The article You Pay For What You Get seems to be trying to drum up support against increasing the minimum wage. I feel quite strongly about this subject and have views opposite of what are presented in the article. Increases in minimum wage are coming, they’re needed, and their rollout should be prepared for and embraced. (See editor's note at end of story.)
Where will the increased wages for workers come from? Are the owners of very small businesses able to absorb a $3/hour wage increase for their employees without increasing the prices they charge to their customers? And who are the customers of the lawnmower repair shops in your example? Some of them are landscape companies that are also trying to figure out how they can sustain their businesses when higher wages are mandated by the government.
I think the important word here is sustain.
It is not sustainable to keep the minimum wage where it is. When you pay less than a livable wage, you get employees who are working multiple jobs in order to live. You don’t get people dedicated to your company and your vision of what you want your company to be. I see the scenario you outline as, you get what you pay for. Employees who are working multiple jobs at different companies are not capable of delivering their best. And the scenario you outline (10 employees, $800k annual sales, 7% net profit) would probably be a key factor in the company’s profit margins running as low as 7%. That rate is not sustainable either.
When I graduated college a VERY long time ago, my first job was to water office plants for almost 40 hours a week at the equivalent of $55,000 annual salary, in today’s dollars. It was a good job back then; not great, but about average for a graduating college kid. I had a degree in horticulture, but it was an entry-level position that almost anyone with two hands could do. Today, that person making minimum wage would earn just over $15,000 annually. Today, if that person making minimum wage watering plants had received a bachelor’s degree from a state school, they would have spent close to $100,000 to get the degree (room and board, tuition). The cost of my schooling, four years at the University of Connecticut, was about $25,000—for all four years! Today, college graduates forced to take minimum wage jobs have four times the expense to obtain a degree, and could be earning about a quarter of what I did when I graduated. This, too, is not sustainable.
Not only is it not sustainable, it’s not necessary. Are there ever really win/win scenarios in life? I believe there are. I have spent a lifetime in the Green Industry making them. This one is easy. Pay more, get more. Get dedicated employees that have the time, energy and drive to make your company’s vision happen. Make more money. Most companies’ margins are based on a percentage of costs. Net profit is realized as a percentage of earnings. Operations based on systems for execution can minimize waste, maximize profit and reduce costs. Higher costs would have to be recouped from customers or subtracted from your return on investment, or profit.
Win/win is possible. It’s not a zero sum game. I’ve got over 30 years that proves it’s true. I would love the opportunity to show anyone and everyone who is interested, how.
My name is Dan Pestretto, I am a third generation horticulturist and have spent a lifetime working in the Green Industry. I am currently a consultant/mentor and Sales Director at Salespeople-On-Demand. I specialize in sustainable business practices in Cambridge, Massachusetts. Check out my website, salespeople-on-demand.com.
EDITOR'S NOTE: My column did not attempt to drum up support for not raising the minimum wage or, more specifically, wages for workers in this industry. What I'd attempted to do was point out the significant impact a 30% increase in wages would have on the typical landscaping company and, ultimately, the prices consumers would have to pay for lawn care and landscaping services. Contractors will need a strategy for when this day arrives. What that strategy entails is for each individual contractor to determine. (Gregg Wartgow, editor in chief, Green Industry Pros)