The Lessons Begin

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LukeLewis

LukeLewis

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I just finished reading a section in Chapter 2, Lesson 1 of Robert Kiyosaki's book titled, Rich Dad Poor Dad. Robert and his friend Mike asked Mike's father how to make money. They wanted to learn how to become rich. Mike's father agreed to see them and when he did, he made them an offer. He'd pay them $.10 per hour for them to work three hours each Sunday at his superette, otherwise known as a deli in some parts of the country. After some hesitation, both boys agreed to Mike's father's terms. It's a good thing they agreed too, because Mike's father's deal was of the take it or leave it sort. He told the boys that he could teach them, but not in classroom style. There'd be "on the job" learning. If they didn't agree to his terms right then and there, the deal was off the table. Even though it was Sunday and even though Robert had a softball game that afternoon, he agreed to work. He did note that the pay was ridiculously low though, but what do you expect to pay a kid who's got virtually no experience and who you're doing a favor for. It was they who came to him, after all.

Arguments Against a $15 Minimum Wage

This section of the chapter (especially the low pay part) got me thinking about the minimum wage debate we're currently experiencing in this country. Back when I was a kid, I was paid $3.35 an hour at my first job. I didn't know if that was good or bad, so I took it. I was one of many children in my town who was looking for a job and if I didn't agree to the pay, they'd find someone who did. It wasn't a difficult concept to grasp. I'm not sure if I ever got paid that low again. I can remember other jobs that paid me $4 and $4.50 and then I remember getting a job about eight years later that paid me $7 per hour and then $9 per hour after I was promoted to a leadership position. I was never paid that much money subsequently until I landed my very first "real" job as an adult. And even then, I started at $29,000 per year, which added up to about $14 per hour. I was happy with that. Again, I had no professional experience, so I was in no position to negotiate. What did I have? A college degree? Who cares. Everyone has one of those.

As a kid, all of the businesses I worked for were small businesses in my home town. None of these businesses had very much money. For my first job, I was a cashier. For the second, I peeled onions. For the third, I vacuumed a floor. Nothing I did was critical, but it was nice to have me around so the owners could focus on other aspects of their jobs. They needed to sell things and strategize how to stay afloat. The last thing they wanted to do was vacuum or run the register.

I know that making more money per hour is nice. We all know this. If someone offered me $15 per hour back then to peel onions, I would have taken it in a heartbeat. If they had though, they would have gone out of business. No business back then could have afforded that. I'm not even sure the managers or owners made that much money. Times have changed though. The value of the dollar has dropped due to inflation and perhaps it's a good time to discuss raising the minimum wage to $15. I guess it is a good time because that discussion is actually occurring. Is $15 a lot? Is it not enough? I'm not sure.

Before I begin, I've got a story for you. It's a quick one. When I was a teenager, I lived in a town that was chock full of residents who worked blue collar jobs and who were primarily entrepreneurs. They ranged from electricians to landscapers to carpenters. The folks in my town did it all and we as children learned a heck of a lot of skills from friends and neighbors. Because of all the entrepreneurial spirit and a strong need for laborers, my town was a magnet for illegal immigration. Many men from Latin America traveled to the town to look for work. Early on, they came from Mexico, but as the years passed, they were all primarily from Guatemala. The houses close to downtown were virtually all inhabited by these Guatemalans. Rumor had it that there would be anywhere from 15-20 of them per house. It was crazy, but the owners of all the blue collared businesses loved it. The owners would get very hard workers to perform all sorts of labor and they'd get to pay them cash at the end of the day. The going rate was $80-$100 per day, no matter how many hours they worked. And boy did they work. These guys worked a lot and at the end of the week, they actually had a lot of money, tax free. No one was the wiser. The government never knew. No one knew, except the workers and the owners of the businesses. Back then, I can remember driving by a few different groups of immigrants standing at each corner, waiting to be picked up. When a truck stopped to pick one or two up to go to a job, all of them would swarm the passenger side door trying to get in. Only the strong survived and made it inside the truck.

Now, I may have been young, but I wasn't stupid. I can vividly remember driving by with my father one time. I said, "Hey dad. Check it out. All of the workers are out again, waiting to be picked up to work." He didn't like the idea very much. He just nodded and kept on driving. He thought they were being taken advantage of by their "employers." I said to him, "What do you think these Guatemalans will be doing in ten years? I mean, aren't they basically being trained to do the jobs of their bosses?" My father paused at that question. Apparently, he had never given that sort of thing much thought.

