Why managers should cheer the new minimum wage

Posted by: Diane Brady on May 25, 2007

Managers should cheer a $2.10 increase in the federal minimum raise—the first jump in almost a decade. It’s not just because the wage will help lift people from being among the working poor, to at least within striking distance of making ends meet. The real benefit is what it may do to those work places that rely on a constant flow of poorly paid workers.

First, it might force employers to hire fewer people but train them better, leading to greater overall productivity. Higher wages and investment are also likely to lead to happier employees, lower turnover and—ultimately—lower costs than getting labor on the cheap.

So I would brush off the fear-mongering of the National Restaurant Association, which predicts fewer jobs for entry workers because of the move. Smart employers will figure out a way to spread responsibilities and trim elsewhere to make sure that the most important assets they have—human beings—improve in value, rather the understandable instinct of underpaid workers to head for the door.

Reader Comments

Alec

May 25, 2007 2:21 PM

Back when the minimum wage was established, and every time an increase has been made, employers warn about ow it will force them to eliminate jobs. The reality is that no previous minimum wage increases have caused a significant decline in the availability of these positions. They're just fretting over the increased costs instead of seeing the value in having employees who aren't losing sleep over paying their bills.

Brad Brooks

May 25, 2007 5:45 PM

It is completely unfair to single out the restaurant industry in the debate over minimum wage. I would propose that the restaurant industry should be held up as a model for other industries in terms of how to train and treat entry level employees.

First time job holders learn about customer service, manufacturing, retailing and the value of real estate. Some of these lessons may not even be taught consciously, but are learned nonetheless.

The film, The Pursuit of Happyness, chronicled Chris Gardner's journey from living on the edge of society as he became successful in a brokerage firm. This story would not be remarkable in the restaurant industry. Many successful restaurant owners started with little and worked very hard to attain success. Without entry level positions (that are usually minimum wage), they would not have gained the experience and lessons necessary to attain success.

Applying labels like "fear-mongering" to the National Restaurant Association for raising legitimate concerns does nothing to further the conversation about the challenges facing all small business owners as they struggle to pay the bills, feed their family and fuel the economy.

Brad Brooks
http://www.myzata.com

Darrell Jones

May 26, 2007 5:56 PM

I agree managers "should" cheer the new minimum wage. After reading the article on the NRA website, I am appalled. How can they shun congress for raising the minimum wage yet at the same time they give praise for tax incentives they will receive? Does this say they are out for themselves or what? Talk about being greedy and selfish.

What I think they are actually saying is they do not want to be a "responsible industry" but would rather pass the responsibility on to American tax payers to foot the bill through such programs as welfare and unemployment payments. Do they not realize that high turn-over, inadequate training, and low wages contributes to the costly expense of the public to foot the bill for the working poor. The wage increase is an effort to hold them more responsible and assist "everyone" to make ends meet a little better. Instead of hiring freezes and layoffs maybe they should consider decreasing the five figure salaries of the CEO's of such companies as Applebee’s, Ruby Tuesdays, Papa Johns, and the like. It is time we begin to pay the "line-staff" employees who bust their butt daily to ensure the companies reap their billions a year while line-staff struggle to pay their light bill. Inflation has increased considerably and the minimum wage has lagged too far behind for too long. Reading the NRA's views, people will need to have a master's degree to wait tables because of the minimum wage increase--get real!

hmmmmm

May 26, 2007 7:52 PM

Do you really think that anyone would be content with a $2.10 increase in pay? No.

In less than two years we will hear that the minimum wage is still too low and it needs to be raised again.

Markus

May 27, 2007 12:58 PM

I agree. Restaurant Workers can get jobs elsewhere if they are laid off. Unemployment rate is like 4.5%

Jay

May 27, 2007 3:21 PM

But if the training cost out weigh the cost of hiring the few, two things insue: 1) costs will rise for the company and 2) whose to say that the employees won't leave after the training.

For industries such as the resturant business training is not the ideal. How much do you need to know about the resturant business for the resturant to realise its worthwhile in keeping you, when the only thing the customer wants is good food, which is dependent on the chef and the art decor.

common sense

May 29, 2007 12:08 AM

Raising the minimum wage will only increase inflationary pressures and while for a short improve the position it will only reflect in higher costs and the continued erosion of the middle class.

Jim (Georgia)

July 21, 2007 6:34 PM

Min. Wage is a way for an employer to say if i could get away with less I would. i don't remember who said that.
i live in So. Georgia where the averade run down mill home consisting of a living roo, 2 bedrooms. 1 bath and a kitchen-seperated by a 5x5 square in the middle of the house; which on the outside measures 25' x 20' rents for 475.0 month plus all utilities. you do the math. It's impossible, and all the work here is min. wage.

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