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Making life difficult for states bottom rung workers
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Once upon a time in a quaint little place called California a young person between 16 and 17 years of age could get an entry level job with ease.

It involved working after school and not after 10 p.m. on weeknights and on Saturdays and Sundays. The skills needed were a willingness to learn, showing up for work on time and hustling. Minimum wage in 1972 was $1.65 an hour. Student workers, as the 16- and 17-year-olds were called, had a lower minimum wage - $1.35 an hour.

Back in 1972 teens who worked did so for a variety of reasons. Some had to help support their families or pay for their own clothes and such due to their parents' financial situation. Others worked to save money for college, pay for a car, or simply to have spending money.

Employers helped teens learn skills such as how to interact with people, customer service and the nuances of a particular job or craft. It was something young workers could take to the bank. Often times they worked their way into full-time jobs after high school graduation or were able to use their experience to quickly land part-time jobs while going to college.

It was paid on-the-job training.

But that started disappearing when the state switched to a universal minimum wage.

Employers had been willing to take chances on young people to get them started thanks in part to the fact they weren't costing them as much as a worker 18 and older.

As summer jobs started disappearing for student workers due to the increased labor costs, Uncle Sam stepped up and started underwriting grants to local agencies to hire student workers.

Lawmakers started funding programs aimed at providing high school students with aptitudes needed to make them employable.

The government created a problem where there wasn't one in terms of student employment and then "fixed" it by spending tax dollars.

There are arguments the government does employees a favor when they raise the minimum wage by dictate. But look at what's going on right now with a number of retailers such as Gap, McDonald's and Walmart that are starting to move up minimum wage pay on their own. They aren't doing it out of fear of government action. Instead, they are reacting to the market.

For years employers such as Costco and In-N-Out Burger paid significantly higher than Walmart and McDonald's for similar jobs. The reason was simple. They wanted a more stable and effective workforce that had minimum turnover since training can be expensive.

The reason Johnny-Come-Latelys in the retail and fast-food sectors are raising wages above the minimum is the improving economy is making it tough for them to keep workers. In other words, their workers are leaving to get better paying jobs and the firms they are departing from are finding it tougher to replace them.

Walmart and McDonald's are learning the lesson that Henry Ford did back in 1913. The reason he more than doubled the then prevailing wage of $2.25 a day to $5 was due to turnover. He was hiring 52,000 men a year to keep 14,000 jobs filled. As a result production of the Model T lagged significantly.

The year before Ford jumped wages to $5 a day, his assembly lines were producing 170,000 vehicles a year. The first year of $5-a-day pay his assembly lines were churning out 202,000 vehicles annually.

Higher pay actually reduced labor costs by eliminating costly turnover that severely impacted production and quality.

It is a misnomer that Ford raised pay so workers could afford to buy the vehicles they produced. That said, better paid workers spent more money which in turn created more wealth for capitalists like Ford and generated more jobs.
It happened not with government intervention but because businesses understood the value of better paid employees especially in times of growth.

It is clear in businesses such as retail, food, and the service industries where margins tend to be razor thin, the Affordable Care Act had the unintended consequence of reducing the hours of lower paid employees to avoid firms from shouldering the additional burden of health insurance. So many who were working more than 30 hours a week saw hours reduced not just under the 30-hour threshold but farther to 20 to 25 hours so employers could build flexibility into scheduling when it came to the need for overtime and covering sickness.

It made getting a second job critical for many making minimum wage or slightly above it. They may not have had their pay cut in terms of hourly rates but slashing hours was even worse.

It exacerbated the problem that many service industry employees have of not knowing their work schedule for a particular week until a day or so before it starts.

This plays havoc with their ability to schedule medical appointments and plan for family activities. Worse yet, it makes it almost impossible to find critical second job since hours are ever changing.

Assembly Bill 357 before the California Legislature seeks to remedy that by requiring service industries to give their employees their schedules two weeks in advance. An improving economy would prompt most employers to give more notice if they discovered more and more workers were departing for firms that offered more advance notice of work days.

One wonders what unintended consequences successful passage of Assembly Bill 357 will create to further make life difficult for employees on the bottom rung.

This column is the opinion of Dennis Wyatt and does not necessarily represent the opinion of Morris Newspaper Corp. of CA.


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