I applaud President Obama for putting the minimum wage discussion on the table in his State of the Union address, but I personally see this issue as one of business model integrity. We business owners should be doing the right thing, because it IS the right thing to do, and not because of any government (or union) mandate.
Timing should not matter either, and we should not count on economists making excuses for us.
“Raising the minimum wage from $7.25 to $9 should be a no-brainer. … A mere $9 an hour translates into about $18,000 a year — still under the poverty line. When you add in the Earned Income Tax Credit and food stamps it’s possible to barely rise above poverty at this wage, but even the poverty line of about $23,000 understates the true cost of living in most areas of the country.
A decent society should do no less.”
— Robert Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley
I agree completely.
DECENT: Conforming with generally accepted standards of respectable or moral behavior : appropriate : fitting. PONO.
I’ve never been paid the minimum wage.
I have been paid less though, falling into that ‘tipped category’ of the hospitality business, where employers expect customers to make up the difference, even though most customers don’t see it that way.
As an intern, and as a volunteer, I’ve been paid absolutely nothing.
I’ve also been paid less simply because I’m a woman, or because I was young; both wrong no matter how you look at it.
My husband has been less fortunate than I in another way. He has realized less than a 3% increase in base wage after 23 years in the same lead position, lorded over by several ownership changes (and their subsequent business model adjustments, the nature of the Hawai‘i hotel business) because his union has not been able to negotiate better compensation levels with any of those owners — and they have stopped trying. They still collect union dues from him though, religiously.
Less than 3% in 23 years. As you can imagine, the cost of living here will rise that much in a single year at times. To add insult to injury, he’s still in a tipped category, in a field where the tipping practice has gone the way of the dinosaur unless mandated, and what he earns in that mandate will rarely balance the scales. He’s remained on the job for other reasons — and that’s often why employers continue their unfair compensation practices, isn’t it: Because we let them.
Earning $35 per month plus two meals each day, [a 23-year old] elevator operator [who challenged a 1923 Washington D.C. law that established a minimum wage for women and children employed within the city] avowed that her “work was light and healthful, the hours short, with surroundings clean and moral,” and that her employer would be glad to retain her, as she ardently wished, but only at her present wage.
— Conor Friedersdorf, The Epic, Surprisingly Sexist Fight That Brought the Minimum Wage to America
There are better stories, and they are Success Stories.
In mine, I met a business owner one day, who shocked me with his offer of pay. He had recruited me to help him open another resort business here in Hawai‘i, and if I accepted the job I’d be paid nearly 50% more in base salary than I’d expected. I accepted that job, but only after getting more insight into his business model, and learning I wasn’t the only one.
Every single one of our employees would be paid at that higher level commensurate with their position, because this was an owner who had factored a decent wage into his baseline business model. His model’s pro forma, also accounted for the projected Hawai‘i cost of living increase over the next 3 decades, and included profit-sharing.
This happened in 1996, and I’ve never designed another business model any other way.
The employees I had then, whose counterparts in other businesses were paid the minimum wage, or less in a tipping category, were then paid more than $9.00 per hour. So were our interns. In 1996. We never became a union house, because that would have meant all union classifications would get a cut in pay.
To this owner, the practices of businesses who were our competition were irrelevant, because their business values were not our business values: The Rub of the Business Model is Solved by your Values. If you copy mediocrity, (or fear it as competition) you get more mediocrity — you get a copy. Kūlia i ka nu‘u and strive higher. Be better.
This was a highly profitable business. Still is. The model works, and works well because of how Mālama is woven into it. When that owner would say, “our people are our greatest asset” he meant it — and he expected all of his managers to mean it too.
That, dear business owner, whether you are a small business owner or a large one, is how it should be.
In most businesses, labor will be one of your highest costs, and your model MUST account for that. You must pay people what they are worth, and be fully cognizant of their contributions to your ongoing success. If not, your model is flawed, and you’ll need to change it, and correct it. You’ll need to improve it, give it the integrity it lacks, and make it better.
It’s the decent thing to do, and in living, working, managing, and leading with Aloha, it’s PONO.
And I promise you: This is not an idealistic proposition. When you compensate people well, you quickly gain all the practical benefits of a smarter model, such as loyal advocacy and higher retention. People will earn their keep, and they contribute more to support you; they become active partners.
Pay people better, and you will see how hard they work to assure you have a secure, sustainable, and successful business. You will gain an ‘Ohana in Business.
Key 6. THE ‘OHANA IN BUSINESS MODEL:
The best form for your life CAN be the best form for your ‘Ohana in Business® as well, where the objectives of each will support the other — they need not be mutually exclusive. A business can be more than self-sustainable and profitable: It can thrive in perpetuity though key people will come and go. In Managing with Aloha we learn a values-based business model and organizational structure simultaneous to learning productivity practices which drive ROI (return on investment) and ROA (return on your attentions). There is art and science in business, and we love it all: Business modeling is never boring in an MWA culture, and we value financial literacy in the complete education of sustainable modeling.
Read more about the Managing with Aloha business model here: