How arguments against the minimum wage turn out to be arguments in favor of it — Laurens R. Hunt

How arguments against the minimum wage turn out to be arguments in favor of it

This hyperlink is to an article that makes false claims against having a minimum wage.–15-an-hour-171832189.html

1.)   Paying $15 an Hour Would Actually REDUCE Fast Food Jobs–The minimum wage is set nationally by federal wage and labor laws.  Fast food workers have been mobilizing around the entire United States especially in recent weeks, but these protests have not been by the restaurant industry alone.  There is no such regulation where one industry must pay $15 an hour, but all of other industries can keep their pay at $7.25 an hour.  The minimum wage is the price of labor, and it applies to all nearly all sectors, industries, and professions.  What this article is having readers believe is that only restaurants workers have been complaining about chronically low wages while no one has been.


The reasons why this is false are many.  McDonalds and Wal-Mart have been receiving the most publicity about their protests.  I have attended the rally for the $15 an hour minimum wage in Foley Square.  The crowd had thousands packed into the small space that is not even the size of one block.  There were the Communication Workers of America, students, teachers, janitors, The United Federation of Teachers, Postal Service Workers, Teamsters, Automotive Workers, and more.  No industry exists by itself.

There are multiple distribution channels and wholesalers involved in the corporations’ business functions.  This is of course true for Wal-Mart and McDonalds, and it is just as true for any of their competitors.  The need for these other workers and jobs was addressed by many of the public speakers during this rally.  Restaurants and retailers alike need a wide gamete of employees.  Janitors are needed in both industries.  Drivers are needed to transport the supplies and goods via their loading docks.  Therefore trucks are required for shipments.  Even with today’s technology there is the need for printed mail, and letters or notices delivered by the post office are just as relevant as ever.  Also there are other issues because not just the wages themselves get discussed.

Many of the circumstances that lead to these low wages also get a lot of attention.  The many rallies I have attended in Newark, NJ are on a smaller scale by The People’s Organizations for Progress.  The most common slogans are “Jobs not Wars” and “Food not Bombs”.  Many of the union leaders talk about how reducing military spending and our foreign wars can allow for significantly higher wages nationwide.  The low tax rates on millionaires and corporations also garner a lot of discussion.  They talk about the need to reverse the public school closings so that more students would be given the skills training and aptitude needed to perform a wider variation of jobs.  This is why students, teachers, and professors are at these same rallies along with United Federation of Teachers.

Those working in the educational field teach critical thinking involving math, reading comprehension, and grammar.  Others equip students with the vocational hands-on part of these jobs working on the assembly line.  This is why the same workers who are commanding higher wages at the restaurants and retailers also want our public schools remaining open, fully staffed, and functioning.  They know about the importance of this skills development, both vocationally and in preparation for college.  No differently than those working in the restaurants and retail chains public school teachers are also often paid too little to live near where they work because of the higher rents.  Additionally I had mentioned The Communication Workers of America.  They are responsible the wiring, phone, and internet service.  Without these media these business franchises and retail stores would never open.

2)  It Defies The Low-Cost Business Model–If the minimum wage is doubled that means that the prices of the products, goods, and services must be twice as high.  Right?  In fact this is hardly true at all.  Wages are the prices of labor.  The sales price of products, goods, and services is determined by countless other factors than paid wages.  For large corporations wages are often less than 10% of the budget and expenditures.  Even for smaller and local business wages are almost always less than 25% of the firms cost.

The reason corporations propagate that if wages are twice as high that consumer prices would also have to be doubled is that they don’t discuss many of the other expenses about running the business that are separate from wages.  They react to changes in wage laws as though this adjustment is macroeconomic.  Wages are twice as high, so therefore everything must cost twice as much.  Here is why this is false.  Wages are the price of labor.  Prices are micro-economic, so wages are determined by unit costs as are the purchase prices.

This is also known as marginal costs (the costs for each additional unit produced).  How much the higher wages affect the cost of running a business vary depending on the number of employees and the projected dollar amount of the firms budget.  Never will doubling the wages result in the cost of business being twice as high.  The final sales price reflects the average costs and therefore is determined by what is an acceptable profit margin for the firm.  The costs besides paid wages are countless including rent, utilities, inventory, purchasing of supplies and equipment, medical benefits, interest on loans, any other fees for use of the building space, and amortization.  Amortization is used to calculate the depreciation (lost value) of assets.   The edifices where the business is located maybe the largest asset.  There are many variations of these assets including factories, warehouses, distribution centers, and refineries.  Assets also include the trucks used for the loading docks, machinery, computers, and other office equipment.   I generalized above that larger corporations can have higher paid wagers costing single-digit percentages while for small local shops it could be up to a ¼ of the budget.

When firms become required to pay higher wages they are also presented with ways they can operate the facility more efficiently.  One is having less extreme variations in thermostat temperatures for heating and air conditioning during the winter and summer months respectively.  I know the impact of this where I work at the County of Hudson.  The heating makes the office feel like a sauna in the winter and a refrigerator with the air conditioning during the summer months.   Many of my coworkers complain about the discomfort caused by this.  Lessening the inefficiency in heating and cooling can save any business thousands of dollars each month for the cost of utilities.  Also there will be less sickness from colds and the flu that result in extended periods of absenteeism for some employees.  I know for myself with some of the colds and nasal drip that I confront primarily during the winter months.  There are many other costs saving measures that can make the increase in wages less costly.

Another such cost saving measure is bringing the construction of the structure up to current fire codes.  This pertains to awareness of the evacuation routes and level of resistance to flames.  Before I became an Eagle Scout in 1994 I had to do a community service project at my local church.  The project was expanding a community room for any kind of meeting that may have to be arranged in the local community, and hence it was an all-purpose room.   The schematic that I was required to use for constructing this conference room also consisted of fire escape routes so that anyone using this space would know where the stairs were to exit the building with as little difficulty as possible.  The location of the fire extinguishers relative to this meeting space also had to be outlined with the floor plans and on the schematic.   Still there is other cost saving measures that a merchant can also apply.

Personnel policies and procedures can cover many issues.  Some are on-the-job training, job rotation, job enhancement, and job enlargement.   More expansive training with exposure to all departments as well as a larger number of tasks allows for greater transparency because of improved knowledge about the products, goods, and services.  This results is faster shipping times and fewer transactional errors.  Therefore there is more customer loyalty and retention.  Firm turnover on the part of employees is also lessened.  With some of these changes in business practices doubling of the minimum wage can result in single digit percentage increases in expenditures even for smaller firms, and for larger corporate offices it is even possible that higher wages can lead to lower prices if enough of these changes are made.  Who would complain about being paid more wages while also paying less for what they consume?  This aspect about personnel changes I tended to notice the impact more readily when I worked in discount brokerage over a dozen years ago.

The more associates interacted with those in other departments the fewer and also less costly the transactional errors.  The share price and prices per share were more accurate regarding the purchase and sale of respective financial instruments.  Financial instruments are a broad term covering many financial products including stocks, bonds, mutual funds, and options trading.  Lastly and obviously not least if the higher level business executives see their pay raises become less than double then that too will shave off a few more percentage points regarding the increased cost of labor.

3)  Why Only Fast Food Chains? –As reflected at the beginning of this piece there are workers from many professions and industries present at these rallies.  Also other topics besides the hourly wages themselves are discussed.  Lastly the wage laws will mandate the $15 per hour rate regardless of the profession and industry.


Comments are closed.

Email Newsletters with Constant Contact