Thursday, October 12, 2006

Stiffing the working stiffs (gratuitous postcard edition)

Postcards: Monmouth Gas Workers

Oooh, the Democratic candidates are at it again, pursuing a raise to the national minimum wage. I've always liked that. It gives me an even better reason for not getting a job (aside from the part where I'm in pain when I try to stand or walk, and aside from the part where I'm nuts).

I used to be an assistant manager for a small store in a small town. Part of my job training, as the bosses were readying me for promotion to partner (it is to laugh. They just liked me, for some reason), was to learn about budgets and schedules (they happen, oddly, to go hand in hand). Our store had money for workers -- payroll -- based on how much we sold in the store. When we were busy, when we had a full staff to help the customers, we brought in plenty of cash. Granted, not every dollar that was spent on merchandise went into payroll. There were things like stockable merchandise, rent, taxes, utilities, parking lot and grounds maintenance costs, insurance (property, liability, and so on)... it took up better than 80% of the store's income. What we were left with was usually enough to pay for me plus two part-timers, as long as the owners put in 60+ hours per week without dipping too deeply into the pool of resources.

I worked 48 hours per week -- on a salary -- and could earn commissions. It was a cushy job, netting me just about 3% above the official poverty line for a single woman in a city. I got to work evenings and weekends. Alone. With no potty breaks. Ah, the joys of retail!

So. Anyway. Back to the budget. While I was working there, the combined fed and state's minimum wage was officially increased 33 cents per hour, from $4.30 to $4.63.* No big, right?

I was asked to rework the schedule, to accommodate the change. The part-timers were only working 16 hours a week to begin with. The one with much less seniority and virtually no skills to speak of (let's just say, if he had to depend upon commissions, he would owe the company money each week) was begging for longer hours because he had a family to support, and this was the best he could find in a moderately recessed neighborhood. The bosses liked him, so they hired him. They were really nice people.

The other had been there long enough to pull her own weight. She was able to work more hours -- she could go all the way to 30 hours, given the right schedule, but didn't want to be held responsible for security, paperwork, or key-carrying (she was why I kept working evenings and weekends).

So. 33 cents per hour, when the prior wages were at just over $4.30 per hour (roughly 7 1/2 percent increase in one swell foop). Sales steady enough for status quo, but no more. No other resources from which to dip for payroll. Two part-time employees, each putting in 16 hours. The increase, on 32 hours of work, adds up to $10.56. That's more than 2 hours' pay each week as a result of the raise in minimum wage.

Now, remember, I only have $137 per week for these two people. Where am I going to get the $10.56 the gummint tells me I have to find for both these people? Answer: I'm not. I have to take it out of somebody's schedule. Say goodbye to the newbie getting 16 hours. He's down to 12 1/2 hours. Miss I-can-earn-Commissions is finding that the people who used to supplement her pay in nickels and dimes -- the many small buyers -- have seen their hours cut at their jobs, too, so they don't have spending money for our sweet little luxury goods. They stop shopping at our store. Our weekly payroll income is cut by $98 in the course of 6 months.

By the second month, we've laid off my newbie entirely. By the third month, we've laid off Miss Commissions. At the end of six months, I'm working 53 hours a week for the same salary, mostly because I used to like my bosses, but I'm damned tired. I apply for and get a job with better hours (and slightly better benefits) in a big corporation, taking my skills with me. The small store I used to work at is closed within a year.

Newbie's family is on public aid for three more years.

Miss Commission is on public aid for eight months before somebody else hires her.

The store owners, previously near retirement age, get pennies on the dollar for their investment, and have to find other jobs to pay their bills. They are unable to retire at 65, and are both still working for Wal-Mart, 35 miles away from their home, in their seventies.

Oh, yeah. We just LOOOOOOOOOVE minimum wage increases.

*these numbers are approximations. It was a long, long time ago.

Update with welcome:
hello, and welcome to you who have come here from EclectEcon. (thanks for the link, John!) Please look around some. My house is always open.


GunGeek said...

California (and some cities within the state as well) has minimum wages that are considerably higher than the federal rate. The last time I was there, I noticed that the McDonald's restaurant (that great stereotype of where to go to earn minimum wage) had a machine that dumped french fries into the basket, lowered the basket into the oil, cooked it for just the right amount of time, raised it out, shook some of the excess oil off, and then dumped it into the fry bin. All the humans have to do is to fill the big hopper once in a while and sprinkle salt on the fries and put them into the little containers. It was also tied into the registers and a database of sales to know when to cook more fries. They even had another machine that picked the right size of cup and then moved it down a little conveyor belt to have ice dumped in the right quantity (regular, light, or none), filled it with the correct drink, and then waited for the drone to put a lid on it.

Those two items alone probably allowed them to cut one employee from each shift (and with the hours they're open that's a bunch of people), making up the cost of the equipment in a fairly short time.

You can give 10 people $5 an hour or 7 people $7/hr. It all depends on whether you ask the 7 that are still working or the 3 that aren't to find out if it's a good idea to pay the higher rate.

Anonymous said...

Raising the minimum wage is great because it kill inefficiently run businesses like yours. Your company was running on such tight margins that a minute raise in salaries caused all kinds of chaos. This means that your business was forever doomed to hire the cheapest, most incompetent, most desperate of employees and could never compete with any other business who could hire talented people.

The minimum wage has been raised thousands of times all over the world. There has never been any study which can show a rise in unemployment due to the increase in minimum wage. This is a no brainer. There are thousands of data points all over the world. If the rise in minimum wage caused any negative effects it would be trivial to show a correlation. There isn't any.