I worked in a warehouse for 8 years. I started off at minimum wage when it was around $5 an hour. I worked my butt off getting hired on to the company, I received yearly cost of living raises (that were often ate up by increases on benefits) and eventually I gained a meaningful promotion that gave me .50 cents more on the dollar then everyone else. I was happily making $11.50 an hour, double the minimum wage. Then my state raised the minimum wage to $8.10 an hour. Shortly after inflation caught up to this increase. The price on groceries, gas, cigarettes, just about everything went up, but guess what did not? My paycheck. The increase in minimum wage made my paycheck and anyone else like me, worth less money.
I about lost it once in our yearly company wide conference call with the CEO. He had the nerve to tell us all that they would be monitoring the the economy for inflation so they could adjust the prices of our products accordingly. So here I am, the company I work for is increasing the price of it’s product therefore making more money, they are not paying me more, the people making minimum wage are working the same jobs they’ve always worked, yet they got a raise. The price on things have gone up and it feels like the only person not making more money to pay for the increase on living is myself. So I wonder where the money is going? If the company is increasing it’s price to adjust for inflation, but my wages–a major cost to the company–isn’t being adjusted for inflation, then where is this extra money going to go? I’m guessing it’s going comfortably into the pocket of the CEO, the board members, and the shareholders. My point is, raising the minimum wage sucks and it often benefits the very people it’s intended to hurt. It doesn’t equalize anything, the burden is put on the people making just over minimum wage, not on the people with million dollar salaries.
We–as a nation–cannot go about fighting income inequality by forcing companies to pay wages we deem “fair.” Economically, it sounds good. $15 an hour sounds progressive right? “Let’s stick it to the rich guy!” The truth is, it’s terrible for business; which is driven by competition and profits. Raising the minimum wage is not going to help the economy. History shows raising the minimum wage is a short term, band-aid for income inequality. The end result is always the same: less jobs or more inflation. Small businesses often fail trying to pay these wages. They cannot keep up with the increased costs of materials. The ones that succeed raise their prices, contributing to the inflation that plagues the value of the dollar. Large companies and corporations either outsource jobs to avoid paying the increase on wages or they raise the cost of their products to cover the difference.
I often hear my friends label themselves “socially-progressive fiscally-conservative.” Although this is often an oxymoron (socially progressive programs like welfare or the Affordable Care Act are often debated as fiscally irresponsible) there is a reason why my friends fancy themselves with this label. Colleges around the nation have professors that swear by progressivism, with the exceptions of Business and Economic professors who often profess and swear by theories of fiscal conservatism. Being fiscally conservative just means you don’t spend more then you have and you don’t use credit unless you are able to pay it back. Business and economic professors are fiscally conservative because they understand how the economy works. Competition is not the enemy. Profit is not the enemy. Growth is built by profit. There can be no progress without competition and profit.
What we need to do is convince companies to increase wages on their own, especially large corporations. We need to pass heavy incentives, like a sort of “Patriot Pass Act” which would give businesses tax breaks, decreased or exceptions on regulations, and/or grants for Research and Development for meeting certain “patriotic” standards. In order to get these incentives, companies would have to meet certain financial markers that take their profits or executive pay and connect them to their lowest paid American employees through a formula. Companies that meet these standards would be published and rewarded recognition by the government. American manufactures would also be included. A major campaign to inform the public of this program would be needed as well. We would need to educate the citizens of how important it is for them to look for and buy from businesses that conform to this program.
This way, when profits rise or executives take a pay raise, the employees at the bottom of the chain also get a raise. Giving businesses tax breaks, decreased or exceptions on regulations, and/or grants for Research and Development while also publishing names, giving recognition and rewards to companies that pay American employees well or manufacture in America, would go far in fighting income inequality. If we reward companies with more business because they were deemed “patriotic,” their competitors would quickly join in the party. Remember nobody likes losing and growth is driven by competition. If we could create an environment where the companies that paid the best gained market share because of it, then we would be on to something.
I’ll give you an example, I am not much of a fan of the taste of Papa Johns Pizza. For that matter, I’m not much of a fan of national franchise pizza in general. However, if I seen a commercial that had Papa Johns bragging about their “new recognition” by the government–deeming them a “patriot” company–because its CEO and board of executives took a pay cut to pay it’s employees more, I would likely buy Papa Johns over any other pizza in town. Why? Because I will have hopefully read or seen the significance of the program and I will understand my purchasing their product over their competitor is the best way I can fight income inequality. This would give them more business and would actually force the other franchises into participating in the program. It would create an environment where getting the label “patriot” is vital to keep the business going or else risk losing more market share to the companies who are participating in the program.
Feel free to share this with your friends.. The more people understand the fight against low wages the better! If you’d like to know more about me, you can find that here.