this number times 2000 (40 hrs/wk x 50 weeks) and you get a whopping $14,500 for the year. At this rate, I can’t imagine any taxes being due, so this would also be the net to the worker.

However, the economics I learned does not support raising this wage.

Why, you ask?

  1. Minimum wage was never supposed to be a wage that you would “live on.” It generally was a starting wage for younger or untrained workers that would then advance through merit raises to higher wages.
  2. Many trade organizations advocate higher minimum wages to support the wages their members get during their negotiations with employers. Some even have clauses in contracts that mandate certain differential wage rates between minimum wage and their negotiated wage rates. This pressure to raise the minimum wage artificially pushes the trade groups wages higher by advocating that they are somehow helping those at the bottom of the wage food chain. A little disingenuous here.
  3. In a free trade environment, every person has a responsibility to maximize their potential by going to school and achieving a modicum of education so that they can contribute to society. I know that many people face circumstances that preclude their education path and we should be aware of these issues and seek to minimize these matters to help every person reach their full potential. 

And this is where my industry, #manufacturing, comes in. There are a lot of entry level jobs in small to medium sized manufacturing businesses that pay more than the minimum wage and plenty of those jobs are available now.  There are also governmental and private educational services that offer affordable training to help people qualify for those jobs.  Many companies will even hire “apprentices” and do the training themselves if the individual has a good attitude and work ethic.

My point is this; as long as options like these exist, people can ‘vote with their feet’ and leave a job that underpays and go to one that offers a better wage.  That, I feel, is the American way and manufacturing, which helped build this country, continues to show the way.

Oh and one more thing.  Just remember, if the minimum wage is raised to $15/hr as some are advocating, you won’t be able to get your 2 sandwiches for $5.00 deal anymore at the fast food places. While not eating two high/empty calorie sandwiches would certainly be result of this rate, all other types of prices will go up and the next thing we’ll hear is that you can’t live on the $15/hr either!

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