Don’t Be Fooled: Increases in the Minimum Wage Cause Job Loss


Job Loss Is Common When There Are Increases in the Minimum Wage

Personally I’m amazed when I hear people profess an increase in the minimum wage has no impact on jobs. Not long ago I heard a successful businessman, Nick Hanauer, on a talk show come out in support of Seattle’s $15.00 minimum wage and say he sees it having no impact on jobs. This makes no sense to me; how can a business absorb a $5.68 per hour increase in wages without a corresponding increase in prices or productivity? The logic is missing!

Business Owners and Managers Must Plan for Survival

Business owners and managers are not stupid! They will react when an increase in the minimum wage is announced. They don’t wait until the day the increase goes into effect to respond; they start planning immediately. They look at the jobs performed by the minimum wage employees and employees currently earning an amount equal to or less than the new minimum.

What Jobs Can Be Eliminated?

The owners and managers carefully consider which jobs or tasks can be eliminated, rolled into other positions, automated or changed in some other way which will not hurt the business while increasing productivity and output. As those changes are implemented new jobs are not created and old jobs are inevitably lost!

Job Loss Occurs Over Time

Again, it’s not the day the new minimum takes effect; it’s the day the business is ready to implement the changes. Some job loss will occur prior to the new wage effective date and some may occur after the new wage takes effect; it all depends upon when all the pieces are in place.

Australia’s $17.00 Per Hour Minimum Wage

Going back to the Hanauer interview he went on to say the minimum wage in Australia is $17.00 – actually $16.88 but who’s counting – and points to this as proof the $15.00 minimum wage can work. What he failed to or chose not to say is Australia has numerous exceptions to their minimum wage which exempt certain classes and types of employees. $17.00 sounds great, but even Australia finds it difficult to justify in certain cases.

Minimum Wage Jobs Are Entry Level Positions

Entry level jobs, you know those where employees are learning the basics of how to work, are not high paying jobs. The individuals filling entry level jobs have few skills and little or no experience. The goal is to provide the worker an opportunity to learn the basic employer expectations and prepare for more skills and responsibilities.

The employer expects the employee will learn:

  • Basic job etiquette;
  • To show up on time;
  • To be dressed appropriately and ready to work;
  • To be at work for all scheduled shifts; and
  • To call in if the employee will be late or unable to fulfill the shift.

That the employee will be:

  • Substance free; and
  • Mentally and physically prepared to do their assigned tasks.

Employers are willing to make this exchange, the minimum wage for minimum skills, if the wage is reasonable. However, if the employer does not considered the wage reasonable the employer will look for alternative and less expensive methods for completing the tasks.

Examples of Minimum Jobs Replaced by Technology

Automated Attendants – Have you ever called a business only to have the phone answered by an automated attendant, answering machine or voice mail? There was a time when there was no automated system instead a person sat at a desk and answered the phones. This individual would then transfer the call to the correct person. Today it’s either an automated process or a role filled as a secondary responsibility by other employees. There are several reasons businesses made this change and one of course is the cost of the person answering the phone. The employee cost savings offset the cost of the technology and after a payback period; the company is saving money.

Serve Yourself Drink Dispensers – When you go to McDonalds®, Burger King® and most other Fast Food Restaurants the customer, who orders a drink, is given a paper or plastic cup and they serve themselves. In the past drinks were poured behind the counter and given to the customer. With the self-serve option customers may have one, two or even more refills or share drinks; however, the decision was made it is cheaper to have the customer self-serve and drink more; than to have counter workers serve the drinks.

Automated Drink Dispensers – If you go to a Fast Food drive through many of the drinks are poured automatically. The employee or maybe even the transaction itself starts the process. The right sized cup is automatically dropped into the machine, the drink is dispensed all with very little human interaction. Was this a high paying employee replaced? Obviously not, it was a minimum wage position which was eliminated by automation.

ATMs (Automated Teller Machines) – Every bank, every mall, every rest stop and even most DMV offices have ATMs. The simple answer is it’s automation, the truth is ATMs are cheaper and more convenient than tellers. There was a time when you either paid cash, which you received from the bank, or wrote a check. There were no credit or debit cards and the bank was, in many cases, a community meeting place. If you wanted cash, you went to the bank.

As soon as management recognizes there is a lower cost option which doesn’t:

  • Take breaks;
  • Get overtime pay;
  • Take sick days or vacations; and
  • Receive a paycheck
  • Always shows up on time
  • Is always sober; and
  • Misses very few days or hours of work (there can be breakdowns).
  • The decision becomes easy.

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    My name is Tom Staskiewicz and my goal is to help everyone do a little better, get a little further and reach the success they are destined to achieve!

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