Why a $15 Minimum Wage Won't Work: What You Need to Know

Updated on December 21, 2018
Glenn Stok profile image

Glenn Stok shares his personal views of many social and economic concerns. His different perspectives may influence further consideration.

Raising the minimum wage to $15 isn't the solution for low-income workers since they’ll need to generate more than $15 to stay employed. Find out why...

Here's a simple rule:

If an employee does not bring in more revenue than they are paid, then they are useless to the company. The boss hired them as an investment, and that investment needs to be profitable.


Many People Don't Realize Why They're Hired

When I ask people what is the purpose of their job, they usually answer... "To support my family." They either misunderstand the question or they don't know why companies hire people.

It should be no surprise that it's to benefit the employer. Their emphasis is always on increasing their revenues.

I have spoken to a few people who are out of work and who have received job offers. They turn the offers down and I ask why. They tell me the pay is too low and they deserve more.

They say they won't work for less than what they think they deserve. When I hear that, I ask them what the value of their work is on a per-hour or per-day basis. I never get a straight answer. They simply don't know.

Then I ask them if they feel they can make more money for their company than they are asking for in salary. Some people didn't even understand the question. They think I'm crazy for suggesting that they should give more to their employer than they would get in salary. They feel it's owed to them.

I wonder where that idea comes from?

Another experiment I try is asking people to evaluate their own performance on the job. And I ask them if they feel they are compensated well for their performance. I am shocked to hear some people tell me that they don't want to work harder until they get paid more.

It doesn't work that way! I have hired people in the past, and I consider it an investment in the company. When an employee's job performance brings in more than their compensation, I give them a raise. Raising the minimum wage isn't a solution. If the minimum wage is greater than the value the employee can achieve for the company, then they will not be hired.

Understand the Facts About the Minimum Wage

People who demand a $15 minimum wage are clueless. They don’t understand the only way to be paid $15 is to do a job that earns more that $15 an hour for the company.

Many people don’t understand that they are hired as an investment for the firm. If the investment does not produce more return than the cost of the employee, then the investment (i.e. the employee) is eliminated.

Simply asking for more pay without being able to give the employer more results is a losing battle for everyone. What are they thinking? The problem is that the minimum wage advocates (this includes politicians) don't understand how finances work.

I'm afraid we will be seeing a lot of layoffs if the minimum wage is increased. The only real solution, other than automating the low wage tasks, is to educate the employees so they learn to earn more money. Then their salary will increase automatically and there would be no need for an artificial minimum wage.

Why We Have Unemployment Issues in America

Many companies are outsourcing to foreign countries instead of hiring our own citizens. They could keep the money in the U.S. by using the resources we have right here. They do want to hire. They do have work. But they also have a profit and loss balance to consider.

The other day I called a particular company for support of their product I had purchased. I was connected to a support rep. I asked the lady where she was located as I detected an accent. She said she is in India.

The technology we have today allows overseas hiring of business support personnel to handle customer's phone inquires. The problem with this is that the jobs are not being given to American Citizens.

I understand that customer service companies are cutting costs by outsourcing these jobs. But they are adding to the unemployment problem and they are negatively affecting our economy.

The next time you are helped by customer support on the phone by a rep of any company you do business with, ask the attendant where they are located. If they're not in America, write a letter to the CEO of the firm expressing your concern that they are doing an injustice to America by adding to the unemployment problem.

This may not actually help much because they still have to make sure they have a profit with their business. There is another side to the issue. That is: how much value they get from each employee in return for the salary they pay.

Is Big Business Destroying Our Country?

In a way I agree with the Occupy Wall Street protesters who complain that big business is destroying our country. I agree with a specific part of that argument... Big business has the money to lobby for their own special interests. They get what they want because the politicians get money from them.

The things they want are not necessarily the best deal for the economy as a whole. The government should not be influenced by lobbyists. I think that lobbying for anything should be made illegal without giving the same level of support to everyone else who wants to be heard.

One needs to be willing to show what he or she is worth. Occupy Wall Street protesters are not doing that.

The Reason Why Employers Hire People

I feel very strongly that people who are out of work need to understand the predicament they are in. They need to accept the fact that the longer they remain out of work the more they will become unemployable at their previous salary.

