A Suggestion to Employers about the Minimum Wage

I was an employer for about two decades. I tell you that simply to provide a point of reference. During the 1990’s  there was a culture of corporate take overs, some via hostile action and some via “merger and acquisition” and for the life of me I could not tell you the difference because every time that happened I became unemployed.

My father always told me that the most expendable creature in corporate America was “the Vice President of Anything,” and the last time I became unemployed, via “mergers and acquisitions,” I simply got tired of the instability. So, I built my first company. To the best of my knowledge, insanity does not run in the family.

My first company was built in “Silly-Con” Valley, California. At that time, employers in Silly-Con Valley did not interview potential employees; potential employees interviewed potential employers.

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Our resource pool typically came from what were once the finest educational institutions in the world like U.C. Berkley, Stanford, UCLA, etc. As a potential employer, we had to deal with young people with impressive degrees like BS/CS, MS/CS, and the occasional PHD and had to answer questions like: Starting Salary? Guaranteed Pay Increases? Stock Options? Health Insurance? On-Site Day Care?  On-Site Gym? Commuting Travel Pay? Work From Home Options?… and more things than I care to recall.

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Needless to say, our interview process was somewhat succinct; typically terminating with the first “No” response. At our peak, I don’t think there was a single college degree on staff and yet we consistently outperformed some of our customers with a ten-to-one manpower advantage and at least two Fortune 500 companies always came to us when their organizations simply could not do the job.

All we could offer our employees was a competitive wage and full medical benefits.

During that nearly two decade era, we managed to keep all of our people employed while virtually every one of those who turned us down eventually ended up unemployed and many lost their homes and everything they owned.

Then folks in Washington started talking about “The Affordable Care Act”, aka: ObamaCare.

We all know that the “Spawn of Satan” (i.e. Congress) in Washington D.C. were working hand-in-glove with all the major insurance companies to lay down a framework for the disaster.  Our insurance carrier was, and to me still is, one of the finer service providers in the health care business; certainly not the least expensive but unquestionably one of the best. And my company paid 100% of the insurance premiums for our employees and their families.

Before ObamaCare had grown to become barely visible to the American public, the insurance companies began raising their rates. At first, we absorbed the extra costs which impacted our profitability and slowly smothered the inferno of “mergers and acquisitions” with a very damp blanket.

Eventually, we passed “the tipping point” and chose to shut down the company. Company management spent the last six months or so focused on insuring that all of our employees were securely situated in new jobs before we closed the doors.

The reason I recount all of this is to shed light on just one instance of what happens when the government reaches beyond its constitutional domain of “governance” and involves itself the free market.

Now Emperor Obama is threatening to use his unstoppable scepter (Executive Orders) to raise the “Minimum Wage.”

Let me be clear, “The Minimum Wage” is a very close cousin to the Tooth Fairy and Santa Clause. In the mid-1970s, as a young computer programmer with no civilian work history, I was making north of seventy thousand dollars ($70,000) a year plus company paid housing, company paid health care, company paid semi-private school for my three kids, travel expenses, cab fares, company provided meals, and a bunch of other things; all of which were calculated into a cash equivalent and were taxable as such.  When all is said and done, I would have been better off financially had I accepted the $14,000 offer I declined in Omaha, Nebraska.

How is that even possible? Simply put, salaries in a free market are relative to the environment in which people are employed.  The government recognizes this in their “cost of living” pay structure; i.e. government employees in Washington D.C. take home more dollars than government employees doing exactly the same job in Mobile, Alabama.

So let’s look at what Emperor Obama is about to do with a wave of his royal scepter (Executive Orders) with respect to his minimum wage mandate.

A friend of mine here in Las Vegas owns five or six fast food franchises; talk about a masochist! I have absolutely no detailed knowledge of my friend’s operations so I will use hypothetical simple numbers.

Assume each of the locations currently employs ten people; most of whom are part time and most of whom are about to take, or possibly already have taken, a 27% pay cut when their hours get reduced from close to 38 hours a week to 28 hours a week so that my friend can comply with the mandates of ObamaCare and still afford to stay in business.

Now let’s look at the “Minimum Wage Mandate.” Let’s assume that these jobs pay an average of eight dollars an hour and the new “Minimum Wage Mandate” is ten dollars an hour or a two dollar per man hour increase. Do the (simple) math:

$2 x 12 persons x 12 hours per day = an additional $288 per operating DAY which greater than the current average pay for an employee making (or about to make) $224 per WEEK based on a 28 hour work week.

Assuming that my friend can reduce overall hours of operation and make other refinements (like quality of product), he reaches the inevitable conclusion that he must reduce staffing by three persons per operating location.

So here is my suggestion for my friend and every other small business owner faced with this reality:

  • Hold an “all hands” staff meeting at each location, spaced far enough apart for the word to spread in advance.
  • Inform them of the simple reality: Emperor Obama has mandated irrevocable business realities which requires that three employees be “down sized.”
  • Tell the employees that THEY have not more than ten minutes to choose who will be released. Tell the employees that they may make their selections based on any criteria they choose, like the employee(s) with the “Obama/Biden” stickers on their cars, or the oldest or youngest on staff (who may truly need the jobs more so than others), and that in ten minutes he will return and if the staff has not been reduced by three persons he will do so at random via drawing names from a cooking pot.
  • Any owner with courage, should then go into the customer area and inform them of what is taking place behind closed doors and why and assure their customers that every effort will be made to maintain our excellent level of service.

Will my friend lose customers by doing this? Quite possibly. But look at the bright side! With a smaller customer base, there will be less need for the staffing levels that are about to be reduced! A win-win for all!

And this is my logic in suggesting this method.

First, by spacing out the meetings between facilities we gain the “amplification” advantage. The word will spread like wild fire, not only within the franchise chain, but across their families and friends and others who may be employed in similar jobs in other franchise chains. The tale will find its way to other franchise owners who may find the courage to lay the blame where it belongs: At the feet of Emperor Obama, instead of shouldering the blame unto themselves, which small business owners are prone to do.

Then, by allowing the employees to execute executive decisions as to who “lives or dies,” it gives them valuable experience and puts a human face on bad government intervention in the free market.

Most importantly, this puts a face on the effects of government involvement in the free market for the consuming public to see. No longer do bad things happen to faceless workers, but are happening to people they have known and dealt with, perhaps for years.

If the Republican Party had any courage or cojones, they would be deep into impeachment proceedings, but they have neither. They spend their time, money and effort attacking the Tea Party more so than attacking the Progressives.

It is therefore incumbent upon We The People to elevate the discussion in volume, content, and intensity at every opportunity until this illegal regime is deposed.

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