Why paying minimum wage is penny wise and pound foolish

By Beacon Staff

First of all, I want to make it perfectly clear that this is not a political column. You can hassle Editor Kellyn about that stuff. He *enjoys* that sort of thing. Me, I’m the pragmatic type. Bring me facts, not sound bites. With that, let’s start the New Year properly. I havent annoyed anyone all year. Yes, I realize it’s only Jan 2. I’m behind schedule!

Recently, I got an “urgent email” warning me about the recent minimum wage hike. Why it was 5 months late (the change took place in late July 2007), I’m really not sure. But I digress.

It started off like this:
The Fair Labor Standards Act increased the federal minimum wage in three steps:
* July 24, 2007, $5.85 per hour
* July 24, 2008, $6.55 per hour
* July 24, 2009, $7.25 per hour

If you have employees in your store making minimum wage, you MUST increase their pay rate immediately! If you have already paid them for time worked after July 24 you must calculate the difference between their old rate and the new rate and give them a paycheck to make up the difference!

Quite frankly, you should only have to make this “last minute” adjustment if you are an idiot. Yep, I said it. An idiot, fool, bozo, whatever. Choose your favorite. Ok, I’ll even settle for “not making choices that result in the best return on investment from your payroll dollars”.

Here’s why:
* If you want someone who can’t get a better job anywhere else, pay minimum wage.
* If you want someone who will spend your management’s time absorbing your training (you ARE training your staff regularly, aren’t you?), and then run off without giving notice to take a job that pays 25 cents more per hour, pay minimum wage.
* If you want someone who has no reason to treat your customers well, since there are lots of other minimum wage jobs out there, pay minimum wage.
* If you wonder why they are disloyal, show up late, leave without giving notice, or don’t seem to care, pay minimum wage.

By now, someone is probably thinking “you sappy weasel, money isnt going to change those behaviors”. And you know what, you are absolutely correct.

Well, maybe not entirely correct – I’m not sappy. Well, not always.

Will paying those people a better wage change that behavior? I seriously doubt it.

So why pay more?
* Paying more allows you to be far more selective about who you hire. Paying minimum wage is a great way to make sure that you are the last option someone takes when looking for a job, and the first to leave when something better comes along.
* Paying more allows you to expect more and better performance from the people you DO select.
* Paying more allows you get a better ROI from your people because they stay longer, learn your business and don’t waste your training dollars (and time!) by leaving at the drop of a hat.

All those things mean better service to your clients, and less employer hassles for you. You know what that means.

Paying better wages – and being more demanding of quality products and services – is one way of making sure your staff, product and service is better than the other guy’s. Which just happens to be a great way to keep your clients happy. Whodathunkit?

Wanna be sneaky?

Let your competitor sit around and wait for Washington and Helena to mandate better wages. In the meantime, you can quietly pay to get better people who will produce better products and deliver better services, while Bozo the Minimum Wage Employer with his big floppy shoes and big red nose will pay minimum and complain about employee dependability, turnover, quality and such.

Of course, when you see that competitor around town, feel free to complain to them about the minimum wage increase. You can laugh about it later.

Think I’m wrong? Feel free to defend your reasons publicly via the comments link below, or if less than ladylike language is necessary to elaborate your feelings, use the email link below.

Got a business, operations or marketing question you’d like Mark to write about or just want more info about him? See Mark’s bio or contact him at [email protected].