If you are an ardent supporter of a raise in the federal minimum wage, it's time to test your personal commitment to that position.
Suppose you are working for an employer who has 50 people who perform a number of different tasks. For illustration purposes, let's suppose that 20 of those employees work in the position of Air Crater, a job that is very simple: You open the top of a cardboard box, allow it to fill with ambient air, then close and tape the box and send it down the production line. Let's also suppose that the employer pays his more experienced and better-performing Air Craters a higher wage than lower-performing, less experienced employees, and those lower-performing, less experienced workers are paid better than new, totally inexperienced workers. Here is the imaginary pay scale:
Group A -Employees with experience and superior performance - $12.00 an hour. (5 employees, INCLUDING YOU)
Group B - Employees with less experience but adequate performance - 10.00 an hour (10 employees)
Group C - New employees without experience and low performers - 7.25 an hour (5 employees)
For a 40-hour workweek, the employer is shelling out $9,850 per week in base wages for his Air Craters. All the employees are happy with this arrangement. The new Air Craters know it won't take them long to get to $10.00 per hour because the training period is fairly short, and they realize you have to start somewhere. The more experienced, average-performance employees in Group B are happy because it is only fair that experience and performance should count for something. The employees in Group A are happy with their pay and with their position at the top end of the pay scale. The employer is happy because his employees are happy, his labor costs are predictable and the price of boxed air is stable as a result.
Then one night you go home and you are watching television and you see the President railing about the unfairness of the current minimum wage. You really can't say that you disagree with him, because you remember what it was like to make minimum wage, and you remember how tough it was to live on that amount. You also wonder from time to time if your minimum wage co-workers are making it, and you know a couple of them have personal financial needs. So, basically, you applaud the President for taking matters into his own hands and raising the minimum wage to $10.10 per hour.
The next day when you get to work everyone is sitting in the break room. The owner has called an urgent meeting and wants to speak with all employees prior to work commencing. You hope it is going to be good news of some sort, but it is not. The owner asks how many people saw the President's news conference or heard about him raising the minimum wage? A few people have not heard, so the owner gives a brief report of what transpired. A few people clap and cheer, especially those earning minimum wage. After it gets quiet again, the owner says that he is all for people making more money, and he wishes that he could give everyone a 50% wage increase, but the economy and low profit margins on boxed air just don't leave a lot of room for big pay increases. And you, as much as you support the minimum wage increase, you like the owner and believe he has always been fair in trying to pay people as much as possible.
The owner goes on to say that the new mandate puts him in a real bind. He thought late into the night about his alternatives, agonizing over what to do. He said when he woke up this morning, it finally came to him. He decided to lay out the alternatives to all the affected workers in Groups A, B and C, and allow them to make the decision. If they cannot reach consensus, he will make the decision. You turn pale in anticipation of the alternatives the owner is about to present, and nervous about how this is all going to end.
Before he turns the decision over to the employees, the owner explains that total payroll for the 20 affected people is currently $9,850 per week. He gives them a chart that shows what each group makes and how many are in the three Groups. He also explains that the minimum wage increase is 33.3% for those making 7.25 per hour. If he gives all employees a 33.3% increase in order to keep the pay scale separation he has right now, he would have to increase the cost of his product by roughly the same amount and that would put him out of business, so he has already rejected that solution out of hand -- unless there are cuts to offset the increase in pay. He tells the group that there is really no win-win-win solution for the employees, the owner and the customer. That is why he is asking them to participate in finding the best among several less-than-desirable alternatives.
"Here are the alternatives," the owner says. "First, we can give all the minimum wage employees a hike to the new amount of $10.10 per hour without giving anyone else a raise. This would increase overall expenses by 5%. That means that Group C is now paid the same as Group B. It also means that this years annual increase won't happen and everyone has to wait two years for the next general increase. Even then, the minimum wage group won't receive an increase because, in effect, they already got the increases they would have gotten for the next two years. This also allows us to start to build back the spread in wages we have now. Everything should level out again in another two years, assuming the minimum wage is not raised again."
Everybody moans, including the those who stand to get the 33% bump in pay, who are worried about being branded as the cause of everyone else getting screwed on their wage increases. The people in Group B aren't happy because they know they will be doing more and better work than those in Group C who will be making the same wage now. The people in Group A (your group) moan slightly less, but they still aren't happy with this whole idea of no increase for the next two years to pay for big increases now for new employees who don't contribute all that much to begin with. Already you are thinking that this proposal ain't gonna' fly.
"Second," the owner goes on, "We can apply the 33% increase across the board in order to keep the pay scale we have today, but that means a reduction in people. One way of going about that would be to cut 1 person in Group A, 4 people in Group B and 3 people in Group C. But if we choose this alternative, it is understood that we won't be working overtime to make up for the labor lost by the reduction in the workforce. Those who are left will just have to buckle down and get more done every day until we can afford to hire some people back." The boss went on to explain that the employees can come up with any combination of personnel cuts, as long as the overall payroll does not increase over the next two years. And you? You're thinking that this sounds like a whole lot of math and a a bunch of work you weren't planning on, but you are willing to give it a shot.
That's when the owner look directly at you and says, "Dewey, I can't think of anybody here who would object if I made you the team leader for this important project. If you accept, I will be available to answer all the questions I can and to give you all the support I can." The owner goes on. "Those are the only alternatives I have been able to come up with. Brainstorm this for three days. That's all the time we can devote to it, important as it is. If you come up with something radical that I did not think of, so be it. Like I said before, the final decision is mine, and the more possibilities, the better. Now let's get after it."
Questions: Do you accept the assignment? In light of the current situation and the owner's explanation of his dilemma, are you as committed to the minimum wage hike today as you were last night? After you and your team work on this problem for several days, what solution do you present to the owner?