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“You’re not supposed to make minimum wage forever”

Posted by David A. Peterson on 5. September 2013 in Economics |

Your not supposed to make $15/hr foreverNo doubt you have heard about the debate concerning the minimum wage. The objective of this debate is to make the minimum wage a “living wage.”

On the surface it sounds like it should make sense… corporations have been doing this type of wage adjustment for years. Example: If you are a Business Manager who lives in Orlando and are asked to transfer to NYC then you should expect to receive a cost of living adjustment.

Even a minimum wage employee, if they were to transfer from Orlando to NYC there would probably be some wage adjustment. So, on the surface if you are going to work at an entry level job shouldn’t you make a living wage?

Short Answer: No

The reason that you should not make a living wage for your minimum wage is simple… They are two different things. To clarify here are my definitions:

  1. Living Wage – Cost of living adjustments due to the economic conditions in a particular MSA.
  2. Minimum Wage – The wage for an unskilled entry level job.

Tracy Burns on Fox’s Bulls & Bears said it best “You’re not supposed to make minimum wage forever.” The point is minimum wage jobs are entry level unskilled positions. Once you pick up skills on the job, and you acquire some experience, you are expected to advance up the economic ladder.

If you are not advancing up the ladder from an undesirable unskilled worker to desirable skilled worker your wages will not and should not go up. If you are not advancing in a timely manner (months not years) then it is expected that the minimum wage worker will seek out the job skills needed to advance.

That’s the whole argument about not raising the minimum wage – it’s only meant to be a temporary wage for unskilled workers. It is up to the worker to become skilled at the job and seek out new positions with better wages.

Workers who are striking for higher wages should heed this warning, you may get the higher wage for a short period of time. If the wage gets high enough a skilled worker or a machine will take your place. Here are four examples:

  • We rarely stop at toll booths anymore
  • Walmart has some self checkouts – it could easily add a few more
  • Illegal aliens will soon become legal residents – they may want those jobs
  • In the military if you don’t advance in a timely manner when your enlistment is up they ask you to leave!

I get it – the current minimum wage is not enough to raise a family. This wage level is not meant to be a career. As Tracy Burns said “You’re not supposed to make minimum wage forever.”

 

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