, , , , ,

ImageA long time ago and far away – South Africa, 1975 – a fruit train was about to be unloaded when the forty regular workers went on strike for higher wages. To avoid the fruit rotting in the hot sun, management jumped in and got to work. Six men and two women got the job done in half the time it usually took forty workers to do the job.

Management promptly fired all the striking workers and hired ten new workers in their stead. At the same pay rate as the previous workers. The work, from that day on, got done in half the time, at half the cost to the company. Business owners are courageous, innovative, and hard working. And we’re smart. We’re in business to make money, and to do that we need to produce great value – that is products and services – at a reasonable price. When the minimum wage is hiked, we have four options:

1. Hire less people who have to work harder = less jobs.
2. Mechanize so that we need to hire less people = less jobs.
3. Close the business down and everyone loses their jobs.
4. Outsource to other countries where people will appreciate the opportunity to work and accept much less in pay = local workers lose their jobs.

In Rhodesia before Mugabe took over, I was a manager at the Holiday Inn in Bulawayo. A black cook in the kitchen told me, “When Mugabe takes over, I will get your job and get paid what you get paid.” I said, “Why wait until Mugabe takes over? Let’s start right away! Take my jacket, I’ll take your apron, and let’s swap roles right now. I can do your job. If you can do mine better than me, I will resign, and you can have it. How’s that for a great deal?” The poor fellow had been listening to the socialist junk spouted by his leader, so he really believed what he proposed. Well, after thirty minutes, he sheepishly approached me while I was preparing a dish on the stove, and offered me my jacket back.

You will be paid what the marketplace deems you to be worth, not what you need or what you think you’re worth. If it’s easy to replace you, you get paid less. It’s really that simple. The more unique your service, the harder it is to replace you, and the more value you create, the more people will pay you. So brain surgeons get paid more than box packers and CEO’s get more than desk clerks. If you think you can do the CEO’s job, apply for it. Wal-Mart grows because they offer great value at low prices. Nobody is forced to work there; they choose to work there.

Remove minimum wage, open the borders, and watch the economy grow fast. And those who don’t work hard, the clock watchers, those who refuse to improve their skills, and those who want to be paid what they need instead of what they rightfully deserve will get their due comeuppance. Nobody wants to pay ten dollars for an ice cream that is worth a dollar. Is your product or service needed and scarce? Unique, special, essential? Then you’ll get paid more; not because some collectivist politician thinks he can get more votes by hiking the minimum wage.

“Don’t like the minimum wage? If you’ve got minimum skills, minimum education, show minimum motivation, and provide a minimum contribution to the workplace, why should someone be forced to pay you more?” Think about it.

Robin Elliott LeverageAdvantage.com