Executive Strategy


The Timeline Trouble with the Minimum


Most pundits will say that no one really makes the minimum so why raise it? Well it is more about increasing the floor than measuring the ceiling. The question should not be how much, it is relative and tangible, the real issue is how often we are raising the minimum wage; is that in accordance with the yearly prices and rising costs.  

Every year our costs increase on average of at least two percent; let’s say that is rent, utilities, food, clothing, gas - the essentials. Our world is not getting cheaper. Why not increase the floor every year, instead of every seven to ten years?


 The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. * from Investopedia

For businesses the easiest cost control is labor. People are paid a set salary or wage based upon the market value. That value is not disrupted until the labor force requests it. How often do you ask for a raise? Certainly not every year but why not? Employees don’t request a raise until there is a big change in their life, a child, a house, a hospitalized family member and even the new job that makes one realize they are underpaid at their current position. 

If business increase wages then they decrease our bottom line. That is somewhat true but examine look the dividends and bonuses that are paid out and they only increase. Companies increase prices every year to keep up with rising but not in the labor market. Ask the manager, CEO and CFO, politicians and lobbyists who all fight to keep the floor the floor until they are introspective about their pay. Oh… then it’s time for change.

The question isn’t a deep shift or looking to turn the labor wages upside down. Let’s look to increase wages two percent every year to keep up with inflation, let’s increase the floor to match the market. For the mid-level manager who says they haven’t had a raise in three years, now their salary will have increased six percent in that time period. It’s common sense and keeps us from having major changes in prices when the floor is increased in shortened time periods.  

By Dane Flanigan

Dane Flanigan is a business consultant who helps companies build revenue by growing sales and acquisitions.