I can remember hearing stories about how certain workers were eventually being sought after because they had gotten so good at what they were doing. And then I remember hearing stories about how some of the workers stopped working for their "employers." I also remember hearing stories about how the Guatemalans were beginning to compete with the blue collared workers who were once their bosses. And then about how they were getting the jobs their bosses used to get. And then about how their bosses were going out of business because of all the added competition. Apparently, I was right. It didn't take long for these "apprentices" to catch on to what they were doing, learn a little English, and then steal a whole heck of a lot of jobs. As you can imagine, the town didn't like this at all because so many of the immigrants were living in each house and none of them were paying anything in tax. Real businesses were going under and families were forced to leave town, which created a hole in the tax base for schools, roads, and other things, but that's a story for another time. My point here is, just because these laborers may have seemingly been taken advantage of at one point, they treated their experiences as learning opportunities. Back in their own countries, there were no opportunities like the ones they found in my home town. They took those opportunities and made the best of them. And then they made some good money.

I'm not all in on the minimum wage debate. I think raising the minimum wage will have negative consequences. I do think there should be a minimum wage, but I really do think it should be kept to a minimum. Many jobs here in the U.S. are great for learning. I don't think many of them are meant to be careers for people. I've never heard of a person taking a $7 per hour job and intending to work it for the rest of their life. Granted, it does happen, but life is long and if someone works a $7 per hour job for 55 years, it's not far fetched to say that they bear some responsibility for that. Opportunity abounds and upward mobility can be found around every corner. I've had many adults in many of my college classes. These people were training themselves for better jobs and ultimately, better lives. It is possible. No one is "stuck" for 55 years.

Let's get into a few of the reasons I'm against raising the minimum wage to $15 per hour.

1. It would force small businesses to fire people, which would raise unemployment levels. There is no disputing this. It's what I like to call a fact. I know that word is thrown around a lot, but it doesn't take a rocket scientist to watch as a small business down the road from them fires two of their five employees because they can't afford the labor costs anymore. Labor costs are very real and for most businesses, it's their largest expense. Many businesses around this nation are mom and pop shops. Can you imagine owning one of these businesses and having your labor costs virtually double? What would you do? From what I hear, you can either close down completely or fire some of your workers to pick up the slack yourself. Many of the people gunning for these wage hikes have never owned a business. I dare you to find one business owner who would advocate for this type of thing. The reasoning for not wanting something like this isn't because the business owners are greedy and evil, it's because it doesn't make economic sense for their own store and the economy as a whole. And the trouble is, the wage hikes have already had very negative consequences. Many businesses have had to either fire some employees or close down completely.

2. It causes more poverty. I forgot to mention a few other negative consequences for raising the minimum wage above. There is actually another option for those business owners who are being forced to raise wages for their employees. They needn't fire them. They can always cut their hours. So someone who used to work all day can now work a meager two hours per day. So someone who used to be full time is now part time. Yes, they'll make more per hour, but they'll work less, which will ultimately reduce their paychecks and most likely, benefits. Also, because of the increased production costs as a whole, due to higher labor costs, products will cost more. The politicians didn't think businesses wouldn't pass on the expense, did they? Now, when the employee goes to the store to buy a new pair of pants or a gallon of milk, they'll spend more than they ever have. Their wallets will thin out rather quickly.

3. It would cause businesses to close. Some businesses simply can't operate with fewer people. They also can't bear the costs of a more expensive labor force. If a shoe factory employees 100 people at $10 per hour each and is forced to raise each employee's pay to $15 per hour, they may very well go under. This is another one of these pesky facts. Dollars and cents don't lie. Of course, the factory could always increase their product cost by the same rate, which will most likely force their buyers to look for sellers overseas. With cheap goods pouring in from China and India, I'm not sure whose idea it was to price the American market right out of competition. I'm also not sure whose idea it was to create ghost towns out of areas where factories used to be.

I've never liked the idea of having a high minimum wage, but that's just the business side of me talking. I invite you to prove my argument wrong. I actually welcome it. If you've got information that I'm missing, please share it down below. I'm on the fence with many of these types of issues, so I'm completely not against some form of enlightenment.

This post is part of a series: Rich Dad Poor Dad by Robert T. Kiyosaki
 
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The Lessons Begin was posted on 06-05-2021 by LukeLewis in the Finance Forum forum.

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