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Archive for February, 2014

There is so much bickering about the minimum wage hike I’m wondering if people are forgetting that PEOPLE work jobs not machines???

When I planned my consulting firm Policy Analysis & Research Group, one of the principles I wrote down was that I would not pay anyone less than $15/hr for anything.  Overall, the lowest I paid was $25/hr with a firm billing rate of $90/hr (this was in Pittsburgh which boasts a very affordable cost of living).  The reason had little to do with economics.  I started a business because I got tired of small business clients telling me that I was a great consultant and helped them but I knew nothing about owning and running a business.  I decided to prove them wrong.  Well, they were right in a lot of respects. LOL!

Paying an employee first when you don’t know when you’re going to get your share is not exactly the most exhilarating feeling in the world when bills are due and collection calls are mounting.  I would tell clients, you need happy employees and they would ask, what about my happiness???  I had to find other things to make me happy because during those moments owning a business was certainly not a happy factor.  And of course, I had many an accountant tell me I had to “learn to manage cash flow” to which I’d answer, “show me the cash and I’ll make it flow!”  So, they would go through my books and say, “you don’t have any cash, why aren’t you out there selling???”  Me: “because I’m sitting here watching you find me cash.”  The biggest mistake I made was not understanding my customer base.  Once I developed a reputation for quality reports, I decided to turn me into a system that others could deliver only to discover clients wanted me not the system (even though they had no complaints about the results).  The dumbest mistake (my small business clients warned me when I announced the name of my firm prior to incorporating): too long of a company name!  It was so long I got tired of signing it on registration sheets and simply would sign PARG which meant nobody knew what the heck I was.  My biggest frustration was not being able to redirect the firm the way I wanted in the midst of a recession but then Porter’s firm went bust too so maybe consultants are “just like doctors” better at curing others than themselves.  Overall, best learning experience in the world!

The point of all this??? Many business decisions have nothing to do with economics and wage rates are one of those mixed issues.  You can’t pay people at levels that go beyond what you are bringing in.   However, setting wage rates only based on what multinational corporations want and then saying small businesses want this too is dangerous ground.  Most small business owners are not serial entrepreneurs or inventors (let alone multinational executives with stock options).  They are people who are pro-active, believe in being rewarded and rewarding others and want to make a difference for their family and their community.  They are the people you turn to when your daughter in college needs an accounting project for her final and nobody will let her touch their books.  They are the ones you can call when your son keeps bugging you about upping his allowance so he can get more girls.  Could you please give my boy a weekend job so he can pay for those movies,”fancy” dinners, gas and car insurance?  We used to be able to tell our children, go work for two hours and buy that dress/new video game instead of bugging me. Well $7.25 x 2 = $14.50 and suddenly we have kids asking, what’s the point of working???  Hearing the news about a recession and no jobs for many people doesn’t help.  You can’t tell kids go to college so you can get a good paying job when the first thing they ask you is, with which company?

These “trivialities” ARE macro issues (due to simple multiplication).  The following map by Bill Moyers shows that there is no state where you can work 40hrs at minimum wage and rent a 2BR apartment http://billmoyers.com/2012/04/02/making-the-rent-on-minimum-wage/ (then we wonder why kids don’t move out anymore).  In addition, costs pile up both in the long and short run (public assistance, crime rates, drug use increases by those trying to “escape”) http://hnn.us/article/153881.  Ironically, small businesses show more growth in states with higher minimum wage rates (maybe because people kind of like getting paid at a level they can pay bills with) http://www.businessinsider.com/raising-minimum-wage-small-businesses-retail-2013-2   And, there is data showing that a majority of small businesses are in favor of higher minimum wage (maybe this way folks can buy American again instead of offshore goods – funny how sentiment against minimum wage coincided with the increase in offshoring….hmmmmm) http://www.smallbusinessmajority.org/small-business-research/minimum-wage/  We can use voluntourism to help people in other countries to start businesses (also a great way to also give college kids a global education).  Let’s not forget bragging rights.  If we’re going to tell everyone that Capitalism is the best wealth generator for everyone and we’re the richest country, the proof is in the pudding and right now other countries have more pudding than we do http://www.theatlantic.com/business/archive/2013/09/how-americas-minimum-wage-em-really-em-stacks-up-globally/279258/

However, the biggest reason is simply a human reason: 5yrs ago a friend and I were celebrating Mardi-Grass with a splurge lunch at a great seafood restaurant.  Our waitress was delightful but we would notice she would disappear to the kitchen area and come back looking very sad.  We got worried and asked what was wrong.  She explained it was supposed to be her day off and she had promised her 13yr old daughter that she would spend the day with her – a rare treat for her daughter.  However, an unexpected expense had come up at school and she decided she would come in to work expecting to make money on tips (restaurants are allowed to pay below minimum wage).  For some odd reason it was one of those days when no one showed up.  Her daughter kept calling to ask if she had made enough in tips to come home since salary was not the solution.  We asked how much she normally made in tips and how much she needed.  She told us she was making that sacrifice for $50.  Needless to say she got a $50 tip.  We thought we would just get an enthusiastic thank you so we left the tip and exited to avoid attention.  Instead, she followed us into the street and begged us to wait.  She ran back in and came back with Mardi Gras beads.  She asked if we would accept them as a gift because that day she learned people in the world really do care and she wanted us to remember her.    I still keep those beads and I still remember her face with tears of joy.  Now I’m on a quest to learn how to make small businesses recession proof so no one has to make a choice between work and spending time with their children…..This, is the REAL minimum wage!

 

 

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