They're Crappy Jobs, But Someone Has to Do Them

The push has been on of course, for some time, to hike the minimum wage, and in many states, they've done exactly that. The most recent one in California, where the state's minimum wage was raised to $20 an hour, has made quite a lot of news— for a variety of reasons, and not all of it good.

Most states will have their minimum wages set at around $15 an hour, with my own state, Illinois, being at that rate by next year.

Honestly, I come from a couple of sides on this idea. As most things tend to be, it's a more complex issue than most people realize. It's easy for me to blanketly say, "I am opposed," and generally I am. Because it is a complex issue.

There's more to consider than just the quality of life for the employees who are impacted by lower wages. Because there's one underlying thought here. Does a higher wage actually have a positive effect on the quality of life for the employees?

I contend that it doesn't, because more often than not, financial woes are the result of personal choices and lack of financial education than it is the result of how much one makes. In order to improve the quality of life for these people, you have to first change the habits that are the root of their problems. 

But of course, no one is going to do that. It's much easier to just hand someone a few more bucks and wash your hands of any future dirt.

The biggest consideration is where the money comes from. Because money doesn't grow on trees and it has to come from somewhere, and unfortunately, the pockets of the businesses aren't as deep as many people tend to think they are.

It's mostly going to come from consumers. Or, in some cases, it's going to come from businesses pulling back on their labor. Either they will find more ways to automate and reduce staffing, or they'll close locations altogether to make up the difference.

At the same time, I do fully recognize that the difference between the wages earned, and basic needs being met have to come from somewhere as well.

Taxpayers will have to pony up on that one.

It used to be that jobs like retail and fast food were secondary jobs or entry level jobs, or just simply jobs that older people used to supplement their retirements. They were never intended to be careers. I think they probably still shouldn't be.

That being said, there is some truth to the idea that these jobs now make up a large number of all jobs, and so it becomes a question of whether or not we should consider these occupations similarly to other ones. 

Between Walmart, McDonald's, Burger King, and Target, they employ around 2.6 million people combined, in the United States. But consider that in the entire restaurant industry in the U.S., 12.5 million people hold these kinds of jobs. 9.8 million people work in retail.

The labor participation rate as of April of 2024 was roughly 62.7%, meaning that fast food and retail jobs account for around 11% of the total workforce.

But there are many other types of jobs such as secretarial work, certain manufacturing jobs and receptionists and call center workers who are also paid close to, or slightly higher than, these state minimum wages. So, the actual number of employees in this wage range are actually representative of a much higher percentage of the total participating workforce.

A full-time worker at these wages will earn somewhere around $31,200 a year, which is $28,028 below the average per worker income of $59,228. Median household income is roughly $78,238, meaning a household with two workers in fast food or retail would pull in roughly $62,400 or $15,800 less than other average households per year.

Raising the minimum wage even higher than $15 could help to at least close the gaps. But again, at what cost? Right now the average cost of living in the U.S. is just under $70,000 a year. It can be presumed that higher wages would lead to higher costs, and thus, closing the gap would be a moot point because the cost of living would raise proportionate to the cost of the higher wages.

So, what do you do? Frankly it becomes sort of a damned if you do, damned if you don't kind of a situation.

I think the emphasis should be on financial education so that any working American is afforded not just an opportunity to earn a wage, or even a livable one, but can actually grow financially. Because it goes back to a saying I cite often, that it doesn't matter as much how much you make as it matters what you do with what you make.

While I am not for arbitrarily raising wages, I do take into consideration that just because these jobs require very little in terms of actual skills, they are still jobs we need to be able to fill. We have to have these workers if we want our lattes and doughnuts and Whoppers—or if we want to have more than two or three lanes open at checkouts.

Someone has to do these jobs, and perhaps working in them should not be a sort of punishment.

But going back around full circle, we also cannot expect the money to simply materialize out of thin air. We have to consider the actual balance sheets of the businesses impacted by paying the higher wages. If they can't function, or go under, no one benefits. Not the workers, and certainly not the consumers who want to be able to patronize these businesses.

When we consider wages, we have to be cognitive of all of the impacts of it. On workers. On consumers. On the businesses. And on the taxpayers. Because when we raise wages, it impacts everyone.

