What is the Cost of an Increase in Minimum Wage to a Minimum Wage Employee?

There is no question about it, minimum wage is not enough to help U.S. families out of poverty, there is an incredibly audible outcry for change.

So let’s talk numbers.

How much of a raise do you feel you need?  Some picketers hold signs asking for 15 dollars an hour; but let’s alter the reality of that perspective:  this would exceed or come close to many management level salaries.  When looking at the average salary levels on glassdoor.com for 11 smaller-box retailers in your average mall I found that a Store Manager’s salary could run anywhere from $15.54/hr(Journey’s) to $25.48/hr(American Eagle) with the average hourly rate being $20.00/hr.  I went on to look at salaries for the First Assistants and they ranged from $8.76/hr (Journey’s) to $18.09/hr (Children’s Place) with the average hourly rate being $14.40/hr.  The stores with the higher paid management typically made a habit of paying their sales associates more than minimum wage at an average of $8.85/hr.

An increase in minimum wage, will have one of two effects on store management.  Either no effect, as that is far too high a deficit all at once for a company, meaning that some cashiers could be earning as much as their assistants.  Or instead of raising everyone, just laying off to the bare minimum.

So what does a higher wage cost the minimum wagers?

A lower minimum wage means the ability to hire more, and work more employees.   As a result of the high cost of workers former Starbucks president Howard Behar suggested the possibility that some may not have yet considered, “You’re going to see more automation. … Don’t be surprised if Starbucks goes to all-cashless payment.”  Meaning instead of hiring employees that will raise our deficits, we will instead utilize computers in their place.  Personally, in place of raising pay I would rather raise the amount of jobs available to workers.

Increase in pay will also result in an increase of cost, it’s a simple economic concept.  If an employer has to raise it’s output it will also have to strategize a raise in income.  The most obvious and necessary step of action would be to increase cost.  Behar went on to explain “the $15-an-hour wage mandate will make a $5.20 order cost $6.20.”  That’s only one dollar on your coffee, it may be five dollars on your jeans, it may be thirty cents to your loaf of bread, or fifty cents to your milk.  Although these sound like small increases they will add up, and the cost of living will also climb.

So what’s a manageable increase?

 It is time for a minimum wage increase, the last one was in the summer of 2009,(ironically) just a week after I had received a raise to $7.25 for my recent promotion to assistant manager with my employer at the time.  That increase was less than a dollar, but also was the third one in three years in a row.  So the true jump was from $5.15 to $5.85 in 2007 and then onto $7.25 in 2009.  So considering the facts here, what do you think will be the more sensible increase?

What would be better than raising minimum wage?

A better quality of life.  A better job title.  Perhaps you should be reaching out to your own employer.  Do you feel you are receiving adequate training?  Perhaps you should ask your supervisor about advancement opportunities, ask for an employee evaluation to target the weaknesses you need to overcome that may be holding you back.  Communicate your career goals with your supervisor directly and clearly.  Allow for feedback on the steps to achieve these goals.

In December of 2009 my district manager asked all the managers of her district to send her our new years resolutions, one personal and one professional.  I told her I aimed to be her assistant and after a serious talk and an updated employee evaluation I was working my way, achieving my goal by that summer.

Dept. of Labor Increase in Wages since the beginning of time:

http://www.dol.gov/whd/minwage/chart.htm

Nation Retail Federation:

https://nrf.com/news/public-policy/nrf-warns-of-‘domino-effect’-minimum-wage-hike

Extra-Curricular Reading:

http://www.forbes.com/sites/theapothecary/2015/01/21/the-real-minimum-wage-zero/

PHOTO: Workers and labor activists march down West Grand Boulevard as they demand a raise in the minimum wage for fast-food workers in Detroit, Michigan, May 10, 2013. REUTERS/Rebecca Cook

This is a repost from my first month of blogging, but it is a topic that continues to resurface. 

From the Archives: April 2015

10 thoughts on “What is the Cost of an Increase in Minimum Wage to a Minimum Wage Employee?

  1. Susan Landry says:

    What I think many people forget when discussing this topic is that minimum wage was never meant to be a “living wage”. It is meant for part time employees, high school students, and summer jobs. I worked for a number of years as an Employment Support Consultant working with folks with disabilities and other barriers to employment. Even completely un-skilled individuals can find work that pays well above minimum wage. In fact, I don’t recall ever applying to full time positions that paid minimum wage..even many part time positions pay much more. This is an issue that, as you suggested, should be taken up by individuals with their employer, and with themselves. Gain skills, gain education! Totally agree that it’s time for an increase. Just not the ridiculous, gigantic amount that’s being suggested

    Liked by 1 person

  2. Stella's Mommy says:

    I work at a hair salon so not exactly retail, but all of our assistants earn minimum wage while doing their training. This typically lasts 3 years. While that’s not an incredibly large amount of time, living in San Francisco is outrageously expensive and I don’t know how some of them survive. The owners of my salon are fully supportive of the wage increase, but they will probably start adding a service charge to all transactions so the customer absorbs the wage increase. It’s not an ideal situation but I can’t think of a better way to handle it. From an assistants perspective, they are majorly struggling on the current minimum wage.From my owners perspective, the assistants already are a large expense because they essentially generate no revenue for 3 years so paying them anything at all is an investment so increasing that significantly reduced their bottom line.

    Liked by 1 person

    • shopgirlanonymous says:

      Gah, when I was a district manager I had store managers under me that were paid only around $25 to $26k a year, and these were managers that had been with the company for years! New managers were getting hired on based on new wages so were making somewhere around $30k. It wasn’t fair, drove me nuts, and I really did wonder how they made it work. I can only imagine how much it needs to come up in California, particularly San Francisco!

      Liked by 1 person

  3. ljaylj says:

    Wonderfully stated. I like fact and logic.
    I base some of my purchases, such as lunch out, on how long I have to work to buy a sandwich at a fast food restaurant. I must work 1 hour to purchase a hamburger, fries and a drink. If I loose my job to a kiosk (which my employer has promised rather than raise the pay) and I no longer have the income and the price of goods goes up, I will no longer buy anything that isn’t necessary. It’s a vicious circle.

    Liked by 1 person

    • shopgirlanonymous says:

      Thank you. My husband teases me because he is the conservative corporate worker and I am the liberal low paid employee and he is all about the raise and I am not 100% about it. The main reason being I worked for a company that I know at $15 They would have fired half the employees over spending anything…They also don’t raise the pay for upper management once that happens…I would kid you not when I say that assistant managers were paid as much as new hired sales associates when the minimum wage was bumped out last. And then they followed that with a raise freeze for literally three years.

      Liked by 1 person

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