Friday, December 22, 2006

The Red Herring

You either believe capitalism works or you don't. If you do, you are a Republican. If you don't, you are a Democrat. Period. I have railed about this belief for a over a year now on this and other don't solve the problems of the world with greater government involvement. Take, for instance, the proposed minimum wage increase.

The issue of a minimum wage increase is a very personal one for me. I own a small business where 75% of employees make minimum wage [before you start thinking I don't pay my people well, understand after you factor in those employee's additional compensation they make over $15 an hour]. All raising the minimum wage does is drive the cost of goods up. There's a negative economic word for that and it's called "inflation." In my case, I have worked for about six years with no raise and for less than I was working before I started my small business. The carrot-at-the-end-of-the-proverbial-stick for me was that day I was to be debt free and owe no money to bank. Well that day was suppose to be 12 months from now. And now I am bitter and mad that politicians are putting their hands in my pocket and taking my money. I feel like I just working 6 days a week for 50+ hours for nothing. That money is mine. I endured the risk that goes with starting a small business and I am sorry but I believe the reward should also be mine to reap.

Democrats like to throw around statistics like: if you factor inflation, the current minimum wage is lower than it was in the 1930s or inflation has lowered the buying power of minimum wage or that the 9 years since the last minimum wage increase is the longest such span since the minimum wage was created. To those points, I say so what? Does any of that help those workers making minimum wage? Hell I'll go one further, does giving a two dollar raise help those making minimum wage?

I contend that if I wasn't competitive with my wages, I would have no employees. That whole "capitalism" thing again. My market dictates I pay a certain wage to get people to work for me. That wage [aside from the tipped employees] is no less than $8.00 per hour. If someone is making $5.15 an hour for 40 hours a week, then that someone is a fool. You can't drive down the street without seeing a fast food place hiring a fry cook for less than $7.50 an hour. It isn't the government's job to give the American worker a raise, it's the American worker's responsibility to get their own raise. Don't believe that, then you my friend are a socialist. How does it feel comrade?

Back to my personal situation, I have not taken a raise in an attempt to have a more money left to pay my staff more. I believe low turnover leads to higher sales. My belief is supported by the fact that my business will have its' third straight year of record sales. I have a staff full of employees that have worked for me over a year and most cases they have worked for since I opened the business four years ago. In my small business' industry what I just described to you would be a statistical anomaly. I also pay my assistant managers and non-tipped staff about $2 more an hour than they would make doing the same job elsewhere.

I don't hold a gun to my employee's heads and they can leave whenever they wish. An unfortunately side effect to starting a new business is that money is lean. I don't have the resources to pay my people what I want to pay them. I have had too many great employees leave for better paying jobs, but I can't afford to keep them. Someday I will, but with a minimum wage increase that someday will be further into the future. Wish to ask me about those record sales I spoke of? Believe me, the government has found away to take a large chunk of it and the rising costs of doing business each year has taken the rest. Not exactly a good feeling knowing you must achieve record sales just to spin your wheels and remain in the same place.

It isn't just the wage increase that will hurt, but the payroll taxes I must pay on those wages will also rise accordingly. You starting to see the political angles now? Don't forget that only 6% of the workforce makes minimum wage and of that six percent over 50% of them are teenagers living at home. Makes you question why minimum wage is even an issue?

Next week I will finally offer my solution to the question of minimum wage. I have mentioned I would propose an answer previously, but the issue is so raw for me that staying calm and focused is sometimes an issue. Hench the delay. However, now is the time to make my beliefs known. Will change anything? No, but at least when raising the minimum wage occurs and the economy stalls and those making minimum wage are still at the same station in life that they were before the increase I can say I told you so.

And really, isn't that what having a blog is all about anyway?

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