Everyone deserves a good quality of life if they are putting in the work. But you can't take from Peter to pay Paul in order to do it. You can't just pick a number off the top of your head and say, "Okay, we'll pay that." And you also cannot assume that the wage is the only problem to solve.

Because again, it's complicated.

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© 2024 Jim Bauer

Why I Think The Economy Is Broken

There is not a single factor, but myriad factors which holds down wages and stunts the progress of the entire economy. And in order for us to fix it, we need to fully grasp this. Because until we do all we will continue to get is nowhere.

Let me just say that mostly on both sides there are misunderstandings of what needs to be done. For the liberals and democrats, of course, their solution is to simply mandate wage increases—such as to the minimum wage—and to raise taxes on the corporations and the rich. For the conservatives and republicans they're still believing that global trade is the answer. If we can sell stuff to the rest of the world that will create jobs and increase wages.

We know, however, that neither of these solutions really work.

First of all, you cannot artificially raise wages without there being rippling consequences within the economy. As I have said many times before, corporations and small businesses are not ATM machines. And certainly they are not the Fed that simply prints more money when it needs to. So, in comes the union machine. Folks, take a look at Detroit as one of the best examples of artificially increasing wages—and even benefits for that matter. But of course this was not the government who did this, although factions of the government certainly did and do encourage it. Not only did unions demand higher wages for employees, and not only did they fight for more health benefits, pensions, and other monetary things which cost a ton, but they also contributed to bylaws which turned otherwise efficient operations into unmanageable, and ultimately unprofitable ones.

In any business there is a rule of thought that you charge a customer what he or she is willing to bear.

But it is not just a matter of what the customer is willing to pay. It is a matter of what a customer can pay in realistic and reasonable terms. In other words, a business knows that there is a fine line

between trying to get more than what they are entitled to for their product or service and outright pricing themselves right out of business.

You can apply this simple idea to the unions. The difference between the business machine and the union machine is that a business knows what a customer is willing to bear, and it also knows how much a customer can afford to pay. In the case of unions, many of the monetary demands were made without anyone on the union side, and especially the employees, knowing what was even on the balance sheet.

The unions, in my opinion, should have had two jobs. One of those jobs was to make a stand for the interests of employees of course. Their job was to create an environment whereby employees could be reasonably compensated for the work they did, and that they would enjoy some of the benefits of a thriving corporation through wages and benefits. Something I think is important, by the way, despite my misgivings about unions in general. But their other job was to also be the spokesperson for reason and rational thought. Their job was, essentially, to educate the workforce they were representing on the reality of the situation.

There is a danger, I think, when we become so convinced that the rich and the corporations they own are simply greedy. Somehow we have come to a place where when we think of the rich and the corporations we think of the giant in the Jack and the Beanstalk story sitting in his castle above the clouds hoarding and counting his golden coins with no regard for anything but the fact that he has the golden coins.

The rich do not sit on their money. It is part of the reason not only do they become rich. But it is a part of the reason they become richer.

In other words, the rich invest their money. And even when it comes to common shareholders they have one simple demand of the corporations for which they hold a stake in.

Make more profits.

But in order to do that that really doesn't mean lower worker's wages, fire workers, send jobs overseas, reduce benefits, and gouge the customers who buy their products or services. Granted, there may be some who believe that way, but I would call them the minority. What any common shareholder—or major shareholder—wants is a growing and thriving business to continue to deliver dividends and profits. For a lot of us that means growing the business and expanding the markets we operate in.

If you talk to many employees the one common theme always seems to be that they are just a number, that the fat cats really don't need them, that they are a burden and that for that reason corporations will go to any length to shut them down and send them packing.

For me that's a false reality, and a silly way to think. Because anyone who understands business also understands that yes, employees do fall onto the liability side of the ledger. But, they are as necessary as any other cost of doing business. The reality is that a business indeed wants to focus on growth and expanding their markets—but when employees walk out the door and when employees have to be replaced, there are two things that come out of this.

Distraction and cost.

