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The Minimum Wage Debate – What are We Really Missing?

September 20, 2017

Source: Sam Burlum begins the discussion relating the minimum wage debate: do we make law to raise the minimum wage to $15 per hour as some are demanding, or are we missing the bigger picture and asking for the wrong request?

In June of 2015, the City of Los Angeles had adopted an ordinance which mandates the hourly minimum wage to be raised to $15 per hour over the next four years. Prior to the action by the governing body of L.A., the City of Seattle passed a similar ordinance. This came after much public outcry over the issues that surround the dubbed “income inequality” and “fair share” for individuals who may receive minimum wage compensation for entry-level positions or jobs that are considered low-skilled work. Theses recent actions taken by government that mandate individuals to be compensated based on their need rather than being compensated on their performance sets a very dangerous precedents.

There are many questions to be answered as we debate this issue. This is a very complicated issue that deserves more discussion and inclusion of input from economist, small businesses, and intellects who have studied social and community engineering. Government officials who were quick to answer a call of action to mandate the minimum wage hike to $15 per hour were either responding to popular consensus or just eager to capture political votes, I doubt thought of the severe consequences of this very action. There are many economic and social ramifications that small business and society will have to tackle for years to come as a result of increasing the minimum wage in the name of income inequality.

Concerns surrounding the minimum wage hike are far beyond the common arguments discussed by small business and consumers that speak against the measure, afraid it will cause a spike in prices of products and services that rely on entry-level labor to provide. With the middle class continuing to struggle to meet their family’s daily needs, they now have to add into the equation higher prices for goods or services once considered “affordable,” or “economical.” Such an example is in the area of fast food restaurants, where a family of four would entertain a meal for just under $20; has now jumped up in the past 10 years to double the cost. With workers in such establishments now demanding higher pay for entry level work, restaurant chains will be forced to pass along the cost to the consumer, thus making the fast food less affordable.

We must also tackle the issue of what someone’s value, time, and/or skill set are worth. Having to raise the minimum wage to $15 per hour for a job or task that clearly does not justly match the service or labor provided will have workers in jobs that require further education and training, maybe more dangerous, or require more investment into the craft will surely be advocating for a larger paycheck that reflects their individual value proposition. For instance, a truck driver whom must content with an industry which is over-regulated and must invest time into extensive training, sometimes without pay, can expect to be paid between $13 per hour to $23 per hour, depending on experience and safety record, according to payscale.com research. The average median pay for a truck driver is $17 per hour. Why would someone want to risk their lives behind the wheel, assume all of the stress and responsibility, and have to deal with being away from home for weeks at a time, for $17 per hour, when they can work a Mc-Job without any stress for $15 per hour and be home every night? Clearly the stage is being set for a serious disagreement by folks whom provide more value than those who are working at entry-level positions.

Opponents also says that a minimum wage hike sends the wrong message overall to society. By “entitling” people to make what are wages usually reserved for middle class families and the trades, we are sending a message that society is diminishing the value and virtue of self-responsibility. When a person is compensated based on need, and not on performance or based on the skill sets they provide, we are undermining incentive for those who wish to provide quality work, those who wish to continue to invest into their trade or professions in order to stay competitive in the job market. If everyone is to receive equal pay regardless of the value they bring to the table, then why should anyone work so hard?

One area of great debate is how do we justify a $15 per hour minimum wage for someone who works in an entry-level position, when someone who serves in the military and puts his or her life on the line to defend our freedoms, who will face hostile situations, only makes between $15 to $22 per hour, depending on the range of skill sets and assignments they are commanded to carry out. If one can make $15 per hour as an entry level position, then why would anyone want to join the military as a career choice knowing that such a job consists of far more risk? To offer $15 per hour for a job reserved clearly as entry level, in this situation should be reconsidered and denied as a matter of national security.

Companies are already looking for ways to lessen the need of minimum wage workers in their operations. In retail and grocery stores, automated self-service checkout registers are quickly replacing cashiers and front-end clerks. You may see one individual who would now oversee four registers where in the past you would have one clerk to every register. Fast food restaurants and airports have been replacing people with self-service kiosk. Some businesses have stopped hiring all together, including some businesses interviewed who are family owned and located on Main Street. More workers are also hired as part-time and are limited hours, so they can never reach full-time status.

Mandated minimum wage increases are just a bandage on the broken arm of the much severe challenge at large. The real source of the problem is the 800-pound gorilla in the room, but yet everyone is afraid to say it. As we the people, we should not be demanding $15 per hour compensation for a minimum wage job; we should be demanding better jobs. Jobs associated with minimum wage compensation are usually jobs set aside for low-skill or no-skill workers. These are usually entry-level positions where the value provided by the employee is not of its greatest value relating to the product or service offered to the consumer. With the economic downturn in the United States, and the vast migration of manufacturing jobs lost to cheaper labor overseas, individuals once in middle management or low-paying skilled jobs have had to resort to accepting what work is available.

Instead of demanding that politicians write laws that increases minimum wage, we should be demanding our jobs back that did allow us to properly support our families. We should be asking our nation’s leaders to address the hard questions, such as how are they (the elected officials or government decision makers) going to help recreate the preexisting conditions necessary that will foster innovation, encourage the renewal of the entrepreneurial spirit, and restore American free enterprise. Provided the opportunity to properly operate without the over burdensome number of government regulations, and control over free trade agreements, such companies would provide many quality jobs to support products and services manufactured here on U.S. soil. We should be holding elected officials and government regulators accountable to their actions that created today’s unfriendly and adversarial business climate that has forced many companies to move valuable manufacturing jobs overseas, jobs in which paid at entry-level above the $15 per hour mark.

We should be questioning the very ideals and details of free trade and be demanding fair trade where these policies have diluted the American market place with goods that are cheap replicas of lesser quality from foreign countries instead of making policy that would protect our very own income producing centers and industries. Instead of trying to be politically correct in the “global village” how come we did not protect our valuable industry profit centers that needed a well-qualified skilled labor force to assist in the success of the company, in which that company would then offer its goods as a valuable export to the world?

The issue of income inequality is just a cover-up, masking the much bigger problem at large: where are all of the jobs that would allow for an individual to challenge themselves in seeking higher education or mastering a trade or specific niche skill set? Have we not any jobs left that allow for our society to take onto himself or herself the responsibility in seeking or aspiring to higher advancement? Are we a nation that now produces nothing but roll back deals, ATM fees, and Big Macs? Are we setting a trend where mediocrity rules and the true value creation is minimized? The answer to this entire debate is better jobs that offer better compensation equivalent to the skill sets provided by the worker. The answer is to minimize some of the adversarial conditions which discourage entrepreneurs from making financial investments and which prevents them from taking a risk. To do those two things we would be providing something much greater than income equality; we would be providing opportunity equality, which fosters by natural progression far more individual wealth and freedom.

Samuel K. Burlum is an investigative reporter who authors articles related to economic development, innovation, green technology, business strategy and public policy concerns. He is also a career entrepreneur who currently is the CEO/President of Extreme Energy Solutions Inc., a green tech company located in Sparta, New Jersey. Burlum lends his expertise as a consultant to start-up companies, small businesses, and mid-size enterprises, providing advisement in a number of areas including strategic business planning, business development, supply chain management and systems integration. He is also author of the books, The Race to Protect our Most Important Natural Resource and Life in the Green Lane – in Pursuit of the American Dream.

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