Paul Saginaw, co-founder of Zingerman's Deli in Michigan, pays his 630 employees up to $21/hour, offers health and dental benefits to all workers, provides paid time off, and 401k retirement plans. This week, Mr. Saginaw is in Washington lobbying Congress and the restaurant industry to raise wages for all workers!In the article, Saginaw had this to say:
Paying entry wages our employees can live on has contributed to our profitability and our annual compounded growth rate of 10 percent. Raising the minimum wage is long overdue.
If paying an increased entry level wage actually increased profitability by itself, then there would be no need to have a minimum wage, as companies would pay the higher wage on their own.
So I looked up the restaraunt, and they sell sandwiches for $13 each. Fountain sodas cost $2.50 each. Then they require tipping!
Compare that to Subway: A foot long sub for $5, and soda is $1.5. No tipping. I have no problem with a business VOLUNTARILY paying their employees more than the minimum. Just understand that requiring all businesses to do so will raise prices to the point where the increased wages mean nothing. Increasing the minimum wage to $10 an hour, as they are advocating, would increase labor costs in these types of businesses by 45%. Since labor is the biggest expense of most of these businesses, an immediate price increase of about 50-60% would be needed to keep these businesses afloat.
Since the minimum wage would be high, this would remove the desire for skilled trades to go to school and learn skills, because no one would want to work hard to learn a skill, only to earn the same money as a burger flipper. This wage increase would send shock waves through the entire economy and cause incredible inflation as companies struggled to afford the new wages. The Fed would be forced to raise interest rates to tighten the money supply in response. This would slow the economy and eliminate jobs.
I got in a similar conversation with my girlfriend last night. She showed me an article that pointed out how the US is the nearly only country that does not mandate paid maternity leave. She used Canada as an example. She said that Canadian law mandates that an employer pay for 52 weeks of parental leave: For the first 17 weeks, 55% of a woman's pay ($500 a week maximum), and the remaining 35 weeks can be taken by either parent, and must be paid by the employer at a rate of 55% (maximum $485 a week). To be eligible, an employee must have been employed for 600 hours.
She teaches courses in how to run a business, and I can't believe that she did not see the obvious problem: A business is obligated, after 15 weeks, to pay for a woman to take a year off with pay at a cost of over $26,000, or a man 8 months off with pay at a cost of $17,000. The result is obvious: Don't hire women.
So then she asked, "What about Mexico? Surely the US can match Mexico? They require that women receive 12 weeks of paid maternity leave!"
You mean the Mexico that is currently flooding the US with illegal immigrants that are willing to risk death to sneak through the desert because there are no jobs to be had? The Mexico where the female labor participation rate is only 34%, while the male labor participation rate is 62%? The Mexico where the average household income is less than half of the US average?
People need to stop demanding that the government force others to give them free stuff.