At this point everyone is familiar with the union supported “Fight for 15” Campaigns focused principally on fast food restaurants. The related union organizing efforts have shown little fruit, but the related effort to obtain State legislation has been more successful. Last week, California and New York acted to pass Minimum Wage Laws requiring $15 per hours. Read now about the landmark California law. (Detailed Analysis).
According to an April 2 Wall Street Journal Article, other states may follow:
Illinois, Massachusetts, Michigan, New Jersey, Oregon, Rhode Island and Washington are among the states with active “Fight for $15” efforts, and even economic experts who oppose the increased rate see it gaining momentum.
Today, Politico’s wonderful “Morning Shift” reported that Boston Mayor Marty Walsh and the Laborers’ Union want Massachusetts to follow California’s lead.
A few observations ….
- A forced higher Minimum wage seems preferable to using taxes to redistribute income because the wasteful middleman of government is cut out.
- I understand the principle behind the $15 Minimum Wage. It’s a form of social safety net. No one can argue with the desirability of everyone earning at least that much, except that not every job is worth $15 an hour.
- One of the reason that some jobs pay so little is that the work requires limited skills and talents and may require little intellectual effort, hard work or ability to handle stress. Admittedly many low wage jobs are tough, but for whatever the reason, the market does not more highly value them.
- Should we be focusing more on jobs that we all agree deserve more compensation such as teachers, nurses and law enforcement officers? Will the $15 minimum wage drive up pay rates or just narrow the gap?
- My biggest concern is that mandating $15 for jobs that the market does not value may distract from the need to get people into jobs that pay more and give more dignity because they require more credentials. Do we want to make it desirable to bus tables at a fast food restaurant as a career?
- The UW Seattle Minimum Wage Study, which is supportive of Seattle’s efforts, has pointed out that $15 may be appropriate in a high cost city such as Seattle because it has a lot of higher paying jobs, but what about rural areas or Midwestern cities who have been savaged by the loss of heavy industry? In other words, $15 may not fit every area. The multiyear UW Study will generate useful analysis of the results of the Seattle Minimum Wage effort.
- Some economists believe that jobs will be lost as employers hire less employees. Restaurant executives have expressed a number of concerns. The Washington Post argues that it will be good to lose some of those jobs.
- Corporations may adjust, but what about small businesses? I’m already troubled by the consolidation in American industry.
The $15 Minimum Wage may be worth the negative consequences, but there will be consequences and some may be negative. We’ll have several test states.
WARNING: The effects of a higher state Minimum Wage may be broader than you realize. To quote from our F & P Alert:
Employers in California should act quickly and seek legal counsel to make sure that all elements of their compensation agreements will be adjusted to comport with the applicable minimum wage levels. This includes meal and lodging deductions, commissioned salesperson exemption pay levels and related minimum draws, minimum pay for employees using their hand tools, minimum salary requirements, and a whole host of other considerations.
“Replace them with Robots?”
The effort to raise minimum wage has accelerated consideration of automating jobs in the service sector, which may be a good thing, but will have consequences. Another article.
The CEO of the Carl’s Jr. has become a thought leader in driving an accelerated consideration of automating many aspects of food service. Article. Remember the Automats of the 30s and 40s? Another article. Article about robots and automation in Chinese restaurants.
One senses that we begin to see more serious efforts to automate many jobs, which may be good. How will automation and the growth of more educated workers in India, China and even Africa affect U.S. businesses and which jobs will be most desirable in the future?
Better put these questions on your long and mid-term strategic planning list.
