December 21, 2006

Minimum Wage – What Does It Mean To Entrepreneurs

Here we go again…

It looks like the minimum wage is going up significantly again. So is this a good thing or a bad thing?

In my opinion it is a bad thing and here’s why…

The minimum wage is designed for low-end, part time, temporary jobs. An example would be fast food jobs. Fast food restaurant business is based on low cost. Raising the minimum wage will raise the cost of products and services provided.

Is it really a good thing or a bad thing?

Let’s explore this some more…

Raising the minimum wage does a couple of things:

First, the cost of many products and services will rise because labor costs will go up. This is usually the biggest cost of any business.

Second, less people will buy these products and services because of the cost increases therefore the companies will have to downsize in order to compensate for lower demand.

Third (which I believe is the worst of all) the incentive for people to do better is now decreased . This one requires a little more explanation.

Everyone wants to live a better lifestyle. Wouldn’t you agree? Of course they do. You do too, don’t you?

If we raise the minimum wage too much the incentive for improving ourselves to find a better job or opportunity goes down. In other words there is less incentive, less motivation to improve and get new skill sets.

Unfortunately most people usually take the easy path. If the path gets too easy there is less motivation for them to improve themselves and go elsewhere.

Can you see why it’s important to keep minimum wages down?

It has nothing to do with the money itself. It has everything to do with improving our nation.

When minimum wages are low, there’s tremendous motivation to want to get out and improve the situation. More money means a better lifestyle. It means you can buy more goodies.

When I was a teenager I had a minimum wage job and I hated it. It didn’t take me very long to realize it’s time to improve and I took action. I’m glad the minimum wage was low otherwise I would not have been so motivated. I also may never have become a millionaire.

But, in order to get more money you have to do something about it. You must increase your skill set so that you can make more money.

I hope this is all making sense to you.

Remember… we get paid what we are worth. We are worth what we know and how we can apply it. We are better off to improve ourselves and make more money.

Getting handouts isn’t the way to improve your life. This is only temporary.

So next time when you see minimum wages going up, ask yourself:

Are we really helping people by doing this?

Are we hurting their long-term future?

To Your Success,
Andy Fuehl