Ingram's April 2024

REFLECTIONS

by Dennis Boone

At the Intersection of Business and Life

Minimum Wage or Maximum Output?

The economic fundamentals of low-skilled work ers are changing. That’ll soon be the case for higher-level workers. Is your business prepared? One of the advantages of pushing retirement age—it’s not a long list—is that you remember things that some folks might prefer to remain forgotten. A reminder of that popped up recently with a news story foreshadowing widespread adoption of fast-food place robotics in California as the state-mandated minimum wage for workers in those establishments officially hit $20 an hour. It wasn’t so very long ago that the livable-wage crowd in Kansas City was demanding a $15 base for such workers. Well, that’ll be gone with the next wind passing through these parts, as well. Thanks to inflation running at 40-year highs—and no, Mr. President, you don’t get to count a slower rate of inflation as a “reduction”—$15 an hour has become something of a floor for those wage-earners. Breezing through indeed.com as April approached, Kan- sas City-area McDonald’s locations had nearly 500 posted openings—at both the corporate level and in franchisee operations—with many of the customer-facing positions starting at $15 an hour. But here’s the thing about long memories I mentioned earlier: Back in the late 1990s, when the nation was experiencing near historic low levels of unemployment at 4.1 percent (compare that to the current 3.9 percent rate), McDonald’s was advertising for counter help at the princely sum of $10 an hour. It wasn’t doing so in response to pressure from social-justice warriors or knuckling under to federal/state mandates. It was simply react ing to labor market conditions as they presented themselves. If you run that $10 an hour through the magic inflation calculator mill today, you get $18.38 an hour. So anybody still arguing for the $15 benchmark is shortchanging themselves by more than 20 percent—and any business executives clinging to 15 beans per as a pay-scale floor deserve to be up all night worry ing about the survivability of their enterprises. Consider this, though: that labor market with 4.1 percent unemployed came against the backdrop of a workforce of right around 129 million. Today, we’re north of 161 million working Americans and a 3.9 percent jobless rate. The work force is 17 percent bigger; the jobless rate is nearly 5 percent lower. Yet companies coast to coast are still hollering about a short age of qualified workers. Perhaps the laws of supply and demand are being validated right before our eyes with wage scales that haven’t kept up with inflation while the supply of available workers was increasing. Of course, everyone who has studied work-force dynamics for more than 15 minutes knows that the issue in America isn’t the numerical availability of workers; it’s the distribution of skills. We have too many people who can’t do things that businesses

really need done today. (Aside to liberal- arts colleges/programs: Are you listening?) Last month in these pages, we ex plored a rather robust network of K-20, public-supported and private-sector education, job-training, retraining and reskilling programs. Yet even multiple pages of magazine text can only begin to scratch the surface of what’s avail- able out there. It’s a lot. Even with that thriving ecosystem to support work-force development, though, companies still sound the klaxon over a talent shortage. The solution should be pretty simple, as a number of our Best Companies to Work For over the years have demonstrated: If you’re among those feeling the squeeze at XYZ Amalgamated, you need to rethink your operating model. The tech tools and content exist to create XYZ University, your own in-house platform for staff training and develop ment, tailored specifically to develop the skills you need on staff. At scale, most companies outgrow the need for outsourced financial re- porting or marketing services; it simply makes more sense and is more operationally efficient to bring those functions in-house. At the same time, the digital age has made the acquisition of knowledge cheaper and more immediate than ever for the rest of your team. That’s only going to pick up steam. This year’s Employer Series in Ingram’s tackles some of the thorniest challenges facing employers in a pot entially pre-recessionary period. In March, interest alone on the $33 trillion national debt overtook all other areas of federal spending. Anyone who has lived out that dynamic at a small business level knows this will not end well. Irrespective of the party that secures the White House for the next four years, we’re in for a bumpy ride. The best way to apply the shock absorbers in advance is to have a staff that’s trained, engaged, flexible, and cross-functional. If you’re not there yet, it’s time to make your move.

Dennis Boone is the edito rial director at Ingram’s. E | DBoone @ Ingrams.com P | 816.268.6402

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I ngr am ’ s

Kansas City’s Business Media

April 2024