I Support a Minimum Wage


Employees should be paid a wage that is worth the work that they provide. Some businesses fail to realize the importance of this principle. Businesses that don't reward their employees with enough compensation to avoid constant employee turnover are losing a lot of money.

The other morning, my wife and I pulled up at the gym that we are members of. The lights were off, and several cars in the parking lot had their engines running. Turns out the girl who was supposed to open the gym didn't hear her alarm.

A couple of days later, we and my wife's friend went to the gym. Her friend had forgotten her membership card, and in the past where any of us had forgotten our cards, they asked us a few demographic questions and let us in. But this time they refused to let her in until I offered to pay the $10 guest fee. "I could lose my job," they said.

I called the gym today, because I commonly see For Hire posters in the window. "We're always hiring," said the girl on the phone. A new front desk employee would start out making between 6 and 7 dollars per hour.

Gold's Gyms in Utah treat their employees like crap. It is no surprise that they have a lot of turnover and are always hiring. I have seen perhaps 20 different front desk workers in the 2 years that I have been a Gold's Gym member. My membership is coming due, but I am looking for exercise alternatives.

Several problems arise when employers under compensate their employees (and find other annoying ways to cut costs, such as canceling cycling classes on days it thinks too few people might show up). Here are the resulting problems I see in the case of the Gold's Gym that I go to:

  • Lack of employee loyalty to the company
  • Lack of employee courteousness to members
  • Lack of employee knowledge
  • Increased vandalism of the premises
  • Increased theft from the premises
  • Increased breakdown of machines
  • Increased employee turnover
  • Members looking for other gyms to go to

Because of the way Gold's treats its employees--by trying to save money in the short term--Gold's loses money in the long term.

I support a minimum wage. People know what they are worth. They should be paid that much. When they are paid what they are worth, it redounds to the ultimate benefit of the company.

But do we need government to tell them that? No. Do we need government to force them to provide a certain minimum wage? No, we need government economists to join forces with private economists to tell them how stupid they are for under compensating their employees.

Thomas Sowell, in his book, Basic Economics, has this to tell government about a forced minimum wage:

...unemployment tends to be higher under minimum wage laws than in a free market. In country after country, ...those whose employment prospects are reduced most by minimum wage laws are those who are younger, less experienced, or less skilled. Those who are idled in their youth are of course prevented from acquiring the job skills and experiences which could make them more productive--and therefore higher earners--later on.

But he also says this about economics in general:

...as a price set below the free market level tends to cause quality deterioration...so a price set above the free market level tends to cause a rise in average quality...

Gold's Gym would do well to learn this maxim when it comes to employee compensation. All businesses should provide worthwhile employee compensation as an investment in their business. They're dumb not to. But they'd be even dumber to ask government how much that compensation should be.

Comments

  1. Actually I think the federal minimum wage is still $5.15 or so, so if Gold's pays $6 to $7 they're already paying above the minimum wage. Many states have minimum wages above the federal level.

    The minimum wage doesn't really control wages in this country...as for teenagers, I worked for less than the minimum wage as a teenager, babysitting then working as a summer camp riding instructor. You can always find a job...the purpose of the minimum wage is to prevent slavery. If the government doesn't set some basic standards, then what is it for?

    ReplyDelete
  2. But how do you set the basic standards without ruining someone's ability to get a job. Walter Williams says that the jobs he used to get when a boy aren't available anymore because min wage priced the youth out of jobs. Do you make an exception for youth?

    How do you compensate small business owners that can't afford to pay above certain wages when they are first starting out?

    ReplyDelete
  3. How about raising the minimum wage just because we're a democracy and 83 percent of Americans want it raised to $7.15 an hour? No, the Republicans are against it for made-up reasons. No soup for you!

    ReplyDelete
  4. Frank, I answered the question
    "But how do you set the basic standards without ruining someone's ability to get a job"

    with my comment

    "I worked for less than the minimum wage as a teenager, babysitting then working as a summer camp riding instructor"

    There are many jobs, such as seasonal jobs and self-employment, that are exempt from the minimum wage.

    ReplyDelete
  5. As for small businesses: If you can't afford to pay even the pittance of the minimum wage, maybe you 1. should do the work yourself or 2. develop a better business plan.

    I don't see how slavery is a substitute for a workable business plan.

    ReplyDelete

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