Minimum Wage: Where It Is, and Where It Needs To Be

I started my working years at a young age, mowing lawns and scooping snow among other odd jobs that would usually go for 20-40 dollars a job. Once I was old enough (fourteen) to get a “normal” job, I started waiting tables at a local hotel restaurant for $3.50 an hour plus tips. Sometimes I would make just five dollars in tips on a slow night, or on really good nights I would maybe fetch forty to fifty dollars.

Through my high school years I also worked at a fast food establishment as well as a brief stint as a telemarketer. After I graduated high school, I joined the Army as an E-2, Private. Not once did I ever feel I was unfairly compensated. I knew that I was being paid what I was worth, and that if I wanted better pay it was up to me to go out there and do what was necessary to get better pay.

Sitting at work complaining that I didn’t make enough would likely do nothing but result in fewer hours on the schedule or even losing my job. So, I worked hard and did my best with bigger goals in the back of my head. I knew it was temporary and that I would someday be able to build up to better wages. I never looked at those early jobs as careers to support my future family off of, and I realized that making good money means you have to work your ass off, take risks, and do more than others are willing or able to do.

I sit here typing this today knowing that I will have to pick which bills I will need to pay at the end of the month, but I knew what I was signing up for when I decided to go down the entrepreneurial path. I still work hard with the hope that “someday” I will “make it” and make it big. Maybe I will and this will all be worth it, maybe I won’t. All I know is I have no one to blame my failure or success on but myself.

Those who are unwilling to work harder, or longer, or smarter to improve their financial situation have no room to complain about their wages in my opinion. That is the root of my feelings on minimum wage, but they are coming from someone who has lived on that wage and knows what it’s like. I wasn’t born with a silver spoon in my mouth; I was born into a family that expected nothing less than a life of hard work. I was told early on in my childhood that our reward was in heaven; don’t concern yourself with earthly treasures. Well, I wouldn’t mind having a few earthly treasures, but I know they won’t come easy.

Don’t expect maximum pay for minimum effort. Minimum effort receives minimum wage. If you don’t want to further your education or pursue increasingly difficult challenges, then expect minimum wage and the life that comes with it – which likely won’t involve fine beard oils or thick sliced hickory smoked bacon (the ultimate reward on this earth!).

To further expand my position on this issue, it is necessary to delve into the history behind minimum wages. The national minimum wage was first established in 1938 under the Fair Labor Standards Act (FLSA). At the time the nation’s lowest class of laborers (to include women and children) were being worked to the bone over the course of long hours for very little pay. The FLSA changed that, establishing a 40-hour work week as the norm and setting minimum wage at 25 cents per hour. The law never meant to put all workers on equal pay, but rather establish a minimum to ensure employers were not taking advantage of people. President Roosevelt was even quoted as saying, “No reasonable person expects a complete uniformity in wages” in response to criticisms about the pending, highly debated law.  

It seems that over 75 years later, we have forgotten what the purpose of a minimum wage is. Minimum wage is just that – the MINIMUM wage that can be given in exchange for work. Today, it is usually associated with jobs that require little to no skill or training. It is not meant to be a middle class wage; it is merely there to protect the lowest class of workers from being taken advantage of. Propositions that suggest it should provide a middle class wage are unrealistic and would only give way to an extreme increase in inflation, a mass layoff of workers who would be replaced by technology, or businesses moving even more jobs overseas for cheaper labor.

Now, just because the minimum wage shouldn’t provide middle class compensation does not mean it shouldn’t still rise periodically. I propose that it should rise and keep pace with inflation, being adjusted on a yearly basis so as not to cause too much disruption to employers that have to account for the adjustments. Increasing hourly wages .10 cents a year is a lot easier to handle than increasing $5.00/ per hour all at once.

Today, many critics of the current minimum wage say that had minimum wage kept pace with inflation over the years, that we would be at approximately $11.00/per hour today. That is only partially correct. To arrive at those numbers, you have to base it off of the peak of the minimum wage’s buying power, which was in 1968. If you do the math based off of increased buying power, starting in 1938 when the FLSA was enacted, $.25 per hour for labor would cost $4.22 per hour for labor today. If you do the math off of total percentage of inflation increased (1,589.72% from June 1938 to July 2014), then it would be $3.97 per hour of labor. Now, obviously I am not advocating that we move backwards – quite to the contrary, actually.

On July 24th, 2009 the minimum wage increased from $6.55 to $7.25 an hour, which was the last time it was raised. Some states took it upon themselves to have a higher minimum wage.  If the federal minimum wage was increased annually on pace with the yearly averaged inflation rates, the current minimum wage would be increased to $7.88 per hour. That is much easier for business owners to implement right now, both small and big, than the recently proposed increases that range anywhere from$10.00/hour to $15.00/hour depending on what labor union or politician you ask. Of course, we also need to enact legislation that ties an annual rise to the minimum wage according to the percentage of inflation for the previous year for all future raises.

My message to employees is to put yourself in the shoes of many business owners; would your family budget be able to handle a 35-110% increase in your bills? I know my family could not, at least not without bankrupting us. So don’t expect business owners to be able to do that. Some businesses that are well off could possibly absorb a change like that; the much-maligned Hobby Lobby pays their workers $14 an hour, because that is what their labor is worth to that businesses. 

But remember that a national minimum wage increase is across the board and affects all businesses regardless of how they are doing. Many people strongly in favor of raising the minimum wage fail to adequately think through the inevitable unintended consequences, such as inflation, higher prices for consumers (including the poor) and increased unemployment as employers are forces to let workers go.  If you don’t want to live off of minimum wage, then do what is necessary to increase your wages. It is up to YOU to put in the work to make that happen. I don’t suggest that it is easy, but few things worth doing ever are.

My message to employers is to not be cheap bastards that don’t pay a fair wage. Not all employers are this way, but some are. They are the ones ruining it for everyone else. The minimum wage is there, but that doesn’t mean that is what you should be paying your employees necessarily. Just because you are paying above minimum wage, does not mean you are paying appropriately for the position. Pay them what they and their labor are worth. Don’t take advantage of the current unemployment rate that makes most job seekers more desperate and more willing to accept low wages than they normally would. It’s the right thing to do.

If they are doing minimum wage work, than pay them that. But if they are doing more for your business than the minimum, then pay appropriately. Don’t forget employees appreciate being appreciated, and paying them well is the best way to show that. It’s a win-win situation as employee happiness increases productivity, and increased productivity from your employee’s means increased profitability. If you don’t appreciate your employees, then you deserve whatever comes your way because of that.

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