The World's Unsexiest Business
adding a little sizzle to the convenience store industry
If you do business in the state of California and have a sizable minimum wage workforce, I’m sure you’re well aware that as of July 1, the state minimum wage increased to $12 for employers with 26 or more employees. But a rather large looming question is it ultimately going to benefit the minimum wage earners? I’m inclined to say maybe with a strong bias towards no. Given my lack of a truly enlightened academic perspective on the issue, I'll leave the nitty-gritty minutiae to a legislators versus labor economists forum.
Speaking to my ‘no’ bias, from a pragmatic entrepreneurial point of view, I will add that in all well purposed idealism, the measure is seeking to narrow the gap between rich and poor by a bottom up approach. I’d also like to make it entirely clear that I personally support any restoration of a middle class.
But that doesn't mean the intended recipients of the bump in pay will see the increase in its entirety. After all, with declining margins in brick and mortar businesses (where a large chunk of minimum wage labor exists), what's the incentive for the business owner to not cut overtime followed by a reduction of wage hours? And then when wage increase become so financially punitive, a last ditch effort comes into play for which eventually the business succumbs to labor force downsizing--ultimately realizing to the perilous fate of a closure. The last step that’s alarming yet largely ignored is a consideration of how purchasing power could plummet as the measure works its way through the greater economy.
It's a tricky and contentious issue. More 'in your face' and definitely less 'thought provoking'. And sometimes it seems like all we want to do is cautiously prod it with the jagged stick of statistics. But with 42.7 million Americans (nearly 1 in every 12) receiving food stamps, it's not an issue we can merely turn a blind eye to.
Alternatively for some unwarranted harsh opinions, you can always turn to Twitter:
Pointing the finger at any one particular political party doesn't solve the problem.
The genesis of the issue? Too many different origin points.
So instead of focusing on the crisscrossing dimensions of a pro-active solution perhaps it can be tackled re-actively. But it's reform driven by economic and political policy versus social and psychology based ones. The latter is open to so much more interpretation and therefore can be more easily downplayed and manipulated with data mined statistics.
A good starting place is to consider the kind of assertions that are being made of low income consumers and EBT (Electronic Benefit Transfer) users:
Let's face it, there are no shortage of headwinds that this growing segment of our population has to face: scarcity of time, money, mental health deterioration, resources, and perhaps even a lack of their wealthier counterpart's compassion. While it may seem that the rich might not pay their fair share of taxes, the poorer have found ways to relatively evade theirs -- sometimes with the cooperation of their 'richer' employers.
In a recent round-table discussion with some local business owners, it was rather unsurprisingly revealed that employees were 'wage' tender gaming -- seeking to cap their 'taxable' check wages while requesting that any additional wages due to be paid 'under the table'. It's a practice that benefits both parties highlighting the huge disconnect between real world economics and government labor law derived ones. To be honest, in assessing its value (or even detraction), I'm not sure where the economist begins and the legislator ends. Or vice versa?
Let's throw a real example out there.
Suppose you're a hardworking couple that works respective full-time minimum wage jobs and you've also got a toddler to raise. But that toddler needs special medical attention that has resulted in some significant out of pocket spending because your combined income is just too high. A further examination of this situation conducted by The Urban Institute can be found here. One very key takeaway can be found below: