Energion Direct

Tag: minimum wage

  • Are Business Owners Naturally Greedy?

    by Elgin Hushbeck, Jr.

     
    GreedIn a recent segment on Global Christian Perspectives discussing my last blog post on the minimum wage, the claim was made about opposition to the minimum wage, “That’s greed. Everyone who has argued against a minimum wage, or even a living wage, has wanted to keep the bottom line for themselves.”  (@ the 50:00 min. mark).
    While an argument commonly heard from supporters of increasing the minimum wage, it is nevertheless false.  There are many reasons to oppose the minimum wage. Many supporters of an increase seem to see this as simply an issue between struggling employees trying desperately to make ends meet, and greedy employers who seek to exploit their employees so as to rake in even more riches.  In this view supporters put themselves in the role of riding in on a white horse to force the employer to give up a small part of their wealth and return it to those who really earned it.
    While such a depiction may work for a movie, or more likely a cartoon, it hardly represents reality.  Rather than a struggle between employer and employee, wages are in reality a part of a huge network of interactions. Sure, there is the employee to their employer, but the employer has similar interactions with customer and suppliers.  Then there is the interactions with government which unlike the others is one sided; government demands under threat of force. [ene_ptp] To insist by fiat demand that employers pay more to workers is problematic because it artificially puts constraints on one part a system governed by free interactions.  Can employers just demand that suppliers cut their costs to make up for the higher wages they must now pay their employees? Hardly, as their suppliers are under the same dictate to increase wages.  Can they just raise their prices?  Probably not, at least not all the way.  After all, if these employers really were as greedy as they are so often portrayed then certainly they would have already done so if they could.  The only other place the money can come from is the employers themselves, or from lower labor cost by cutting employees.
    This is where the other part of the myth falls apart. Over half of all employees work for small businesses, and small businesses account for 65% of new jobs, yet most small businesses fail with 5 years. Owning a business is not a matter of exploiting your employees, it is hard work and very difficult to do. Many businesses are struggling, and it is not uncommon for a business owner to have to forego paying themselves, because there is not enough money left after paying their employees, and bills.  This is why following the recent increases in the minimum wage in both Seattle and San Francisco, many businesses simply closed while others cut back their staff resulting in a lot of people, not getting the increase in their wage that supporters promised, but seeing their wage go to zero.  So there are reasons to oppose the minimum wage beyond just greed.
    “Business owner” is not just an abstract label; it represents real people, people who as a general rule work very hard and who are concerned about their employees. Yet not only is the charge that just greed is involved false, it is slanderous and thus wrong on both moral and intellectual grounds.  It is wrong on intellectual grounds because instead of dealing with the evidence, it short circuits the thinking process.  Those making the charge can, and often do, simply ignore any evidence present that runs counter to their beliefs as merely a ruse to mask greed. Thus such slanderous attacks become a form of self-justification, insulating the maker from any evidence that runs counter to their beliefs.
    This can be seen in the fact that rarely do I see supporters actually addressing the arguments I raise concerning the damage done to those who lose their jobs, those who lose their businesses, and those who cannot get employed because they do not yet have the skills to be employed at the minimum wage level.  No, it is far easier to attack mythical greedy employers rather deal with actual damage done.
    In terms of moral grounds, I believe it is immoral to falsely demonize large groups of people.  As I have written in the past, rather we must treat people as individuals, and I believe should assume the best until proven otherwise, and yes, I believe this even includes business owners.
    Yet many of the arguments put forth to support a minimum wage hike are grounded implicitly and, at times as in the quote above, explicitly demonizing those who disagree. If we were to do this with any nationality, race, or religious group, etc., such demonization would be justly condemned. So why is demonizing business owners, or those who oppose the minimum wage because of the damage that is does any different?  Is it not even possible that they are good people who just have a different point of view?
    Nor is it sufficient to say something to the effect of “Well they are not all greedy,” and then go back to arguments based on the premise that opposition is still based on greed.
    I believe that if one person agrees to hire another, whatever the price that is a good thing.  Being employed is better than not being employed, as numerous studies on happiness and self-worth have demonstrated. I also hope that the employees will develop a track record as a good employee and this will allow them to quickly move up the wage scale. If the only job one can find is a minimum wage job, then it is much better to look to the person (do they have skills and work history to get a better paying job), or the job market (why are there not better paying jobs out there).  This, I believe would be far more beneficial than making it even more difficult for employers to hire people.
    For me the minimum wage is a barrier to some from earning a starting wage.  We have far too many people who have never been able to enter into the job market so as to become productive members of society and who are thus are trapped in poverty and dependence. That is not an argument based on greed but on wanting the best for all people.
    [slideshow_deploy id=’2411′]

    Click on any picture for more information or to order

     
     

