August 6, 2015 at 7:40 am, by Carl

If you follow my blog, then you know that my intent is to write and speak about how to Live Well in the world.  I have some guiding principles for that, which my longtime readers know well.  One of those principles is the necessity for critical thinking.  As a society, we used to be a place that valued deep thinking.  We were, once, the best well-read populace on the planet.  When we were working on state Constitutions in the 1770s and 1780s, there was a breadth and depth of deep thinking to the point that many states facilitated much of their populace to be included in the discussion.  The state of Massachusetts even sent out drafts to all of the cities of the region, bringing to mind groups of lobstermen or families in the timber industry, loggers, sitting around discussing the depths of how the civic society should be organized.  Men and women were deeply invested in their own learning, and while me lament how limited “public” education was, or that often women weren’t included in higher education at the new colleges like Harvard or Yale…the reality was that most people were highly literate.  They were deep thinkers.

 

Today…not so much.  While there are many negative implications of not being thinkers, one of the most obvious, and worst, is that we have lost touch with logic.  We can no longer pull off common sense, the idea that making sense of something is common, obvious and evident.  I can think of no greater example than in the nation’s current obsession with the minimum wage.  Almost out of thin air, groups have decided that jobs of very low skill should warrant a pay of $15 an hour.

 

Now, if you’ve read my work for a while, you know I deeply value the necessity of workers of all types.  And, I am not a champion of the “all must go to college” crowd, knowing that a wonderful life can be lived without the need for a college degree.  Laborers of all types are necessary for a successful world, and certainly workers of all types should be paid fairly.  I have also made clear through the years that since the 1970s, our economic reality has been poor and in need of some changes.  However, history teaches us that changes cannot simply come because a central government demands it.

 

So, recently, the uber-hip fast food restaurant Chipotle said it would not raise pay to $15 an hour.  As a Fast Company article said, presenting the progressive lament about it all said, “if Chipotle won’t pay that, then who will?”  The answer of course is that such a demand is lacking in logic.  The logic fails on three easy to see or understand points.

 

First, the money everyone assumes is there, being pocketed by all the greedy, evil business owners, actually isn’t there.  Read how Fast Company put it:

Reducing the CEO’s paychecks wouldn’t be enough: Even if they each took the proverbial $1 salary, dividing up the value of their compensation packages among 48,500 hourly workers would yield a raise of about $22 per week per worker or $0.55 an hour (assuming each worker works 40 hours a week). Rather, a very rough back-of-the-envelope calculation, just to get a sense of the scale, suggests it would cost Chipotle anywhere from $500 million to far more than $1 billion a year to raise the wage of all its hourly workers to $15 an hour. If it’s anywhere near this range, that seems unacceptable at first glance. The company only made $445 million in profit last year, on relatively healthy 11% profit margins.

In other words, the evil business owners aren’t making that much…and yes, I would agree they are probably making far more than they should.  So, I’m all for demanding that they make less…and lets imagine that world where they also agree that they should make a smaller wage…let’s say higher middle class of maybe $125,000.  If you do that, there’s not enough money to give some “pulled out of thin air” number like $15 an hour.  Nor are there enough profits, so for those of you who are certain these companies are just making the rich richer on profits….well, yes, they are making profit but that’s the entire reason for owning a business.  But they aren’t making enough to somehow pay $15 an hour and still stay in business.

 

The second point is connected to the first, and Fast Company makes this point.  If a company like Chipotle paid higher wages, they would have to raise prices.  Logically, if all the places paying minimum wage raised their prices, then the magical $15 an hour would all of a sudden no longer be enough.  Why, you ask?  Because as every other place raised prices to cover the $15 wage, every other company would have to raise prices.  Food would go up which would lead all other workers to start complaining that they needed more money to pay the bills, so everything else would rise over time.  It’s called inflation and is a logical outcome.  In the end, this would all fall apart quickly because many of us in the middle class or lower all shop at low price places like Bealls, Target, and of course Wal-Mart.  That we all shop there is part of the problem.  It’s as if we can’t see the logical issue here….we want higher wages but no one wants (or could afford) higher.   Fast Company does have a statement on this point:  “In other words, customers need to also take some responsibility for low wages: anyone who can afford an $11 burrito can probably afford a $12 burrito, too.”   Right…but how many people who are low-middle class (as I am …living on one income) or on an hourly wage actually paying the outrageous high price of $11 for a burrito?

 

The third point is perhaps the main place where I think the failure of logic comes through the most.  It is the poor logic that takes an hourly job, typically only working for 20-30 hours (especially since the new health care rules penalize businesses for having workers going more than 29 hours a week)…and ASSUMES that such a job is meant to be a career.  The entire thrust of this argument about minimum wage, and the Fast Company article highlights this, is that people in these jobs need more money because this is their career, that they are trying to live a normal middle-class life off of this money.

 

An entry-level, minimum wage is not a career.  Nor is it a job that someone should be holding in the assumption that this would be enough to sustain a middle-class life.  Now, we can have a different conversation about why there are now so many service type jobs, about whether our education is adequately preparing our children for the jobs that are available, or about the issues of a society that is high-tech with much of its industry now closed and moved overseas.  Those are all fair points and ones that should worry us.  Those are problems to be solved.

 

They aren’t, however, solved by demanding that minimum wage jobs all of a sudden become careers that sustain a family.  Logically, if someone owned a business and had a low skill position, they aren’t going to pay it high wages.  This is the type of job for someone who is young, looking for income to help with school, or maybe someone who is picking up a second job.  This could be for a single who is combining income like my roommate and I did when we lived together for two years when I was 22 and he was 20.  We shared our expenses and made do, both of us with low-paying jobs.

 

If we ever really hope to return to a position of a healthy society, we must return to being a reading, thinking people.