A discussion about the process, steps and options of starting a new business

We're focusing on the new federally mandated minimum wage increase that just took effect this week, raising the hourly wage for minimum wage workers here in the United States.

For my part, I gave my take from the business' perspective.  Not all businesses, but many.  My post, which is sparking some debate among those who have read it, asserts that businesses will simply reduce their staff to accomodate the mandated increases in what is paid to employees.

This raised the eyebrows of a fellow Know More Media staffer, Kimberly Morrison, who commented on my post:

"I honestly don't see the logic. I think it is a cop-out to say that
businesses are not making enough money to pay their employees a living wage.

Granted, I am not expecting all small businesses to pay every single
employee a minimum of $10/hour, but I think it is ridiculous to expect
anyone to be able to live on less than $6/hour. Most of the companies I have worked for were small and they all paid above the minimum.

While this may not be representative of all small businesses, this indicates to me that they could afford to value their employees more than what the minimum dictated. From what I can tell, companies that value their employees are already paying more than the minimum so the increase won't be affecting their bottom line. 

Am I missing something here? How is is okay for prices to keep going up on literally everything, but workers continue to get paid the same as they were 10 years ago?"

Debate is good, no matter what the subject.  So, in that spirit, let me reply to Kimberly's points:

• Kimberly says, "I think it is a cop-out to say that businesses are not making enough money to pay their employees a living wage."  It's actually economics, not a "cop out".  Businesses who employ minimum wage workers usually do so because they run a low margin business.  Fast food is one example that comes to mind, but its also the case in other industries.  Forced to pay employees more, the business has two choices: Raise prices, or reduce their workforce to accomodate the new increase in outgoing salaries.
• Evidence of businesses laying off employees due to mandated wage increases is bountiful:  This example from Pennsylvania... another example from a factory in American Samoa...these examples highlighted in the Wall Street Journal...and those are just a few examples.
• If we're talking about a true "living wage" as Kimberly terms it, why stop at a mere $5.15?  Why not $15 an hour?  $20 an hour?  Can anyone really live on $5.15 an hour?  I'd like to hear why Kimberly considers just $5.15 something that anyone could truly live on.  Of course, it's not.  Even here in California, where the minimum wage is close to $8 per hour, it's not something that most individuals could "live" on, much less a family.  That's why you see hard working teenagers and college students serving you the Big Macs and checking your items at the mall: It's a good part-time income at best, not a "living wage" (whatever that is).
• I agree with Kimberly that most businesses do pay slightly above the minimum wage to employees they hire, but so what?  I go back to my previous question: Why not mandate a wage of $15 or $20 per hour as a more compassionate hourly wage?  For businesses that will round up their hourly wage to $6.00 per hour, is that really anything to get excited about?
• To that point, Kimberly notes that these companies who pay their employees slightly above the minimum wage "value" their employee more.  For anyone working at or near minimum wage out there reading this, let me be the splash of cold water that awakens you from dreamland: Your employer pays you as little as he or she can in exchange for as many services as possible.  And, to further rock the world of minimum wage employees, your employer will do everything possible to keep your work week under 30 hours.  Why?  Because after you exceed 30 hours of work, you are entitled to additional benefits that cost the employer money.  Are there companies out there that break from that norm and pay employees triple the going rate, give them espresso machines in their break rooms, let everyone work in bean bag chairs, and encourage scooter riding and foosball during the workday?  Sure.  Of course, there are fewer of those companies around now than there were in the 90's, because most of them have since gone out of business.
• Prices go up primarily because supply costs, depending on the industry, goes up.  However, even this is backwards: Prices for products in many sectors regularly decrease the longer that the business and/or product has been on the market.  Flat screen TV's, laptop computers, term life insurance...there are hundreds of examples of products decreasing in price here in the U.S.  Why?  Because it is a competitive, market-driven economy. 
• One last thing...our leaders here at Know More Media used to pay their blog experts 43% more for each blog post they submitted to their respective topic.  Then, no doubt due to economic realities and strategic decisions for the business, that pay was reduced to its current rate (currently 23% below the new federally mandated minimum wage).  Am I complaining?  No.  I understand that business decisions have to be made, and I also understand that I can choose to leave at any time I want and blog somewhere else.  However, I choose not to.  I like the folks at Know More Media, and am thrilled to be a part of the business community it serves.  However, in light of this debate sparked my Ms. Morrison, there is an irresistable temptation to ask: Is my blog pay really a compassionate "living wage"?  Why was there a decrease, instead of an increase?  Of course, I know the answer...I'm a businessman, and an entrepreneur.  If I had to fathom a guess to the answer for the question I just asked, it would probably be, "Dan, posting blog entries here at KMM was never designed to be a full time job that would allow you live and thrive on what you are paid."  Bingo.  That's your answer to the minimum wage argument: It is paid to people doing jobs that are specifically designed to be either temporary or part-time.

In France, their workers are guaranteed six weeks of vacation and aren't allowed to be fired from their jobs without a judge getting involved.  If any entrepreneur reading this would like to copy the French economy as a model for successful capitalist business, please let me know.  If anyone thinks that $7 an hour is an acceptable "living wage", please let me know. 

I wrote my original post as a kind of just-the-facts take from the business owner's perspective.  It may not be the utopian view of the shan-gri-la world that some employees dream of, but it is reality.

My recommendation: Start your own business so that you can control what you make.  Oh, and when you do, let me know what you're paying the part-time teenager who stands at your cash register.