How a High Minimum Wage Can Cripple a Business
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When the floor pay scale is too high, there is no incentive to do more than the minimum. I saw this same thing happen in fast food in the 1990s.... new hires would often make as much (and sometimes more) than people with a decade of experience. A Seattle credit card processing firm has made the decision to raise their own minimum wage to $70K. The result? Lawsuits and an exodus of the talent at the top that were making the company successful. When those who work hard get no reward and those that do the least work get the most reward, things are going to suffer.
An interesting look at a company that tried to go much farther than most...
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Sounds like a page out of the communist manifesto. It works great, as long as you can keep milking the producers to feed the non-producers.
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@art_of_shred said:
Sounds like a page out of the communist manifesto. It works great, as long as you can keep milking the producers to feed the non-producers.
In a closed system (where you own the entire potential market) it might work to some degree. They are still paying the producers more, just not as much more as they should. But in any market where you don't own the entire potential market (which is all markets, even whole countries aren't completely closed markets, not even Cuba) you must compensate appropriately for the work that is done or else the people at the top will often seek compensation (which also means appreciation) elsewhere.
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What we saw when I used to work at fast food places was that new hires, the ones worth the least to the company, would often get higher hourly pay than the long term, senior people who did all of the work and trained them (the ones worth the most to the company.) They actively discouraged people from staying long term or becoming good employees. There was not just a lack of incentive to do well or to be loyal, they actively used the pay system to make only bad employees exist. Anyone who had been around for more than two years, typically, would be punished for having stayed around and would easily make more money by simply moving to a new hire position at another fast food place down the street.
This cause churn for the sake of churn with every restaurant in the region having to constantly train new people and having to live without senior, long term people with a good working knowledge of the restaurant and facility. They paid too much for the labour that they did have and got far less out of it than they should have.
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The amount he choose seems drastic. Sure they mentioned in the article the reason for this number, but it definitely seems over the top.
It's notable to try to remove a considerably significant point of contention in most people's lives, but if you remove one it must be replaced with another. Humans by nature live on challenges. For the masses, that challenge seems to be obtaining the dodadds that they think will make them happy.
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@art_of_shred said:
Sounds like a page out of the communist manifesto. It works great, as long as you can keep milking the producers to feed the non-producers.
You obviously did not read the entire article then. It clearly states his inspiration for the idea. It was a religious leader not communist.
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@scottalanmiller said:
This cause churn for the sake of churn with every restaurant in the region having to constantly train new people and having to live without senior, long term people with a good working knowledge of the restaurant and facility. They paid too much for the labour that they did have and got far less out of it than they should have.
Why do you think it's churn for churn sake? I don't have any personal experience in fastfood -- do those workers who are the better employees ask for raises and get denied? or do they more often see the new people automatically getting more money and make a personal decision that the only way to get higher pay is at the time of hire, so instead of asking they quit?
There's also the other side - Fastfood, is it suppose to be a long term job/career except for the rare few who are managers, etc?
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@Dashrender said:
@scottalanmiller said:
This cause churn for the sake of churn with every restaurant in the region having to constantly train new people and having to live without senior, long term people with a good working knowledge of the restaurant and facility. They paid too much for the labour that they did have and got far less out of it than they should have.
Why do you think it's churn for churn sake? I don't have any personal experience in fastfood -- do those workers who are the better employees ask for raises and get denied? or do they more often see the new people automatically getting more money and make a personal decision that the only way to get higher pay is at the time of hire, so instead of asking they quit?
There's also the other side - Fastfood, is it suppose to be a long term job/career except for the rare few who are managers, etc?
I worked FastFood a lot in middle school. There are no raises in FastFood. Every one I worked at had a written policy against giving raises.
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AFAIK, all UK fast food joints only pay the national minimum wage. Mostly zero-hours contracts as well. The good news is that it is now illegal to use tips to "top up" wages to the minimum wage.
Given that the new minimum wage is set to go up dramatically if you're above the age of 25, but stay low if you're below 25, I don't expect to see anyone old working in fast food restaurants for much longer as it will be nearly twice as expensive to employ someone above the age of 25 than someone who is 17.
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@Dashrender said:
Why do you think it's churn for churn sake? I don't have any personal experience in fastfood -- do those workers who are the better employees ask for raises and get denied?
Because the actively encourage people to not stay but to leave and go to competition and the competition encourages them to leave to go to you. Everyone transfers employees around and discourages them sticking around.
