About Minimum Wage

It's Not OK That Your Employees Can't Afford to Eat 

by Peter Cappelli

   
It wasn't that long ago that in most companies, especially large ones, a fair amount of time was spent worrying about whether the company's practices towards employees were fair. One of the functions of human resource departments was to advocate for the interests of employees.

The motivation wasn't entirely altruistic. Since WWI, employers figured they could keep unions out by giving employees virtually all of the wage and benefits they would have gotten from joining unions. Even without that concern, though, the leadership of the company considered it part of their job to strike a balance between the other demands on the business and the needs of employees.  They were one of the important stakeholders in the business, along with customers, shareholders, and the community around them.

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Let's be clear about the wage levels that are associated with not having enough to eat. A family of four with one breadwinner is eligible for food stamps if they earn less than $2500 per month. That is the equivalent of a $15 per hour job and a 40 hour work week.  The government has determined that full-time workers earning less than that do not have enough money to feed their families on their own. If that breadwinner earns less than $16 per hour, they are also eligible for Medicaid assistance to provide healthcare. Depending on where they live, that breadwinner is also eligible for subsidies to help pay for housing.

Jobs paying $15 per hour are not the concern, though. Those are routinely seen as good jobs now. The concern is those jobs paying at or around the minimum wage, $7.25 per hour or only $1160 per month for a full-time job. About 1.6 million workers in the U.S. are paid at that level, and a surprising 2 million are actually paid less than that under various exemptions. If you are an employer paying the minimum wage or close to it, the Government has determined that your employees need help to pay for food, housing, and healthcare even if they have no family and no one to look after but themselves.  As we've been reminded this season, many of those workers also need help from families and coworkers to get by.

No doubt the reason low-wage companies continue to pay low wages is because there are plenty of workers willing to take jobs at those wages, and the need to pay more to avoid the risk of being unionized is largely gone. But "can" and "ought" are not the same thing.