Minor Thoughts from me to you

The minimum wage isn't bad because it hurts employers. It's bad because it hurts non-traditional employees.

Coyote Blog » Blog Archive » Case Studies on the Minimum Wage

To run our campgrounds, we mainly employ retired people. Of my 500 workers, well over half are over 60 years old, more than 150 are over 70, some 25 or so are over 80 and a few are even over 90! Most are on social security and medicare, and many have pensions and retirement health plans. A good number are disabled and have some sort of disability support. While they work slower, they make up for their low productivity in part by their friendliness with customers and their life experience.

Most of my employees travel the country in their RV. They take most of the year off, but many like to work over the summer to make a little money and to pay for their camping site. I give many of them a free or subsidized campsite, worth about $500+ a month, plus all their utilities and then pay them minimum wage for the hours they work. Many are thrilled with these terms - so many that I have a waiting list now of over 300 names of people who are looking for this type work. This list is currently growing by about 10 names a day.

There may be employers somewhere who have a power imbalance over their employees. Some days, I envy them. My employees most all have independent means of support. Further, they all have wheels on their houses, so they can and do pick up and leave if they aren't enjoying their job. And, if they don't like our company, there are thousands of other campground operators who are looking for help.

So why are so many people lining up for minimum wage jobs when lefties and progressives are telling them that they should not want those jobs? Here are some reasons:

• They value the amenities that come with the job, including living for free in a beautiful outdoor setting, something it is impossible to value under minimum wage laws
• They have other means of support, so the money is incidental. In fact, I get more inquiries from employees asking me to reduce their hours so as not to mess up their social security or disability payments as I do people asking for more pay
• They get to work with their spouse as a team. There are not many employers out there that let a husband and wife split up work between them any way they want or even work together - can you imagine such a situation on a GM assembly plant?
• They would have a hard time getting hired by anyone else. Very few employers will hire new workers in their sixties, and certainly not older than that. Older workers can be slower and less productive. For $12 an hour, I would have to hire younger workers too, but at minimum wage, I can afford the lower productivity of older workers and gain the benefit of their experience and trustworthiness.

This last point help set the stage for our cases. I love hiring older workers at $5.15 an hour, and they love the job and line up for it. But what happens when I have to pay these less productive workers $6.00 an hour? What about $7.50? What about at $12.00 an hour? Here are some examples of what happens

Case 1: The jobs just go away ...

Case 2: The jobs get outsourced to contractors ...

Case 3: The jobs get automated away ...

Case 4: Prices go up to customers ...

Coyote Blog » Blog Archive » Update on the Arizona Minimum Wage

We are changing our operating strategy from hiring retired couples who live on-site to hiring younger workers. This is a change I really hate. The business model of hiring retired folks who live on-site at a campground is an old and successful one. Folks in their seventies (and I even have workers in their eighties and nineties) don't work very fast, and they have more workers comp claims, but they had the ability to live on-site and life experience that helped them with customer service. But trade-offs that worked at $5.15 an hour don't work as well at $7.25 and higher. So far only selectively, but we are hiring younger folks from the local community to come in and do some of the janitorial and maintenance work. Even if I pay them $8 or $10 an hour, they make sense if they can be twice as productive.

Businesses, sadly, don't have an unlimited ability to raise their prices. Every time the cost of labor goes up, the profit margin goes down. When the profit margin goes below 0% (or whatever margin the owner is willing to accept), prices must go up. If prices can't go up -- as frequently happens in a competitive marketplace -- costs must go down. If the government mandates that labor must cost at least some number, per unit, then the number of units has to go down.

In this case, Warren Meyer is faced with the unpalatable choice of reducing the number of elderly employees at his company or losing the ability to run his business. This isn't something that his specific employees want. They're thrilled with the amount he was giving them. I strongly suspect that they'd work for even less, if given the choice. But they can't. They're not allowed to. They're forced into unemployment because the government refuses to consider that they may not fit the mold.

The minimum wage isn't bad because it hurts employers. It's bad because it hurts non-traditional employees. We're not all alike and it shouldn't be our government's policy to criminalize those who have different preferences about how they'd like to be paid.