Minimum Wage Hike Will Hurt Workers, Small Businesses

On February 10, The Arizona Republic reported the state’s new minimum wage law had cost many teen workers their jobs. Arizona lawmakers recently increased the minimum wage from $ 5.15 per hour to $ 6.75 per hour, a move designed to help lower wage earners support themselves and their families, but the end result has been fewer jobs for part time workers and lay offs and fewer hours for those who still have jobs.

We can expect this on a national scale once the proposed minimum wage hike to $ 7.25 passes the Senate and gets signed in to law by President Bush. With this law-and others-lawmakers have focused on the instant gratification of higher wages without considering the far-reaching ramifications of such artificial manipulation of the free market.

What happens when the minimum wage goes up? Well, the few unskilled workers who actually earn the minimum wage instantly see an increase in their pay checks. That’s stage one: the “feel good” part. After the euphoria subsides, the reality of stage two sets in. Due to increased payroll costs, small businesses often cannot afford to hire new workers. Several businesses resort to laying workers off or cutting hours for their part-time help. The businesses that do keep their existing staff levels are often forced to raise prices.

So, who wins when lawmakers increase the minimum wage? It’s not skilled workers; they typically already make more than minimum wage. It’s not teenagers working in movie theaters; DVD rentals and movie downloads are already sapping profitability from theaters. Small businesses definitely don’t win; they are already struggling to stay afloat in a sea of “big box” retailers like Wal-Mart.

No, the only winners seem to be the tiny number of unskilled workers who actually work minimum wage jobs and have somehow never managed to earn a raise. In 2004, that amounted to 0.4 percent of all workers, or 520,000 out of a labor market of 130 million.

The rest of us pay the price. We pay the price in lost jobs for teen and college-aged workers, fewer hours for teen and college-aged workers, higher prices for goods and services, and, in too many cases, fewer restaurants and retailers to choose from as small businesses fold.

There is, however, one group of people who come out of a minimum wage hike as winners: the Democrat and Republican lawmakers who pass this sort of irresponsible legislation. Politicians come out looking like champions of the working man despite the real effects of their economic meddling.

When you start paying more for a hamburger or a theater ticket, when your younger siblings and friends are unable to find part time jobs, just remember who to thank. Be sure to thoroughly enjoy that overpriced burger or movie; Lord knows, enough people lost their jobs and businesses to give it to you.

Back in 1981, I was just starting my career in television production, and working as the Unit Manager on a location drama. One day, I learned a lesson that would serve me well some 20 years later, when I came to develop a small business. The lesson that I learned in 1981 was that any small detail can really screw up a production. This is how I described it in my book entitled “Don’t Let Your Dream Business Turn Into a Nightmare”:

One day, one of the lighting guys wasn’t feeling well and left the set early. At the end of the shooting day, word was sent out to the set from the production office that the call time for the following day was being moved up from 7 a.m. to 6 a.m., because the production had fallen behind schedule, but the lighting guy didn’t hear the announcement because he had gone home early.

And you, as the Unit Manager, didn’t think of calling him at home to inform him of the scheduling change.

Ordinarily, that might not be a big deal, but this time, it was.

Because -the next morning, as the convoy of production vehicles was pulling out of the television station to make its way to the set – a small town about an hour north of the station -the huge lighting truck remained in place – and a bolt of white hot terror ran from the top of your head down to your toes, as you realized that the driver of the lighting truck was still in bed, because you hadn’t thought to call him to tell him about the change in call time.

Soon there would be 40 people standing around on the set while the lighting crew was waiting for the truck to arrive so that they could set up for the first scene- and whatever time they had hoped to pick up by virtue of the earlier call time would be entirely lost.

So you got into the truck yourself – and without a license to drive a rig that big or any idea of where the gears were – you willed the vehicle to the set – sweat pouring down your face -and you never forgot how that felt, for the rest of your career in television production – or the rest of your life.

The fellow whom I forgot to call was named Mike, and everyone called him “Mikey”.

Forgetting to call “Mikey” almost ended my career in television production before it began.

But the lesson that I learned stayed with me -and so, when I was developing my small business, which was a spa for men, I made a list of everything that I felt could go wrong – every single small detail that I could think of – that had the power to ruin my business.

And I checked that list every single day.

If you are developing a small business, or if you are already running one, ask yourself “What is the ‘Mikey Factor’ that could ruin or damage my business if I forget to do it. Is it insurance, a security system, labor regulations or building codes?

It takes a lot to make a business successful, but the smallest details can make it fail.