Is mandatory minimum wage hike to $15/hr good or bad for managers?
After a lengthy period of lobbying for increment of the minimum wage, Seattle became one of the first cities in the US to pass the law and begin its implementation on April 1 2015. The push to have the law passed for other places is gaining momentum with San Francisco adjusting its minimum wage to $11/hour and has plans to raise it to $15 by mid 2018 (ShiftWa). Other cities such as Berkeley are on course to increase the minimum wage to $12.53 next year. The law if passed in other states targets to increase the minimum wage from $7.25/hour (ShiftWa). Although laden with several benefits notably the increased purchasing power and a high quality of life, the mandatory minimum wage hike to $15/hour would be bad for managers.
The law will have a negative impact on small businesses where many mangers serve in capacities such as hotel managers, service managers, branch managers and other related positions. Although the big employers such as McDonalds, Wal-Mart and others might be in positions to afford paying their employees the pay hike, the small businesses struggling to employ professionals will not manage the salaries (Meer & West 2015). As such, the small businesses, which employ nearly half of the private sector in the US, will remain without professional managers, and thereby reduce the employment chances for managers (Meer & West 2015). The big companies with ability to hire mangers will avoid it and choose to outsource for jobs from other cheaper places overseas.
The proposed pay hike will also result into loss of jobs and employment opportunities for managers. The pay hike will result into business owners increasing their cost of goods due to the increased cost of production. For instance, in Oakland California, a 36% increase in the minimum wage from the previous $9-$12.25 started implementation in March 2015. Many restaurants have increased the price of food by as much as 20% (Ucilia, 2015). In Seattle, many restaurants have closed leading to job losses for many people including managers since the restaurant owners cannot afford the huge wage bills and other expenses. The restaurants that have closed range from small diners to big ones that need to hire managers. The restaurants are doing so because a huge portion of their earnings (36%) goes into paying for labor (Ucilia, 2015).
The restaurants are also looking into ways of merging functions, adding mandatory service charges, and avoiding voluntary trips. Some of the functions that restaurants want to avoid are the reasons why they need managers and it is likely that the restaurants may find managers as unnecessary. Other personnel such as supervisors can handle reduced workloads and lesser managerial work. As such, the managers are being seen as intruders and complications to a bloated cost of production for many business and hence their reduced employability (Meer & West 2015).
The pay hike, which results, into business owners downsizing their staff means that managers may have more work on their hands. The managers who survive the sackings will be required to manage smaller number of employees. This can be very challenging to the managers since they will be required to accomplish big tasks with not only fewer employees but with other resources such as funding and equipment somehow skewed as businesses allocate more funds to pay wages (Meer & West 2015). Managers working with reduced resources may be required to take up active junior roles in addition to their managerial work and this result into overworking and poor morale.
The pay hike would mean that managers who are also consumers in the public have to contend with increased cost of living. The major reason for a pay hike has been to increase the purchasing power of employees. However, in places where pay hikes have been implemented, there has also been an increment in the prices of goods and services as business people seek to recoup more profits to cater for salaries. Taking the managers to be consumers, their increased wages will most likely end up being used up in meeting increased cost of goods. Shelby Sloan, a manager at a Universal Beauty Supply and Salon in Oakland, California states that everybody is raising their prices. She gives an example that Chili at an outlet called Wendy’s used to cost 99c. However, the increment in minimum wage caused the business owners to raise the cost to $1.49 (Ucilia, 2015). As such, if a certain manager used to purchase his/her chili at Wendy’s they will now be required to make more money because the cost of living has gone up. The argument that managers will use up their wage increments to meet increased costs holds when the managers operate within areas implementing a pay hike, a scenario very likely for many managers.
The increment in minimum wage stands to hamper the career progression of many managers. This is so because; managers will be in less demand especially in the restaurant industry, which has been affected severely by the increment in wages. The business owners will seek to downsize thereby laying off junior manager and hampering their career progression. The employers will also be hesitant to promote managers since promotions come with increased pay, which the employers would want to avoid (Meer & West 2015). The merging of responsibilities, roles, and functions means that the managers might lack specialization and lack of expertise in critical department say human resources, or marketing when they are required to handle several departments.
The minimum wage law will intensify competition for minimum wage positions. As such overly qualified people such as managers will be compelled to vie for minimum wage positions thereby pushing younger entrants out of the market. The mangers will contribute to continued unemployment by limiting the number of inexperienced, young workers out of the market (Ucilia, 2015). The managers themselves might be victims of the intensified competition for minimum wage positions.
The laws stand to be applied inconsistently leading to many manager facing different working conditions and pay rates. For instance, many states have set their own minimum wages which are all above $7.25 per hour (ShiftWa). Washington DC has a minimum of $9.32 per hour. As such, the variations in minimum wages being given to employees and mangers alike might widen the differences between working in different states.
Managers being part of the management teams will face increased boycotts and strikes and other related ways of pushing them to increase wages. The go slows likely to be experienced in places such as restaurants as workers push for minimum wages have a negative effect on managers. The employers will require the managers to find solutions to the boycotts. The employers will also demand that the mangers continue to deliver profits in spite of the challenges in labor. These pressures translate into low morale and possible career retrogression as managers may choose to resign, take on lowly jobs among other moves that will cause them to experience less pressure in handing industrial strife.
References
Meer, J., West J. (January 2015) Effects of minimum wage on employment dynamics. January 2015. Retrieved 9 July 2015 http://econweb.tamu.edu/jmeer/Meer_West_Minimum_Wage.pdf
Ucilia W. (2015) What a $15 minimum wage means for US Small businesses web 9 July 2015 http://www.theguardian.com/business/2015/apr/15/what-a-15-minimum-wage-means-for-us-small-businesses
Shiftwa. More Seattle restaurants close doors as $15 minimum wage approaches
Retrieved 9 July 2015 https://shiftwa.org/more-seattle-restaurants-close-doors-as-15-minimum-wage-approaches/
