So, we need to raise the minimum wage. I am trying to understand this concept so please bear with me. My fear is that some of our brokers will have to work less hours so that they remain above the $10.10 threshold. See, if you work 40 hours per week, you will earn $21,000 per year but if you only work 30 hours, you are making $13.46 an hour. With that bad joke aside, let me understand the reasoning for increasing the “minimum” wage. Being a business owner, I find it quite interesting that there are those who will work for minimum wage. Everything I am seeing indicates that a person may start at a minimal amount but with expectations that they will earn significantly more by proving their worth. Now, if someone starts at this minimal amount but doesn’t prove their value, why would they continue to work for this meager amount? On the other hand, why would an employer continue to employ someone at this level if they have no value to the business? A business is only as good as their people and it is those businesses that forget this basic principal that slowly die out and someone takes their place. At OCI, we have the best employees that the Omaha Area can provide. I have over the last month or two seen numerous emails, letters and phone messages that have complimented our staff. In fact, I am jokingly asking them if they are bribing brokers to send me these tributes. I know that isn’t the case as our employees are truly professionals and that shows by the way they handle our brokers. We are lucky to have such a strong employee base and I appreciate all they do for OCI.
Now, I got off the subject a little but it brings to point the futility of raising the minimum wage. By raising the wage base, the only one that benefits is the Government. Why? Because they increase their tax coffers immediately by the increase in income, instead of taxing $7.00, they get to tax $10.00. Not a bad increase for our politicians to spend. In addition, those people who were at $10.00 an hour have to be raised to an amount that is fair, let’s say we provide them with the same increase 42% so they go to $14.40 an hour. Of course, those people are $14.00 an hour will need to see their incomes go up so they are now at $19.88 per hour and so on and so on. Overall, the increase to the taxing authority is a 42%. In addition, companies will have to increase their pricing and or decrease the number of employees in order to stay competitive. What you actually have done is start an inflationary spark. Cost of goods will go up, incomes go up, but inflation eats away at everything. I remember the 70s and early 80s when interest rates were over 15%. People couldn’t afford to purchase homes, cars or most anything else. Who benefits from extreme inflation? Well, if I have borrowed lots of money and my interest rate is low, I win since my borrowed dollars remain level at low interest as inflation devalues each of those dollars. Great way to lower the damage done by excessive borrowing. Now let me think, who has borrowed a tremendous amount of money and has no way of paying off their debt? It wouldn’t be the same people that want to increase minimum wage is it? And you don’t think they know what they are doing.
Well, there you go, a boring but hopefully entertaining blog.