Friday, March 17, 2006

The minimum wage isn't the problem.

How we use and apply the minimum wage is. The minimum wage was designed to be a starting place in the work force. It was designed to keep the cost of training and education of a new worker low while they are learning to be productive in a new field or career. The intent was that someone with no training or previous experience would be given an opportunity to enter a career field at a reduced rate to encourage new employment and training by a company. The employee once achieving a level of function profitable by the company, their wage would compensate to that level.
Where we went wrong. Automation has reduced many skilled jobs to simple daycare. In many factory line settings a person is simply there to hit a stop button if something should go wrong. These positions often require no real training and little physical energy. This person may simply sit on a stool all day next to a line and watch product go by. Companies fail to recognize profit for this activity so compensation is low. Instead, employers should see this as profit insurance because it keeps things going and minimizes down time when things go wrong.
Job loyalty by both the employee and the employer is part of the problem. Less then forty years ago company loyalty was a standard. People still dreamed of finding a good company with a future and working for them until they retired with a good pension and plenty of company loyalty on both sides. Those days are now far behind. The average employee will be at a company for 3-5years and move on. This short-term employment structure has greatly reduced loyalty and reward for such. Why invest heavily in a short-term situation. We can see in standard business how the length of the term of contract will predict the profitability of it. As the time increases the rewards to both sides increase and the contract become of benefit to both parties. We have a reduced time in the work force and hence a reduced reward.
Technology has reduced the knowledge base in the work force. Skill and knowledge in your career field was much higher thirty years ago. With the computer almost everywhere the need for knowledge has reduced to simply pushing a button and the answer is in front of you. The old know how is been replaced with a do what it says.
Education isn't what it used to be. Our youth used to come out of school and be able to do the basics; Read, Write, Math, and problem solve. A high school education meant you knew something. Most now a days scoff at a high school graduate. They can't do any of the basics. You have to go to college just to get a basic education. What we new in 8th grade 100 years ago a college student couldn't even pass the test with a "D" today.
Selfish ambition on both sides of the job market has also contributed to the problem. Everyone has become so ME centered that trust and encouragement has been tossed out the window. The employer is so worried about their bottom-line and themselves they fail to give a care for the employee. The employee is so wrapped up in themselves they no longer consider the employer. No mutual ground is established and each functions as if the other is out to get them. Paranoid, maybe, but the selfishness on both sides has cut into profitability for both. The failure to build a relationship of trust and mutual desire to succeed has pulled both down. The lack of encouragement in both directions has further soured the relationship. Then add in the above short stay syndrome and you have quite a problem.
The timetable has gotten out of hand. We no longer allow the time for quality and craftsmanship. We expect a certain percentage of failure. This expectation is the seed of ultimate failure and vast loss of profitability. We need to be able to take the time to make sure it is right, to allow the ink or paint to dry before we deliver. We say we want a quality product but NOW out goes quality hands down. Few things of any real value don't take significant time to get together.
I have touched on a lot of issues here and believe me, I could go on. The key to solving the poverty issues is bigger then the minimum wage. Yet, I will make a suggestion that goes beyond the obvious above. We need to create a standard that re-establishes how the minimum wage is used. I would suggest that any employer who applies the minimum wage to an employee for more then six months should have a penalty. It generally takes three to six months to get someone skilled to a level of profitability in a given position. This person should either be rewarded for success or ousted for failure. That should be followed up with positions that show constant rotation of employment should be demonstrated as stepping stones in moving up in a company or penalties should be in place to keep employee rolling down to a minimum as a way to dodge wage increases. Many would argue that that level of government involvement is too hard on business. I instead would argue that the product waste and loss or profitable wages has reduced everyone’s profitability and the greater good to all needs to be considered.

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Blogger Bob King said...

Hm. I often make the point that any added cost of doing things you MUST do over and above fair market value is a tax, or may as well be, and it matters little to whom you pay it.

This, by the by, is one of the primary arguments in favor of universal, single-payer health care; a lower cost of overhead for everyone, as well as fewer choke points that are useful for fraud and gaming the system.

Oh, and I should point out another rational and reasonable view of the minimum wage - it must be enough for an employee to break even on the costs of being employed.

Of course, once you think of it that way, the mind opens up to all sorts of ways that governments and employers could leverage assets and services that would create an effective wage higher than the dollar amount. (Meaning a willing labor pool at a lower out of pocket expense.)

9:35 AM, February 29, 2008  

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