The company who hires them still needs to see a profit from the investment in that person.

Let me explain. A company hires a person for one reason and one reason only. It's an investment. And just like any investment, they expect a profitable return on their investment. When they see a profit they will eventually give those raises.

If they can't get more back than what they pay in salary to an individual, then there simply is no reason to hire that person.

An Example of a Great Return on Investment in Employees

When I first started my own business, long before the Internet was available, I contracted the services of a company to fold leaflets and stuff envelops to do my mass mailings of advertising literature.

The cost was amazingly affordable and I found out later the reason why. They hired people with disabilities to do the work.

I was told that the law allows paying below minimum wage for the handicapped. At least these good people who have integrity and intelligence can get work. Their only limitation is what their disability imposes. With whatever capabilities they have, they use it to get employment.

Unemployment Solutions

A lot of people have been out of work for a long time. Young graduates trying to find their first job are finding it difficult in this economy. Experienced baby boomers who had been laid off can't get back into the job market.

Employers feel that many unemployed workers are unskilled by now for lack of activity in their line of work. It’s unfortunate but they may just have to start over proving what they are worth to a prospective company.

I am disappointed to see that companies like Citibank are hiring workers in India and other foreign countries when we have perfectly good workers right here in the U.S. There are so many unemployed Americans because companies find cheaper employment out of the country.

I just argued that corporations need to show a profit and no one should complain about that. But how about it if those companies try to find solutions that still leave a profit by hiring Americans.

There has to be some common ground. Maybe a little more cost in paying salaries, and a compromise with personnel understanding that they need to start again somewhere and show that they are worth it.

Starting Over Again

Disabled workers can do telephone support. Other workers, such as the people I have interviewed, who are not disabled, can work for less—just to get back into the workforce.

Once they’re working again they'll have a chance to show their worth and get those promotions and raises. If they truly believe that they are worth it, they should take the opportunity to prove it.

I guess I am biased because I've heard too many people tell me they won't work hard until their boss gives them a raise. It just doesn't work that way. They have to show they are earning more money for the company first. The management needs to see a return on their investment. Then they will want to give a raise just to keep the profitable employee with them.

So there you have it. I know I may get a lot if flack for this. But I feel just having a clear and accurate understanding of why people are hired in the first place can eliminate a big part of the problem.

But there are indeed legitimate problems with corporations too. It's not just capable workers who want more than they deliver. Big corporations need to straighten out their act too.

Eliminate Bailouts

Another thing that I feel has hurt our economy are the fraudulent companies who continue to pay huge salaries to CEOs who have failed to make the company profitable.

If a company can't do business in a profitable manner then they should not continue to exist. That's just putting a strain on the economy.

Investors who bought stock in companies like AIG have lost their money. It was a mistake in my opinion to bail them out. An worse, to bail them out a second time when they gave the initial bailout money to the CEOs who haven't done anything to make a profit to begin with.

Remember what I said that hiring people is an investment? Well that goes for the CEO's too. The salary the company pays these top managers is an investment. If they fail to make a profit, they should not get more than they made. That has to change and out government should not be rewarding companies who fail to understand this simple rule.

It's not Wall Street that wrong. It's specific companies that reward unsuccessful management and who force politicians to favor their special interests.

How to Fix the Problem

Corporations have to take the responsibility to help fix the problem just as much as the government does. We are all in this together. Corporations should consider the fact that they may need to provide training for newly hired personnel.

Companies should be rewarded for training employees on the job. The government needs to motivate them to do that by offering a waiver on the employer's half of Social Security (FICA) payments when they hire an American Citizen and start them off with paid training. Presently the employee pays 4.2% through FICA withholding and the employer pays 6.2% FICA tax.

This will motivate companies to hire additional personnel even if they don't start off having a complete knowledge of the work.

I see no reason why any company in their right mind would hesitate to hire more workers if they could see a return on their investment.

© 2011 Glenn Stok

Reader Comments

    0 of 8192 characters used
    Post Comment
    • Glenn Stok profile imageAUTHOR

      Glenn Stok 

      7 months ago from Long Island, NY

      Eleanore Ferranti Whitaker - I have not confirmed your statistics, but you have made some important points about states raising taxes rather than controlling their spending.

      However, that was not the subject of this article. You only referenced this subject of minimum wage in one sentence, and I think you missed the point.

      It doesn’t matter if we are taking about $15 an hour or $100 an hour. The fact still remains that the employee needs to earn more than his or her wages for the company. If that can’t be achieved then there is no point hiring that person. As I said, it’s an investment.

      When I had my business and paid $80 an hour to my programmers, I had to see more than $80 an hour in receipts from sales. That is the profit expected for hiring programmers. The same applies to any field of service.

      It has nothing to do with states that fail to control spending, unless you were trying to point out that government agencies hire people at a specific wage without considering if they are profitable.

      Now, that’s a point that makes sense. Most government agencies have always been known to not function as a business. They don’t care to control spending and they don’t focus on profit, because they know they can always just raise taxes and get tax payers to cover the loss.

    • Ewent profile image

      Eleanore Ferranti Whitaker 

      7 months ago from Old Bridge, New Jersey

      Too late. It works just fine in NY and now NJ has voted to increase the minimum wage to $15.

      We know why it won't work in the "Walmartian" plantation states. Wages in the south and midwest are largely dependent on government jobs and therefore federal tax dollars.

      37 Moocher states, ALL Republican except Maine. are supported by 13 Dem States according to a 2013 report by the State University of New York's Rockefeller's Institute of Government.

      If you check the Government Accountability Office, (GAO.gov) you see the reasons why the Moocher states depend on handouts. These are the states with the largest number of prisons, military and defense industries and fossil fuel industries, all of which get up to 65% of every US tax dollar.

      So paying higher wages in these moocher states is as much a matter of the old Confederate sharecropper ideas of keeping wages low and getting as much federal funding as they can grab two fisted.

      These are also the states with the greatest numbers on welfare. The only reason they are not on unemployment, they pull the AL Labor Dept. dir told NPR in 2011, "we shift the unemployed to SSDI to keep our state from losing state revenues. We save $2 million a year getting doctors to cover high blood pressure, high cholesterol and Type II diabetes as a disability so these unemployed can collect SSDI instead of unemployment."

      The same people who say $15 an hour minimum wage won't work live in states where their teachers are earning what a bus boy in NY City earns.

      But then, these moocher states love to say our donor states have high taxes. I can explain why that is too.

      Every one of these 13 states gets back 72 CENTS for every $1 we pay in federal taxes. Meanwhile, 37 moocher states get back $1.35 up to Alaska's $2.10 for the $1 they pay in taxes.

      So our donor states have to raise state taxes so we can pay for what we don't get from the fed.

      This is going to stop. The donor states are now looking at ways to keep most of the federal tax dollars in our states to pay for what the federal government refuses to give back for the ROI on our federal tax dollars.

      That will mean moocher states will have to do what we have had to do. Cough up more state taxes to pay for the loss of donor states federal tax revenues.

    • Glenn Stok profile imageAUTHOR

      Glenn Stok 

      7 years ago from Long Island, NY

      Fuller-Life, I agree with you that politicians are focused on being reelected. That's the main reason why they don't do things right. But I am also thinking that if we had a businessman or businesswoman in the white house, they would know how to fix the economy. But who knows, even a business understanding may be put aside if they just want to be reelected. You do have a point. It's sad, Isn't it?

      Thanks for reading and adding your insightful comment.

    • Fuller-Life profile image


      7 years ago from Washington, DC

      Glenn, I don't think politicians are uneducated and lack the knowledge to do things right- They are. They know what to do, but they wont do it. They care more about being elected. Look at how they are fighting funding towards education and health? It's because they can afford private surgeons and send their children to better schools and international exchange programs, that they don't care about the rest of us. I have never seen any developed country that doesn't invest in infrastructure that is able to stand for long. We are in trouble with this ill founded ideological fight!

    • Glenn Stok profile imageAUTHOR

      Glenn Stok 

      7 years ago from Long Island, NY

      homesteadbound, Thanks for adding that additional info. That is indeed another problem we can add to the list of issues... That people are considered over-qualified based on their previous position. I respect you for willing to take a lower paying job. I have spoken with so many who refuse to take offers because they feel they deserve more. I'm not doubting that they do. But I feel it's better to take a job at less pay if it will help pay the bills. And it will hopefully lead to a raise when things improve.