For one, when you have to spend time in the day strategizing over how to bring in replacement

workers, and when you have to spend time in the day seeking out new workers and being engaged in the hiring process, you are going to have less time in the day to focus on strategizing keeping the machines running and expanding the business. It's a distraction. And then there's the cost. Even in unskilled labor, you have to train the workers. And during that process there is going to be some level of transition and downtime whereby the operation will not be at its optimum efficiency.

For those who say unskilled labor is a job even a monkey can do let me just say this.

I have worked in many "unskilled labor" jobs during my tenure in the workforce. I have seen workers come in who worked in similar settings prior to their working alongside me who were still not able to simply walk onto the production line and run the operation flawlessly. You still had to have other employees showdow them, and you still had wrong buttons pushed, and problems within the process which ultimately slowed things down—and cost the company money.

It is better to have a strong and reliable and fully trained workforce committed to the process and committed to the company than to have a revolving door. Smart businessmen know this, and so therefore it is misnomer that employers simply do not care about the people who work for them.

It's a very small example, but say you own several rental properties. What's more efficient and cost effective for your business? Keeping tenants over the long haul, or constantly having to find new ones to rent to?

Of course there is a need to always evaluate the workers you already have and determine whether or not they are serving the best interests of the business. For those that are not, of course you have to make decisions about whether they stay or go. The same would apply to my tenant example. If the renter is consistent in paying but breaks windows, knocks holes in the walls, or otherwise jeopardizes the business—they are no longer an asset. It is common sense really.

Unions essentially created bad tenants. So many, in fact, that at some point in time it makes more sense to simply shutter the doors than to coninue to seek out new tenants—or be burdened by the cost of keeping the bad tenants you already have.

And then you have the matter of taxes.

It has always amazed me how many people think that by simply raising taxes, you, and I do mean you will somehow benefit better by it. The reality is that taxes, just like employees, are a cost. And when you are spending money in one place, you obviously cannot spend it in another place. And again, the rich and the corporations are not the giant in the Jack and the Beanstalk story. Their money will be worthless if all they do is hoard it. In order to get richer the rich and the corporations must find ways to make their money grow. And that means investing those dollars into more factories, more retail outlets, more products or services in their lines, and it means it will take more people—workers—to get it done.

And by the way, those additional workers will pay more taxes. The more product or service moving through the economy the more sales tax revenue. The more workers with money to spend will also contribute more to the tax rolls as a whole. Lowering taxes does one primary thing. It encourages the flow of real dollars into the real marketplace and when you do that, even if taxes are lower, more tax revenues will be reaped simply because there are more dollars moving around in the real economy to tax.

Why does the Fed lower interest rates when the economy is in a slow down? To encourage more money to enter into the real economy. Lower taxes does the same thing. It speeds up the process of free money flow in the economy.

When interest rates are lower more people will buy cars, more people will use credit cards, more people will buy houses, and thus the markets move upward in a fluid fashion. Raising the interest rates slows the economy down in much the same way that the example I provided about a business pricing itself out of the marketplace ultimately shuts it all down.

Raise taxes and you slow it all down. Lower taxes and it all speeds up. It's not rocket science. It is very basic economics, folks.

The more money you have to spend to fuel your car, and to keep the lights on in your house, the less money you will spend on newer cars, adding square footage to your house, or simply going out for a dinner night with the family.

Everything slows down when certain dollars are siphoned into one pool for which all other pools suffer as a result.

And then there are regulations.

Regulations can be put into two categories. Those that are created through government policy, and

those that are created out of those bylaws I was talking about as it applies to unions. You can make rules that allow businesses to freely and openly compete, and expand, or you can create rules that make it harder, or impossible, to do that.

If you look at the macro here what you begin to see are those myriad issues I was referring to at the start of this. Higher taxes, unruly unions with bylaws that scrape away at efficiency, higher costs of wages and benefits for less work, and rules and regulations put forth by the government and the unions—and laws created in the interest of global trade have all worked to hurt the American worker, and to dissolve what were otherwise good paying jobs, only to be left with an economic disaster. Workers make less, and therefore can not spend as much, and because corporations can no longer reasonably compete, since the door was open to go elsewhere for their labor, they have done so.