  • Minimum Wage

    by Elgin Hushbeck, Jr.

     
    living wageThere is a growing movement on the left to increase the minimum wage, or as it been relabeled, a living or in even some cases a just wage. As the relabeling makes clear, this is often seen, not just as an economic issue, but as a moral issues in which greedy business owners are pitted against the oppressed and exploited workers (On the labels, see my previous post).
    As Christians we are after all exhorted to “stop expressing love merely by our words and manner of speech; we must love also in action and in truth” (1 John 3:18 ISV). So our duty would seem clear, to take action and stand with the oppressed.
    But John’s exhortation is not merely to love through our actions, but also in truth, and herein is the rub. Simply relabeling something does not change its nature.  Calling something a just wage, does not make it just.  The wages for any particular job are part of a complex web of economic relationships.  Employers have work that needs to be done and are willing to hire employees to do that work.  Employers are not completely free to set wages at whatever they want.  If they pay too low, they will not find people willing to do the work, if they pay too much, workers will be easy to find, but customers are likely to find the prices charged too high. Thus like so many things in the economy, wages are a balancing act between completing forces.[ene_ptp] Often the charge is made that employers are hoarding huge piles of money while they exploit workers.  This is belied by the simple fact that most business fail.  It is also belied by the fact that workers must be paid first, and many a business owner has had the “privilege” of going without because after paying wages and bills, there was nothing left for them.
    Thus it should not be a surprise to anyone that when cities like Seattle raised the minimum wage, many small businesses closed.  When San Francisco raised its minimum wage likewise many business closed, including a historic bookstore that was beloved by the community.
    Why? It is simple, government can demand that employers pay more, but aside from Obamacare, they cannot demand that customers pay increased costs.  In Seattle the average restaurant spent 36% on labor, and made about 4% in profit, the difference going to food and other costs.  Without a price increase or labor cuts the increase in the minimum wage would drive labor cost up to 42% – 47%.
    It is just math; something has to give.  Increase prices too much and customers stop coming.  Let employees go and service declines and again customers stop coming.  Even before the increase owning a restaurant was not an easy business to be in, so it should not be a surprise that many owners just gave up and closed.
    Nor is this restricted to just restaurants.  Twenty Two top Retailers have profits of $34 billion dollars, which sounds like a lot. But they also employ 5.8 million people for an average profit per employee of about $6000.  Not a lot but a good return on investment that allows these companies to remain in business. Not all of these are minimum wage positions, but increasing the minimum wage tends to shift all wages up so increasing the minimum wage to just $12/hour and this changes the profit into a loss of over $1000 per employee. Increasing this to proposed $15/hour and instead of making $34 billion, these retailers would be losing $34 billion.
    To stay in business, they would have to increase their prices, though given customers resistance to price increases that can be difficult. The only other option is to reduce the workforce, which raises the question, what good is a $15 minimum wage if it costs you your job?
    In recent years, an additional result of increasing the minimum wage is to accelerate the push to automation. Fast food restaurants are already experimenting with automation both at the counter and back in the kitchen. The higher the minimum wage the more cost effective such automated machines will become.
    Thus increasing the minimum wage will have some short term benefit for a few workers, those lucky enough to still be employed when the wage kicks in, but the benefit will be offset by some increase in prices, and this benefit will decrease over time as the economy works itself out to the new higher price level.  Others will see their wage drop to $0/hour as they lose their job.
    The worst off however will be those trying to enter the job market for the first time.  This is the real insidious damage done by the whole concept of a “living wage.”  Minimum wage jobs are not supposed to be jobs one can live on. These are entry level positions, positions many if not most people start at, only to move on to better paying positions once they develop job skills and experience.  According to government figures in 2014 of the 131.5 million people in the workforce, only about 1% or 1.3 million, earned the federal minimum wage, which demonstrates that virtually all do move on, that is if they can get into the workplace to begin with.
    The truly tragic part of such increases, is that it makes these entry level positions even harder to get.  Without the entry level positions it can be very difficult for people to learn the job skills needed to get and hold a job. These are skill most of us take for granted, such as showing up on time, acting professional,  working hard, etc., but for those who have hired first time employees, sadly for many these are skills that do need to be learned. With chronic unemployment at levels not seen since the Great Depression, now is hardly the time to be further restricting the job market making it even harder for people to get their first job and learn the skills that will allow them to succeed in life.
    So while at first blush raising the minimum wage may seem like a compassionate thing to do, it is hardly loving in truth as it causes far more harm than good.   Perhaps that is why the new bill passed in California only raises the minimum wage $0.50 per year until the end of Jerry Brown’s term, but $1.00 per year after that until the new minimum is reached, leaving the next Governor to deal with the consequences.
    [slideshow_deploy id=’2411′]

    Click on any picture for more information or to order.

Energion Direct
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.