Instead of raising the minimum wage, put it towards training

I have been thinking more about the call from the CTU to raise the minimum wage to $15.00 per hour. The more I think about it the more it makes sense not to. And here is why. If you keep on raising the minimum wage sure people get a bit more, but it becomes so hard to break out of the minimum wage trap.

Instead the extra $2.00 to $3.00 per hour that is being suggested should be pulled out and put into employee training. Train the staff up and they are then worth more (to you and society) than the minimum wage. Once they are more skilled they can apply for better jobs, or move up the ranks and become more productive.

This will not only increase the value of education in our society but will allow for young people to start on the minimum wage and build for a future too. As the old Chinese saying goes “Give a man a fish & you feed him for a day. Teach a man to fish and you feed him for a lifetime.”.

It seems like a simple solution really. And what’s more the employers will also get much more benefit out of the skills training than they ever would out of raising the minimum wage by the same value.

CTU wants a higher minimum wage

An article in Stuff yesterday talks about the CTU (Council of Trade Unions) election campaign to get the minimum wage raised to $15.00 per hour. While I am all in favour of people earning as much as they can, this idea has very far reaching ramifications.

The CTU also talks about pegging the minimum wage to two thirds the average wage. While nice in theory to peg the minimum wage to the average wage, what it will do is will drive up the average wage further. Add to this the Green’s thinking that it will help pull people out of poverty.

This whole method of thinking in my opinion is seriously flawed and here are some reasons why. Firstly if the minimum wage was to increase, as a natural consequence the price of purchases will also increase. And the prices of purchases will probably rise higher than the increase in minimum wage will.

This purchasing price raise will keep those on the minimum wage in poverty. The cold hard fact is that if you are on the minimum wage, you are at the poverty line, regardless on how high this is raised. A better idea is to pour all that extra per hour money into training. Pull people above the minimum wage not lift the minimum wage.

Another major flaw in this theory is that at $15.00 per hour employers will think twice about employing people. They will look first at streamlining the systems they have. One obvious answer is to outsource or send overseas work that can be done cheaper elsewhere. Therefore the number of minimum jobs available will reduce substantially. Ultimately business isn’t a charity and profits driven. If the pressure to pay for unskilled labour becomes to high, they will stop using unskilled labour.

The final flaw I see in this theory is that for the employees themselves, there is no incentive to better their lives. The mentality will become “The government will grow my wage for me”. Anyone that does not get above having a minimum wage mentality will always struggle. The extra dollars per hour should be invested into building up their skills so that they are more employable at the higher rates, rather than force employers to pay higher.

A great article on the gap between tertiary and the real world

Computerworld has reported on the 25th conference on tertiary-sector ICT which carries some messages that make a lot of sense to me. You can read the article here. There are a couple of points of interest worth exploring further.

The first paragraph talks about the gap between what students learn and the things practiced in the workplace. My belief is that this is not only true of ICT but also of many other areas of Tertiary education. We have a graduate marketing person working with us at the moment. It is interesting how some of the basic theories and ideals taught in university are very different to application in the real world.

The second important point that this article mentions is that the shortage is not actually about applicants, rather about suitable skills. This obviously relates very closely to the first point. And it is quite possible that Tertiary institutions are at fault here because not enough real life experience is added to the courses.

The third and most interesting point to me is the paragraph that states

Applicants typically have “grossly inflated expectations” both in pay and in the nature of the work they think they will be doing.

In the IT industry in particular this is definitely a very true statement. Many graduates have a false expectation that they will be able to slot into a high pay packet without paying the dues in an actual working environment.

I saw this with one particular person in the marketing industry. She spent 3 years getting educated in marketing and business. This person was actually very good and had a natural nose for the industry. However she still had to do the 2-3 years hard yakka to get any credibility. Unfortunately her expectation was that she shouldn’t have to do the job experience because she had just spent 3 years at university.

Education is valuable, but ultimately it is experience that allows a person to sell themselves for the higher rate.

In today’s world keep the people you have is most importance

It is well documented that there is a shortage of skilled labour in the market place. And for this reason it is so much more important to keep your people. You will always find the odd content person that will stay regardless on how greener the pasture is on the other side.

More and more today though, your people know how green the other side is and more importantly they know their real value. For these two reasons it is in your best interest to do all in your power to make it as hard as possible to leave.

I say as hard as possible to leave because it gives you the extremely valuable leverage “Being content”. Contentment if you like is the killer application. If your people are content, no matter how greener the other side maybe, the fear and risk involved in a move will outweigh the benefits.

Becides if you are like me. If you spread the love, the love comes back at you in bucket loads. Or in other words, The happier your staff are, the happier your clients will be.

The importance of training up your staff.

I had an experience on the weekend worth talking about. It was to do with buying a new camera. Our family camera finally died and as with most things these days it was going to cost about the same to purchase a new camera verse getting the old one fixed.

I went into the store to do some research on different cameras on Thursday and talked to a very helpful guy about a couple of different camera’s. I walked out with a couple of camera’s in mind that I was going to research more on the Internet. At this point I had pretty much decided to purchase from this store.

After my research I was pretty sure I wanted to buy one camera but had a couple of simple questions. I went to the shop on Friday night and the guy I spoke to wasn’t there. Instead I was frustrated by two sales people that had no idea of there product. I was disgusted at their lack of knowledge and therefore the service.

How can anyone make a wise purchase if the sales staff has no idea about the products they sell. Here are my simple questions;

Did the camera come with a spare battery as had been indicated previously?

Does the video mode have sound?

Can you show me how to take a video so I can see how well it does?

I was pretty sure I would buy the camera if these three simple questions were answered. Instead I came across ignorance, and an expectation that I would just spend $450.00 anyway even if they didn’t know the answers.

I found out later that the first guy I spoke to was the store manager. This whole experience screamed out to me the importance of training, training and more training of staff. Needless to say they lost the sale. Instead I walked up the stairs to the competition and brought my second choice there instead.

I wonder how many other sales have been lost for this store due to poor training. And how many more may have purchased “here” instead of “there” if they felt that this store knew everything about its product.