I have long held that the idea of global trade was a good one when it became the "law of the land." But somewhere along the line it got away from us. Before it was a convenience and a novelty to be able to expand our personal dollars by having the opportunity to buy that cheaper item made in Japan or some other place. And it was a "feel-good" moment to think that by putting out dollars into those other countries would also lift their economies, thereby making it more possible for them to buy what we made. What we saw in all of this was a win-win.

Going back to my tenant example, what better opportunity to raise your rent than when your tenant gets a pay raise. If one person is making more money, then everyone ultimately makes more money. If global trade would have worked, we'd all have been making more money. Us and the Japanese and the Chinese, and whoever else you want to throw into the equation.

Why did Detroit fall? Why is our entire economy falling? Again, there are myriad factors to consider in all of this. High taxes, over regulation, and stifling of efficiency—it has essentially shut the whole thing down. And what we're left with is a horrible situation where half of the workforce is on government assistance, and the other half is working for pennies on the dollar. Those who are making it, by the way, are having to support the half that aren't.

And also by the way, we used to do it that way before this all happened. We did. The difference was that we did it by our earned wages being used to support the earned wages of another. Paul worked on the production line making beds and mattresses and used that money to buy cars from John who worked on the production line making cars. And John went out and bought a new TV with the money he earned making cars that supported Joe who made TVs. And all three of them supported Tom who drove the trucks to get the products moved, and Sally to stock the shelves, and Roderick who made the sale.

These days who is their to support? Paul doesn't make beds and mattresses anymore. John doesn't make cars anymore. Joe doesn't make TVs anymore. The jobs left don't pay as much, and when any one of these guys buys a bed or mattress, or a car, or a new TV, it takes a much greater chunk out what they can spend on other things—like even a hamburger at Burger King.

And now for something completely different:

You Might Be Raising A Democrat If...

Perhaps it is a product of my own upbringing, coming up into the world from the School of Hard Knocks, that I form my opinion about life in general. I have no kids of my own. Not that my wife and I did not try, nor want them. It just wasn't in the cards for us. But I do have a brain, and I don't think for a second that not having kids means I don't understand what can fuel a generation of people into, if not believing in it, understanding the principles behind a society of living off of somebody else's dime and being completely content with that. And as is an undeniable tenet of liberal ideology having the compelling belief that one is entitled to something for nothing.

Let me start by citing at least one component I believe was true of what ultimately lead to the financial crisis of 2008, which also was a component in the whole Internet boom we saw in the 90's which lead to a crisis of its own. What was it? It was a belief that all along generations before the new generation were doing it wrong.

Hard work? You're doing it wrong. Starter home? You're doing it wrong. First car that spends more time in the shop than on the road? You're doing it wrong. Traditional 9 to 5 job? You're doing it wrong.

Of course, the blame cannot be laid completely on the kids. Parents who came up in the world, realizing the struggle and overcoming it through hard work vowed that if they ever had the means they would make their children's lives better. They will have what I could not have. It is as noble an idea conceptually as feeding the poor, or providing shelter to the homeless. All the while I think we all still fundamentally believe in the old adage that there is no such thing as a free lunch. Except now we make exceptions, and there are many free lunches. And despite all of our efforts as parents to give a leg up to our children as they make their own way into the world, we in fact instead cripple them. And I think it is beginning to become quite clear that as a country and a society as a whole, we are also crippling the entire nation.

These children potentially become the liberal voting block that is growing and threatens the basic founding principles of the nation as a whole.

In life you are supposed to start off poor and struggling. You are supposed to have to drive beat up cars, live in small apartments, make your way up through the corporate ranks, have lousy first jobs, and these are the things that are supposed to make and shape you as a person. These are the things that are supposed to make you appreciate what you achieve once you arrive. And the struggle is what is supposed to get you off your duff to come up in the world and make something out of yourself.

The struggle is real. And the struggle is an integral part of it all. Without it, like a delicate ecosystem, if you take away the struggle, the entire process and system goes out of balance. And that is sort of a place we have arrived at in our current time.

What do we take away from our children when we do not allow them the struggle? Necessity. And here is another thing I think we all fundamentally still believe in, and that is that necessity is the mother of all invention. When you do not have food, and no other means to get it, you will learn to hunt—or you will learn ways to get money to buy it. All of the tools of the hunt, by the way, were invented out of the need to improve our odds at a kill. If the animals all simply fell dead at our feet would we have needed to bother to make arrows? Bows? Guns? Hell, cattle farms for that matter. None of these things would exist if we did not have the need for them.