Yes of course they are denied raises, that's the whole point. The only way to make more money is to go to another place as a new hire because the new hires make a little more than the senior people who drop to minimum wage over time as the minimum wage increases faster than their "raises" do - so they actually lose value over time whereas new hires basically always get hired over minimum wage to attract them.
It is literally churn purely for the sake of churn.
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@thecreativeone91 said:
I worked FastFood a lot in middle school. There are no raises in FastFood. Every one I worked at had a written policy against giving raises.
I knew some that had raises and some that didn't. But the ones that did did not give them fast enough to outpace the gradual increases in minimum wage so they amount that they earned over minimum wage decreased instead of increased.
But certainly none ever allowed employees to get paid differently based on skill. The concept of even considering the skill of an employee did not exist.
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@Dashrender said:
There's also the other side - Fastfood, is it suppose to be a long term job/career except for the rare few who are managers, etc?
Why would it not be a career? The idea that entire market segments exist only for high schoolers or whatever is not for the real world. No matter what job you imagine: babysitting, farm work, fast food, etc. All of those exist as careers for adults.
Fast food is staffed, at least back in my day, about 50% of more by adults for whom it is a career. They tend to cover the shifts that do the overnight, breakfast and midday. Teens are more likely to work evening and weekend shifts.
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Some "near" fast food that I worked in, like Pizza Hut, was exclusively adults. Not that they wouldn't hire teens, but almost never did.
Some positions are barred from teens as well, mostly depending on state safety laws. In many states teens (under 18) cannot operate fryers, bladed equipment, etc. So a certain number of adult staffers are necessary.
In many fast food restaurants that I worked in, the long term career adults represented effectively the entire functioning portion of the restaurant and the teens were only used to fill in staffing gaps or to be the "extra on call" people when things got busier than normal.
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@scottalanmiller said:
Some positions are barred from teens as well, mostly depending on state safety laws. In many states teens (under 18) cannot operate fryers, bladed equipment, etc. So a certain number of adult staffers are necessary.
Not that restaurants actually follow that. I worked in a Fazoli's for a few years starting when I was 14. I solely worked in the kitchen as a cook.
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Few small businesses follow the law. Even fewer employees hold them accountable to it.
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@JaredBusch said:
@art_of_shred said:
Sounds like a page out of the communist manifesto. It works great, as long as you can keep milking the producers to feed the non-producers.
You obviously did not read the entire article then. It clearly states his inspiration for the idea. It was a religious leader not communist.
That doesn't change what it is.
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Employees are producers, by definition, aren't they? If they're not producing anything, why are they employed?
<confused>
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What is the greatest lie every created? What is the most vicious obscenity ever perpetrated on mankind? Slavery? The Holocaust? Dictatorship?
No. It's the tool with which all that wickedness is built: altruism. Whenever anyone wants others to do their work, they call upon their altruism. Never mind your own needs, they say, think of the needs of... of whoever. The state. The poor. Of the army, of the king, of God! The list goes on and on. How many catastrophes were launched with the words "think of yourself"? It's the "king and country" crowd who light the torch of destruction. It is this great inversion, this ancient lie, which has chained humanity to an endless cycle of guilt and failure. My journey to Rapture was my second exodus.
In 1919, I fled a country that had traded in despotism for insanity. The Marxist revolution simply traded one lie for another. Instead of one man, the tsar, owning the work of all the people, all the people owned the work of all of the people. So, I came to America: where a man could own his own work, where a man could benefit from the brilliance of his own mind, the strength of his own muscles, the might of his own will. I had thought I had left the parasites of Moscow behind me. I had thought I had left the Marxist altruists to their collective farms and their five-year plans. But as the German fools threw themselves on Hitler's sword "for the good of the Reich", the Americans drank deeper and deeper of the Bolshevik poison, spoon-fed to them by Roosevelt and his New Dealists.
And so, I asked myself: in what country was there a place for men like me - men who refused to say "yes" to the parasites and the doubters, men who believed that work was sacred and property rights inviolate. And then one day, the happy answer came to me, my friends: there was no country for people like me! And that was the moment I decided... to build one.
- Andrew Ryan
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@Carnival-Boy said:
Employees are producers, by definition, aren't they? If they're not producing anything, why are they employed?
<confused>
Sometimes because there is a law requiring it. Many times because of welfare. That employees must produce seems logical but millions of people in the US alone are employed for other reasons.
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@scottalanmiller said:
Sometimes because there is a law requiring it. Many times because of welfare. That employees must produce seems logical but millions of people in the US alone are employed for other reasons.
This is one reason of the many:
