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You are here: Home / Key 6. The ‘Ohana in Business Model / America, it’s time to get Decent, and be Pono: Raise the Minimum Wage

America, it’s time to get Decent, and be Pono: Raise the Minimum Wage

February 17, 2013

2019 Update:

A Hawaii Business Magazine series catching my attention, is their CHANGE Report: “…because Hawaii cannot continue on its current path. We need to change. We face many significant problems but the biggest may be that half of Hawaii’s people are struggling financially today despite a booming tourist economy and full employment…” Half of Hawaii Barely Gets By.
CHANGE stands for:
C – Community & Economy
H – Health & Wellness
A – Arts & Culture
N – Natural Environment
G – Government & Civic Engagement
E – Education
I’d say “half” is a generous assessment. The magazine estimates that “The average working family of four in Hawaii needs to make at least $36.17 an hour to stay out of poverty. But that same family would have to almost double their earnings ($69.44) to become financially stable.” And our legislature is debating about mandating a $15.00 per hour minimum wage?

 

2013:
America, it’s time to get Decent, and be Pono: Raise the Minimum Wage

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.

No one who works full-time should have to live in poverty. It’s time to raise the minimum wage.

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:

1. The 9 Key Concepts
2. The 9 Key Concepts — Why these 9?

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Comments

  1. Rosa Say says

    February 18, 2013 at 9:18 am

    NY Times Op-Ed Columnist and economist superstar Paul Krugman says, Raise that Wage. In part:

    For about four decades, increases in the minimum wage have consistently fallen behind inflation, so that in real terms the minimum wage is substantially lower than it was in the 1960s. Meanwhile, worker productivity has doubled. Isn’t it time for a raise?

    Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs. But there’s evidence on that question — lots and lots of evidence, because the minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many “natural experiments” here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.

    Why is this true? That’s a subject of continuing research, but one theme in all the explanations is that workers aren’t bushels of wheat or even Manhattan apartments; they’re human beings, and the human relationships involved in hiring and firing are inevitably more complex than markets for mere commodities. And one byproduct of this human complexity seems to be that modest increases in wages for the least-paid don’t necessarily reduce the number of jobs.

  2. Rosa Say says

    February 18, 2013 at 9:28 am

    Another NY Times article, from Joseph E. Stiglitz, a Nobel laureate in economics, a professor at Columbia and a former chairman of the Council of Economic Advisers and chief economist for the World Bank. He is the author of “The Price of Inequality.”

    He begins:

    President Obama’s second Inaugural Address used soaring language to reaffirm America’s commitment to the dream of equality of opportunity: “We are true to our creed when a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else, because she is an American; she is free, and she is equal, not just in the eyes of God but also in our own.”

    The gap between aspiration and reality could hardly be wider. Today, the United States has less equality of opportunity than almost any other advanced industrial country. Study after study has exposed the myth that America is a land of opportunity. This is especially tragic: While Americans may differ on the desirability of equality of outcomes, there is near-universal consensus that inequality of opportunity is indefensible.

    Read more: Equal Opportunity, Our National Myth

    Americans are coming to realize that their cherished narrative of social and economic mobility is a myth. Grand deceptions of this magnitude are hard to maintain for long — and the country has already been through a couple of decades of self-deception.

    Without substantial policy changes, our self-image, and the image we project to the world, will diminish — and so will our economic standing and stability. Inequality of outcomes and inequality of opportunity reinforce each other — and contribute to economic weakness, as Alan B. Krueger, a Princeton economist and the chairman of the White House Council of Economic Advisers, has emphasized. We have an economic, and not only moral, interest in saving the American dream.

  3. Rosa Say says

    February 18, 2013 at 11:11 am

    As a bit of an aside, I always watch for a James Fallows column after President Obama gives a major speech. Here’s why: The Annotated 2013 State of the Union.

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19 Values of Aloha: Index Pages

There are 19 Values of Aloha taught within the Managing with Aloha philosophy:

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