The bottom line here is that the more we give of things rather than advice, life's experiences, and instilling the importance of why the struggle is necessary, the more we actually take away from the whole rewarding and life experience of our children. We can see examples of this in trophies handed to participants. Not winners. We can see this in examples of kids entering the workforce believing that working at Burger King is beneath them. We can see this in examples of kids being dissatisfied and slighted if they have to drive a 15-year old car for the first time in their driving career. We can see this in examples of kids who believe that their first real jobs in life should be professional careers rather than having to work their way into fields that pay better, and even to work on their own to pay for their own advancement in life in the workforce.

You need to get your hands dirty. You need to sweat a little bit. You need to arrive at home after work with sore arms, sore legs, and dog-tired. It makes you appreciate what you have. It makes you appreciate the achievements. And it makes you struggle and work harder to improve your own life and your own situation. It builds a strong society. It builds a strong character. It builds a strong work ethic. It creates a sense of drive and ambition. And all the while it makes life much more purposeful, and as we draw closer to the ultimate finish line, it makes us more proud to have lived. To have worked hard. To have struggled. And to have arrived. Even if not rich, not for lack of trying, it is better to reach the end having done everything we could have, on our own, than to have had it all handed to us.

I play the lottery. I want the money and the riches like anyone does. But I always say while I will gladly take the money for free, I'd much rather have my come-uppance by my own hand. It is much more rewarding. It is much more worthy. And one like myself would have to wonder; if I simply won the lottery and did not have to do anything else in my life, what else might I have otherwise accomplished that will never be known simply because I did not have to bother to do it?

Raising Wages Artificially Seriously Hurts Jobs—No One Gains

I am not sure if I remember exactly who first touted the $15 minimum wage, but the lawmakers sure have clung to that number with several cities in the US now implementing wage hikes. Bernie Sanders wants to be a champion for the middle class shouting in a Verizon picket line that "corporate America can't have it all." And Dan Price, a Seattle CEO of what was a successful company decided based on some pie-in-the-sky study of a "happiness factor" that his employees should make no less than $70k a year.

The truth is that all of these numbers, all of these promises, all of these demands, are simply done without any thought to who pays the cost ultimately of any of these types of decisions. When people shout out these talking points they are not considering facts such as how much money is really out there for the taking? What are the bottom lines of the companies? What do the balance sheets look like before and after an ultimate decision is made?

The end result, however, is clear. Loss of jobs essentially washing out any potential gain from increasing wages.

Less taxes will be collected, less wealth will be gained, and more doors of companies will be shuttered leaving behind it simply more ruin. Time and time again there are lawmakers and people in the voting public who simply do not understand the basics of economics, and the impact of arbitrarily pulling numbers out of their asses when it comes to what they believe everyone is entitled to. The way to boost the economy, and the way to boost people's wages ultimately is not simply by slapping a number down and saying "let's call it done." It is simply not how it works, and the proof is always in the pudding. People always suffer as a result of unintended consequences. Unfortunately these are the very people these decisions are designed to help.

I am not at all against people making more money. I say a company should pay their employees the most they can reasonably afford to pay. But it's not simply a matter of picking a number. It is a matter of looking at what is reasonable and it is a matter of hiking or paying wages that are conducive not only to the lifestyles of the employees, but to the continuity and profitability of the business as a whole. If people are laid off, if prices need to be raised, if benefits need to be reduced, this helps no one to accomplish the end goal of rising up the middle class and improving anyone's standard of living.

Just like in our own lives, creating artificial spending relief by adding credit cards to our wallet only prolongs the reality that we do not have the money to sustain what we want, a company cannot simply absorb demands without real money to satisfy them and have the expectation that this will somehow make-up for itself somewhere down the line.

When the bills come due, that is when reality sets in, and the smartest people in the crowd begin to realize you cannot create something out of thin air and expect it to work. Those who aren't the smartest in the crowd point to the greedy businesses and the rich as "screwing us over again."