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Tuesday, August 13, 2013

Hidden Cost Of A Low Minimum Wage

Jim Alexander e-mails:

I read your recent commentary on raising the minimum wage.What these companies don't seem to realize is that constantly having to hire new people is an expensive undertaking. There is a cost associated with hiring and training, and the more turnover they have due to low wages, the more expense they incur. Doubling the minimum wage would encourage employees to stick with the company, which in turn would lower turnover costs. It would also result in better-trained employees, since turnover results in losses of people who have been trained. Happier employees also translates to better customer service, which in turn brings in more customers (and more money).
Consider hiring and bringing an employee to fully-trained status as a Bell Curve. More turnover lowers the average height of that Bell Curve, meaning that employees are less trained and more expensive. This is all simple math that any business owner should know. Why McDonald's and other associated businesses cannot figure this out continues to baffle me. Thanks for giving this concern a forum.
Well said, Jim. It's another case of people predicting disaster despite the past proving that no such disaster will occur if a positive social change is made. That is, whenever wages have gone up in the past, employment hasn't dropped, and the economy has thrived because the workers have more money to spend.

My gut tells me the same will be true of all the gloom-and-doom predictions about Obamacare. What I like to see -- if those predictions don't come true, and having 30 million more people covered by health insurance accrues to the positive for our nation -- is someone holding those who made those predictions accountable. There's not enough of that in our media, other than on "The Daily Show," which routinely shows clips of people contradicting themselves over time or being outrageously wrong about something that turned out to work despite their best efforts.