How a Rising Minimum Wage Can Hurt the Best Workers
A rising minimum wage leaves less and less for the most deserving employees
Minimum wage is one of those subjects where, while preparing to write about it critically, you feel like you’re about to wade into quicksand. It’s dangerous ground.
I would never deny that there are good reasons to have a minimum wage. Minimum wage is part of the legacy of worker’s rights that came out of the twentieth century that were hard won by trade unionists — including my grandfather — and others willing to put their lives on the line to help lift workers up. I am thankful for the progress that was made. In theory, rising minimum wage is a good thing… right?
I want to say yes, but I’ve seen the effects that a rising minimum wage has on workers. The effort to make a rising tide lift all boats is well intentioned, but it can hurt the workers who most deserve the boost.
I live in a Canadian province with a gradually rising minimum wage. Every couple of years, the minimum wage goes up. It was $8 an hour from 2001 to 2011 under BC Liberal premier Gordon Campbell. It had risen to $10.85 in 2017, and at the time of writing, it sits at $13.85. By June 1st 2021, it will be $15.20.
As a leader in a big-box retail environment, this is the problem I see with a rising minimum wage: businesses, especially big-box corporate locations, are given a labor budget from which to pay their employees. Each employee is allotted the minimum wage, then whatever is left over can be doled out to the highest-performing employees in the form of pay increases. There’s a limited amount to work with.
The problem with a rising minimum wage is that it takes more and more from the labor budget, leaving less and less for the most deserving employees, and it disincentivizes the hard workers.
When the minimum wage rises, it’s a de facto raise for everyone. That’s all well and good… but what about the people who deserve a bigger raise than that? At my workplace, they go on a list, and the leadership team has a meeting and discusses the contributions of each employee. Leadership team members advocate for the employees they see as the hardest working contributors, and in the end, the general manager chooses who will get a raise higher than the minimum.
The budget that corporate gives us is never high enough to properly reward those employees, so the people who literally carry our business on their backs — the people who come in early, stay late, pick up extra shifts, and save my ass every day with their ability to stretch themselves and accomplish the impossible — get maybe fifty cents per hour over the minimum wage. If they’re lucky. The people who make time for us and bring their best selves to work every day make just a tiny bit more than the people who do the bare minimum.
In a perfect world, we could shower those people with rewards. If I had my way, many of the employees who report to me would get $25/hr and full health care benefits. They earn it every day. These are people who volunteer for every extra task I come up with, who pay attention to details, who cultivate their own expertise and have me consulting them for advice in certain areas. They deserve the world, in my opinion.
Yet we can only afford to reward the very highest achievers among them. Even those, we can only reward with a fraction of what they deserve. As a result, the new hires, who don’t have the knowledge base and expertise of the high performers, make the same amount of money as some of our most tenured, veteran employees.
If you’re one of those veterans, why would you continue to work so hard if you aren’t being rewarded for it? Why would you stick around in a job you work too hard at for too little pay, when you could get another job for close to the same wage, without the added responsibilities and authority you’re barely compensated for? When my best employees leave, it’s frustrating because not only am I losing a major asset, I also can’t blame them for leaving.
The frustration is compounded by the fact that it’s all out of our control. Even when individual stores do their best and make their sales goals, it ultimately doesn’t matter — if the corporation as a whole isn’t up to snuff, budgets will be tight. Executives and buyers and marketers, the big brass with the real power, are the ones with real control over profits and losses, but individual stores pay the price.
The corporate structure who hands down the labor budget — based on complicated factors like overall projected profits — may not care about individual front-line employees, but localized leadership teams do care. We care a lot. We personally benefit from the labor of those employees, and we want the world for those employees in exchange. They would be millionaires, if I had my way. That’s how big my gratitude is.
But that’s out of my control, because when the minimum wage goes up, that much more of our labor budget is compromised, and the playing field is leveled to the detriment of our best and brightest. It’s beyond frustrating, and we lose our best workers because of it.
I don’t know if there’s a solution to this problem. The radical liberatarian in me wants to abolish minimum wage — base everything on individual contracts, let people bargain and advocate for their labor’s worth, free up that labor budget so the best of the best can get their just rewards. Meritocracy wins the day. But I recognize that my radical side is, well, radical, and that minimum wage employees deserve some protection against the rising cost of living.
I’m left with no real answer to the problem. All I have are my own feelings of frustration, and the desire to heap lavish rewards on those who deliver results despite the forces who move to level the field.
