Dick’s Drive-In: The Best Argument Against A Government Mandated High Minimum Wage
There is a great editorial in today’s Seattle Times on increasing the minimum wage. Iconic Seattle-based business Dick’s Drive-In is featured as the best argument against a government mandated increase of our state’s already-high minimum wage.
The editorial points out that Dick’s has thrived for nearly 60 years and has made the choice to reward its 180 fast-food employees with good pay and benefits. Dick’s offers workers a starting wage of $10 per hour, as well as merit raises, employer-paid insurance, up to $8,000 for child care or college tuition, a 401(k) retirement program with employer match, paid time for volunteer service and up to three weeks paid vacation.
Government has not forced Dick’s to provide generous wages and benefits; the company does it because it is the business philosophy that works for them.
According to Dick’s Drive-In founder Dick Spady:
“The No. 1 job of a business is to make a profit. If you don’t, it’s not worth anything. No. 2 thing is to take care of your people. They’re the key to success.”
These two rules drive the Dick’s business model. But the company’s vice president and the founder’s son, Jim Spady, says forcing businesses to pay a high minimum wage, such as the $15 per hour wage fast-food workers around the country are demanding, will hurt small businesses, especially new ones. These businesses, such as fast-food establishments and small restaurants that rely on inexperienced or low-skill workers, do not have the profit margin to withstand a massive wage increase.
Spady points out that fast-food restaurants like Dick’s are “transitional employers,” where the vast majority of workers start with no experience and end up going to work somewhere else.
“The way to improve the wages of the poorest people is to encourage them to upgrade their skills, not to pass a law that requires we pay X dollars an hour. Governments can pass laws, but they can never repeal the law of supply and demand. So if you force law abiding businesses to pay more, they will — or they will automate their processes so they use way less labor. Or both. And the people they do hire will be the people who are best in that group. So what these high minimum wage laws do is they help a few people get better wages, but a lot of current people will lose their jobs.”
Seattle restaurant owner (and Iron Chef winner) Tom Douglas seems to agree. He voluntarily raised the wages of the employees of his 14 restaurants to $15 an hour last month. Douglas says the wage increase was a personal and business decision that he can afford after years of success with his restaurants. But Douglas readily points out that if he were forced to pay such high wages when he first started his business, he wouldn’t have a business:
“Other times, I couldn't have afforded to do the dollar amounts that I'm doing now. We're literally committing one-third of our profits to this. But, you know, I'm 25 years in. I feel like now I own my car, you know, I own my house, I own my farm. Now, instead of buying more toys, I just feel like this is the way I want to pay back a bit of the incredible luck that I've had over the years, and the incredible hard work that many, many, many people have put in over the years…You know, if I were to try and do what I'm doing now when I first started out 24 years ago, I would be bankrupt. I couldn't have done it. So I think there is a time and place for this and I think there is a sense that in my mind that, you know, you have to be the business owner that wants to do it. I'm not a big believer in the whole government mandate.”