      Well, good luck to you. I hope you find something soon. And thanks for reading and commenting.

    • homesteadbound profile image

      Cindy Murdoch 

      7 years ago from Texas

      This is a great hub. And you are so correct, and Ktrapp also, education is a big problem. I have looked for a job, and they are hard to come by. Sometimes it's hard because I'm not given a chance (I think) because I am over-qualified. I hate when they ask how much I have made, because I have been willing to take so much less, but fel I have not gotten the chance. Just my two cents!

    • Glenn Stok profile imageAUTHOR

      Glenn Stok 

      7 years ago from Long Island, NY

      ktrapp, Education and Healthcare are both broken and need to be fixed. It's sad that these things are left to deteriorate in a country as great as America. It won't be great for long if these problems aren't fixed soon. You're so right that these two things also affect unemployment.

    • ktrapp profile image

      Kristin Trapp 

      8 years ago from Illinois

      Like most problems in this country, when you start to peel away the layers to get at the root cause of the problem, in this case outsourcing, you realize there are multiple failures that have resulted in the problem. And some of these causes may have started years before the problem, making it difficult to unravel.

      I for one, just wish it would all get fixed. I think our education system is lagging, but the cost of a college education is absurd; our healthcare costs have skyrocketed, yet we seem sicker than ever; as a nation and world we embraced the internet and technology, yet as unemployed Americans we lament that people a world away can take our jobs. I think outsourcing is a big conglomeration of unanticipated problems from years past, and fixing it is going to be difficult.

    • Glenn Stok profile imageAUTHOR

      Glenn Stok 

      8 years ago from Long Island, NY

      Ktrapp - Thank you for expressing these additional issues. I have to totally agree with you. The entire picture is more complicated than any single item. The issues you mentioned are definitely part of the problem too.

    • ktrapp profile image

      Kristin Trapp 

      8 years ago from Illinois

      I think an additional issue is the cost of benefits which is a huge cost to businesses, making it more affordable to outsource. And because the cost of living for Americans is so much higher than in places where outsourced workers live, it makes it difficult for Americans to accept jobs that just aren't enough to pay the bills.

      I also know several people in the IT field and they have told me that they try to hire locally for their American firms, but they hardly even get any applicants. So, in many instances they have no choice but to outsource. I think the blame for this may be with the education system in the U.S.

    • Glenn Stok profile imageAUTHOR

      Glenn Stok 

      8 years ago from Long Island, NY

      @Fuller-Life - Very good points you made. That may very well be part of the problem... Americans don't take those jobs so they get outsourced to other countries. As for lower pay to the disabled, I think the reasoning is that their disability slows them down. So the payment still needs to be in line with the quantity produced. At least they appreciate the dilemma and accept it.

    • Fuller-Life profile image


      8 years ago from Washington, DC

      Excellent layout of the argument Glenn. I agree with you on the need to try to employ Americans. But if Americans can't accept lower but reasonable pay, I don't see any justification why a company can't outsource. Also, I think it's wrong to underpay disabled people when they can do administrative work just as well as the able bodied. I'm convinced that profit is as much a moral issue as it is political.

    • Glenn Stok profile imageAUTHOR

      Glenn Stok 

      8 years ago from Long Island, NY

      @gmwilliams - Thanks for being the first to read and comment. I appreciate the high standing you gave it.

      @Erin Boggs - Yes, I think everyone who writes hopes that their efforts will catch the attention of those who can make changes. Thanks for reading and for your kind comments.

    • Erin Boggs1 profile image

      Erin Boggs1 

      8 years ago from Western Maryland

      You have made so great points in this hub, now if only we could congress and so big business to read your hub...and the people that feel they are too good for certain jobs too.

    • gmwilliams profile image

      Grace Marguerite Williams 

      8 years ago from the Greatest City In The World-New York City, New York

      This is an excellent hub. You have elucidated many excellent and insightful points.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, soapboxie.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://soapboxie.com/privacy-policy#gdpr

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)