Compensation Follies – Why Minimum Wage Laws Don’t Work

3 soaring diversI have a difficult time empathizing with those who demand more compensation for little or no skills. It’s like going to a sporting event and giving everyone a prize for showing up. I understand the need to find gainful employment, however some types of employment shouldn’t be turned into a career.

Labor is a purchased commodity. That’s the only valid way to look at it, and for a business to succeed, labor costs are an expense item that must be contained, just like all others. We make decisions on almost everything in life based on value, perceived or otherwise. Many people choose to go to a specific retailer based exclusively on costs. Those retailers find as low of a cost in the marketplace for items that you may want to purchase. Another example, people buy diamonds at a higher cost than cut crystal. The reasons vary, but it comes down to what others define as its value.

watch your thinkingWhen an employee says, I’m worth more, the immediate question is, why? What do you bring to the business? Are you one of millions of people who can do the same job? Your acquired skills must be perceived as valuable, improving your services is necessary to increase your wages.

Rarity, plays a big role in the value of an employee. This is why some people are paid astronomical compensation, they have skills or established relationships that are greater than most other people. The loss of someone highly skilled or connected, becomes more difficult to replace than someone who can place items on a bun, or follow a prescribed recipe queued by a timer to finish the process.

The answer to finding meaningful employment at a liveable wage isn’t the responsibility of those who own a business, or for that matter, the government to create a law with a higher minimum wage. The responsibility and challenge is for the individual to learn more, do more, to become a more rare gem, someone with real skills and attention to detail. Someone who stands out from a vast population of people who believe all you have to do is show up, is a person that no longer worries about minimum wage.

Money - ResourcesTo suggest labor or minimum wage laws can be adjusted without negative effects, is ignoring the reality of how people interact, purchase and assign value to anything. Once the minimum wage becomes higher, the cost of everything also rises, thereby negating most if not all of the benefit in raising it. A dollar buys less when the cost of everything rises. This is the effect of inflation. Right or wrong, the open trade borders of a country place most manufacturing and services at a level playing field with other nations.

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