This is a commentary by Michael Vasquez **
When you hear the unions, Dems, and supporters of $15/hr minimum wage speak about the issue you generally hear vague soundbites. It will end poverty. It will raise quality of life. It’s a living wage. Blah, Blah, without a detail in the world. Why? Because details matter.
In the real world where soundbites have repercussions the details are all that matters in the end. Things that Seattle is well aware of. Like businesses forced to fire employees or just close because the wage requirement (at just $11, the first step in the transition) is unaffordable. Or the fact that workers already are unable to get the food stamps, housing assistance, and other aid that they need as they are now expected to pay for these things and they still cannot adjust. The answer from the $15 crowd? Raise the pay of everyone, and make it higher. Like $36.58.
In fact Gravity Payments did just that. So what happened?
According to the NY Times (hardly a Conservative view) Gravity gained some clients, and lost a few old clients. With the profits, and salary of the CEO, dedicated to the pay increase, there is nothing left for infrastructure in the company so no upgrades in tech (which could hinder growth or affect retention of clients in the future). Add to that, it is unclear if the new clients will make up for the cost of lost business and the new pay structure.
But why be petty. This is about people (and as the CEO admitted, a bit of free publicity). As stated by Maisey McMaster, who had been with the company 5 years and was the financial manager (until she decided to quit),
“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump.”
Yes, that’s the result. The unworthy get the same reward as the hardest working. A manager with years of experience and multiple responsibilities gets the same as a new hire with no experience and no guarantee they will last or qualified for the job done. As Grant Moran, the former web developer for Gravity said in the article,
“Now the people who were just clocking in and out were making the same as me.”
But what about the new people. How do they feel with the pay increase? Stephanie Brooks, with the company a mere 2 months and now given a substantial raise, had this to say,
“Am I doing my job well enough to deserve this? I didn’t earn it.”
But wait, wasn’t this raise in pay for every worker in the company meant to remove all the problems? Isn’t that what the supporters of the movement promise? Again, reality is not the same as campaign slogans and political party efforts to maintain power.
Repeatedly, real world experiences are proving that just upping pay does not instantly remove all problems. Existing workers are unfairly compensated for hard work and excellence as unskilled and unproven workers are lauded. Business competitiveness suffers, both from workers and the inability of a company to address any corporate concern (replacing equipment, changes in market and/or laws, ect) EXCEPT employee pay. Unskilled workers and new hires are burdened with the need to prove they are worthy of the extreme pay, both to the employer and far more skilled workers, to justify their continued employment. If the costs continue to eliminate profits, there is the risk of placing the burden on the consumers to make up the difference – just to break even – a fear that clients are keenly aware of.
Yes, paying people more money for the same unskilled and unproven work sounds great in a speech. It brings in votes. But long-term there are consequences, to the workers and companies, that no speech from supporters will ever mention.
Should every worker in a company get paid $36.58/hour? For some companies, why not. Either they will be able to support that pay scale and make a profit, or they will fire employees and/or close the doors. Relocation to somewhere where costs are cheaper is yet another option, leaving workers not just near poverty but completely unemployed and on government doles.
That’s the nature of a business. But to force EVERY business to do this is equivalent to corporate genocide. While $15/hour is far more reasonable, the fact is that there really is no difference in outcome. Some employees will be unfairly given pay that they do not merit. Some employees will be, as Mr. Moran stated,
“It shackles high performers to less motivated team members.”
It is quite possible that there is a middle ground out there. But whatever that compromise may be, it will never be spoken in the speeches meant to rally public support of an idea that is presented without consequence. Politicians seeking to maintain power don’t care about long-term consequences, the national debt alone proves that. Yet at the end of the day, when reality kicks in as it always does, the unavoidable results may be ones that consumers and the general public may find far less palatable.
Michael “Vass” Vasquez
President – M V Consulting, Inc