📈 Reimagining The Minimum Wage 📉
2009: $7.25 / 2019: $7.25
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The minimum wage: same as it ever was, same as it ever was.
As we get closer to the end of the year, folks are doing the 10 Year Challenge, sharing photos of themselves a decade apart. The 2009 and 2019 versions of Ashley are very different from one another.
The photo on the left was taken in 2009, just after I finished teacher training in New York. A guy in my program dumped me for the girl to my left, and for some reason, she thought it was cool with me and talked to me about him all the time. The photo to the right reflects an Ashley that has no time for that.
The only thing both of these photos have in common is that I (poorly) cut my hair prior to these photos.
While these #TenYearChallenge photos are a breeding ground for jokes and embarrassing stories, one thing that should be hugely embarrassing is that, in the last decade, the minimum wage hasn’t changed once.
The federal minimum wage in 2009 was $7.25 an hour. In 2019, it is still $7.25.
Many states have adopted their own minimum wages. California has one of the highest: employers with fewer than 26 employees must pay at least $11/hour and those with 26+ must pay $12, with a plan to get everyone to $15 by 2022. But there are still a number of states where the minimum wage is the same as the federal minimum wage—and there’s no plan to raise it.
Who does this affect? Low-wage employees: including, but not limited to, retail employees, domestic workers, and, of course, members of the service industry.
So what happens when we reimagine the minimum wage?
“I had this…idea in my mind that [at] all the places that I have worked before, the power structure and the resources were all arranged like this upside-down pyramid,” said Michael Schroeder on the podcast. Michael is the director and roaster at Oddly Correct Coffee in Kansas City, Missouri, and debuted a totally new pay structure for his staff.
On November 4th, 2019, Oddly Correct announced on Instagram that it would guarantee its employees a take-home pay of at least $18 an hour. If they made that amount with their base pay plus tips, great. If they didn’t make enough in tips to get them to $18, then Oddly Correct would subsidize the rest.
Missouri is one of 44 states that allow employers to pay a tipped minimum, or less than the federal minimum wage to employees who also collect tips. Some states allow employers to pay as little as $2.13 an hour if an employee collects tips; this amount differs state by state. In Missouri, employers are allowed to take a tip credit of 50% of their minimum wage ($8.60), meaning they can pay their staff as little as $4.30 an hour.
The minimum wage is literally the lowest you can legally pay someone—so Michael decided to redefine that.
$18 an hour was a specific number, determined by using MIT’s Living Wage Calculator (in Kansas City, the living wage, or an estimate of what the actual cost of living is for a given municipality, for a single person is $11.29 an hour) and by deciding what was feasible and realistic for Oddly Correct.
“If someone on our team is working 30 hours a week and making $18 an hour, this is going to put them well over that living wage and give them a greater degree of financial independence. I knew that it was something that, right now, we could handle as a business.”
Oddly Correct’s policy removes the volatility of a key component—tips. Although Oddly Correct baristas still rely on tips from customers, they’ll leave every shift with a guaranteed amount of money: a barista working 30 hours will always leave with a minimum of $540 a week. Neither a busy shift with lots of people on the floor (and a lot of people to split the tip pool with) nor a slow shift with no customers will affect that base amount.
That totally dismantles the definition of what minimum wage is. Instead of being a wage floor for employers, Oddly Correct has made it a protective roof for its employees.
Post from Oddly Correct’s Instagram
This kind of thinking is a huge phase shift. In our interview, Michael mentioned a pyramid—one where the highest-paid people have the most resources and power. And he wanted to invert that type of thinking.
“I think it just comes back to the idea that if I can't place a proper value on my greatest resource, as opposed to viewing it as like my biggest liability—it is the thing that we pay the most money for week after week—but it's bringing us the most benefit. It comes from seeing the value in people as opposed to feeling like it's a weight that has to be managed.”
Using an inflation calculator, if the minimum wage went up to at least match the rate of inflation, it would be $8.70. To put it simply, $7.25 in 2009 was worth more than $7.25 is today. In ten years, we’ve systematically devalued the folks most likely to be paid by this standard—in some ways, it was better to be a minimum wage employee ten years ago than it is now.
What does that mean? Many businesses continue to actively devalue the members of their business that are arguably the most valuable: front-facing, customer-oriented workers. Low-wage workers are often painted as disposable and transient, but never is their financial devaluation taken into account. Our work force has built an intentionally unstable tier at the very bottom of the pyramid.
According to the Bureau of Labor Statistics, about half a million employees make the minimum wage. Another 1.3 million make below the minimum wage. Oddly Correct’s new policy isn’t just about paying baristas more—although that is fundamentally important and its significance cannot be ignored—but a push to think about how you value the work of others.
“If I think that a job is worth doing, then I should be paying a wage that makes it a job that someone can continue to do. If I think that that person's job is worth having on my team, then I need to show that I value it with how I'm compensating it. I charted our payment system to make it less of like a pyramid—like a point at the bottom and wide at the top—to more of a rectangle.”
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