Real raises make a difference

A steadily improving workforce has more permanent benefits than a minimum wage increase

Ah yes, the minimum wage. It’s back again and again and again.

If we can put politics aside for a few minutes, it would be nice to take an objective look at the economic forces at play. There are several macro trends we can’t ignore.

Seattle raised their minimum wage to $15 per hour some time ago. They were surprised at some of the results. Some people, who were looking forward to their raises, lost their jobs or got their hours cut.

Perhaps the most surprising result was that some people asked for their hours to be cut because working full-time at the higher wage made them ineligible for some of their low-income benefits.

The late Earl Nightingale was a very popular motivational speaker and author. I’ve never found a better formula for determining income level than the one of which he spoke. “Our incomes are determined by the demand for what we do, our ability to do it, and the difficulty of replacing us.”

That simple formula explains why a heart surgeon makes so much more than say a fast-food worker. It takes long years of study and practice to become a competent surgeon. Many low-skilled jobs can be learned working a shift or two.

We can legislate to our hearts’ content, but there are certain natural laws we just can’t change. What is particularly cruel is that raising the minimum wage doesn’t really give anyone a lasting raise.

The prices in the grocery stores, department stores and even in the fast-food restaurants are forced to rise to cover these increased costs.

It’s no secret many of our better-paying jobs have gone overseas. But outsourcing is not the only thing making good jobs disappear. Automation is another big factor. For instance, the assembly of automobiles has become highly automated. Automation can be expensive to buy, so most efforts have been directed at replacing high-cost workers.

If we can automate automobile assembly, does anyone think automating the production of hamburgers would be a problem?

As labor costs increase, the initial price of automation becomes more and more justifiable given the attractive long-range savings. Our local fast-food restaurants may never become vending machines, but they won’t need as many employees as they do today.

Like it or not, the higher we drive wages, the more tempting it becomes to automate some jobs or move them offshore.

If we really want to help our low-wage people, we should enable them to earn real raises. Suppose employers were encouraged to provide development programs for their people. Yes, some companies do this already, but many don’t. Smaller companies with no corporate ladder to climb feel no need and probably can’t afford their own training departments anyway.

Additionally, many low-wage employees lack the basic skills and knowledge they should have learned in school. If basic math is a challenge, it’s hard to get promoted to a supervisory or management position in retail, fast food and other businesses.

Incidentally, no one is immune. There are plenty of well-qualified professionals, some with advanced degrees, that are out of work. Outsourcing and office automation have made huge cuts.

A number of retraining programs have been developed for our unemployed. Perhaps they should be expanded for our low-wage people. They could include some on-the-job training as well as classes at local schools.

The benefits to employers would be workforces steadily improving in competence and morale. Customers would see the difference. The smart employers would develop their people for even better jobs than they can provide.

Yes, someone else will get the benefit, but the original employer becomes a preferred place to work. Providing opportunity enables us to attract the best people.

Admittedly, this can’t happen overnight, but it’s the only way we can provide lasting raises without simultaneously driving up prices. Today, we compete with machines, technology and people all over the world for the jobs we have. We can’t increase their costs without also increasing the value they produce.

Businesses have to keep improving performance just to stay in the game. A large component of that is a steadily improving workforce.

Ronald J. Bourque, a consultant and speaker from Windham, has had engagements throughout the United States, Europe and Asia. He can be reached at 603-898-1871 or RonBourque3@gmail.com.