Reimagining the Minimum Wage
Minimum wage in 2009: $7.25. Minimum wage in 2022: Still $7.25.
Hey folks! I’m taking a break this month. That also means I’ll be re-publishing some of my favorite pieces from the Boss Barista archives, which will probably be new to many, if not most, subscribers. Today, I’m sharing a piece I wrote to accompany my interview with Michael Schroeder of Oddly Correct Coffee, which you heard earlier this week.
One of the reasons I decided to take a break—beyond the fact that we all deserve time off—is that this publication is unfortunately not economically sustainable for me as of yet. One day, I’d like that to change—and your help would go a long way towards making that possible. If you can, becoming a paid subscriber is the single best way to support my work:
[Note: This article was originally published on November 28, 2019, so some of the numbers and figures have changed since then. I mention the new minimum wage in Missouri in the podcast episode transcript. However it’s important to note that the federal minimum wage still has not changed.]
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 taken a decade apart. As you can see above, 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. I was tired, unsure of myself, and desperately looking for a job—I didn’t get hired by the school I’d eventually work for until three days before the schoolyear started. The photo to the right reflects a very different Ashley: not a teacher, but with much more confidence. The only thing both of these photos have in common is that I (poorly) cut my hair prior to them being taken.
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Actually, there’s one other thing that hasn’t changed between when these photos were taken, and it’s also pretty embarrassing: In the last decade, the minimum wage hasn’t been raised 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 per 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? Millions of low-wage employees, including, but not limited to, retail workers, domestic workers, and, of course, members of the service industry.
What happens when we reimagine the minimum wage?
From Elizabeth Warren’s Twitter
“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 he recently debuted a totally new pay structure for his staff.
On November 4, 2019, Oddly Correct announced on Instagram that it would guarantee its employees 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 the state’s 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 MIT’s Living Wage Calculator, and by deciding what was feasible and realistic for Oddly Correct. (In Kansas City, the living wage—or an estimate of what the actual cost of living is for a single person—is $11.29 an hour.) As Michael explains:
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 its 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 simple idea totally dismantles the definition of minimum wage. 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 10 years, we’ve systematically devalued the folks most likely to be paid by this standard.
What does that mean? While low-wage workers are often painted as disposable and transient, in reality, they are arguably the most valuable: Most service-industry businesses would collapse without front-facing, customer-oriented workers. And yet these workers’ financial devaluation is rarely taken into account. Our workforce has built an intentionally unstable tier at the very bottom of the pyramid.
According to the U.S. 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, full stop:
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.
You can learn more about Oddly Correct, and how it’s implementing its new minimum wage structure, by listening to the latest episode of Boss Barista, or by visiting Oddly Correct on Instagram.