Monday, May 16, 2016

The $15 minimum wage is an employee-relations nightmare

Last week, Cleveland’s City Council introduced legislation to raise the city’s minimum wage to $15. Mayor Frank Jackson has come out against the bill, stating that he opposes the legislation because it puts the city at a competitive business disadvantage against other cities: “I continue to support a minimum wage increase if mandated by the state or federal government and not just for the City of Cleveland. For the full economic impact this has to be a united effort throughout Ohio and the United States.”

There is much debate over the positive or negative impact of a $15 minimum wage. Where you fall on the debate depends on whether you are pro-employee or pro-business, and, if you look, you can find empirical evidence to support either argument.

Here’s one argument, however, that I have not come across. If the minimum wage raises to $15 an hour, what happens to all of those employees already earning $15 an hour? What happens to the employee, hired 10 years ago at $7 an hour, who worked his butt off for the past decade, and, through a series of promotion and raises, earned his way up to $15 an hour? Those employees will not receive a proportional raise to keep pace. The $15 minimum wage will convert these millions of workers into minimum-wage employees. And, for better or for worse, there is a certain stigma with being classified as minimum wage—especially if you’ve worked hard for years not to be minimum wage.

There is no easy answer or quick solution to providing people with a livable wage. There is lots to discuss before we make the reflexive decision to cure the wage gap in this country by increasing the minimum wage. One issue that cannot be discounted is the employee-relations nightmare that we will create for those already earning this new minimum wage.