Why most people make only $12.48 an hour: Do you want ROI with that?

Restaurant pay is up 3% the year, according to the Labor Department, outpacing the 2% growth in wages in the private sector over the last 5 years.
Food service workers made an average of $12.48 per hour in 2014, including tips.

Does that seem like a lot or a little to you?
I’m going to explain why it’s not what you think it is.

Driving this bump are a number of factors: higher state minimum wages, Wal-Mart raising their minimums, a stronger economy, and general inflation.
While they drive short-term gains, none of these factors will pan out in the long run.

You’ve probably heard of groups lobbying to make $15 the minimum wage for fast food workers.
Sounds good, doesn’t it? Think of all the things you do with $15 an hour– pay off your bills, live nicer, or buy some things you’ve been eyeing.

Assuming you work full-time, $15 an hour works out to $30,000 a year.

Fifty years ago (in 1964), the average salary in the United States was $4,576.
And that amount had the same purchasing power as $30,000 today.
Economists like myself will say that “real wages” have not gone up.

source: paulsnewsline.blogspot.com

What happens is that if you jack up the price of one item in the economy by X%, everyone else will increase their prices by X%, too.
They have to– since the relative value of items must remain the same.
If an orange is worth as much as two lemons, doubling the price of lemons will cause a doubling of the price of oranges.

Let’s say Uncle Sam decided to instantly double the amount of money in everyone’s pockets and bank accounts overnight.

Poof.  Magically now you have twice as much money.

Would you be twice as rich?


Since what would happen is that all stores would double their prices the next morning.
Nothing really happened to create more economic value– a wage increase was merely artificial.

So raising the price of labor (called a wage) does the same thing.
Behind it are good intentions, but the effect is political and political.
The worker is fooled into thinking they’re winning, but the gains are not real.

If you want to raise real wages for people in a sector (whether restaurant workers, teachers, mechanics, or whatever), increase productivity.
When we invest in education, automation, and smarter process, the output of our people increases.

Unlike lemons and oranges (or guns and butter, for the economists reading this), the value of people is easily increased.

We call this “people, process, and training“– the three factors to troubleshooting productivity.

A lemon is a lemon, but the value of an hour of your time can go from $10/hour to $50/hour if you can produce 5 times the value.

If we build software that automates 80% of the work (which we’re doing), then a worker is 5 times as productive.
If we create a process for completing projects that is 5 times faster, same thing.
And if we train folks to be able to do tasks that are 5 times as valuable, then ditto.

So the key to making more money is not by demanding more pay or relying upon artificial government price controls.
It’s investing in yourself, as Warren Buffett recommends— the ultimate non-taxable investment, one which nobody can steal.

That doesn’t mean you should get a degree since a diploma by itself is no guarantee of having practical skills.
Criticize Obama’s community college program if you like, but some degree of education, especially vocational, is critical.

I view people not as interchangeable parts or cogs in the greater machine.
They are the most important part of a company, yet aren’t found anywhere on a balance sheet.

I do have a degree in finance– and I’m puzzled that we’re examining assets, liabilities, and equity.
We have a false sense of control over these line items, but ignore that people are not owned in the same way.

Do you ever think about what you’re “worth”?

Perhaps tying that to what you’re paid?

Each of us is a wonderfully and fearfully made creature that is uniquely valuable.
But it’s so easy to put a financial price tag on a human– to say they’re worth $15 an hour.

The vision I have of personal branding is that we are not faceless, generic robots driving Ubers or running errands.
Let the robots do commoditized tasks for the price of electricity and parts– zero, basically.

We need to help people find their passion, tie that to a related commercial interest, and build unique value.
The supply and demand sides of the labor market must be connected– the analysts and the businesses.
We must turn the commodities market into more of a Match.com– to stop trading pork barrels and start connecting people.

By helping young adults find their passion, creating content that signals their expertise, and giving them job experience directly in that area, we increase their value from $10/hour to five times that or more.  $50 an hour is $100,000 a year.


The schools alone are not able to increase a student’s value in the marketplace.
They provide basic education, but not on-the-job training.

The businesses have the dollars to hire these workers, but only if they’re properly skilled.
They’re not equipped to train up students– they have a business to run.

Students themselves can read blogs and polish their resumes all day long.
But they don’t have the connections with commerce to know exactly how to bridge from school to work.

So most students, despite being awesomely talented and willing to work hard, end up working retail jobs.

We need to all work together to change this from “Do you want fries with that?” to “Do you want ROI with that?”

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