My Turn: It’s time to reassess profit distribution
I was very disappointed to read that the New Hampshire Senate voted down a very modest increase in the minimum wage.
The argument for killing the bill was that it would, among other things, kill jobs in the hospitality industry. Hospitality industry is a broad category, ranging from small mom-and-pop-style restaurants, motels and amusement facilities to the much larger number of national chains, which surely are less vulnerable. So I found myself thinking: What is a fair profit?
New Hampshire is a state of rugged individualists, Yankee entrepreneurs in the best sense of the phrase.
I myself deal with a number of self-employed business people who take pride in their excellent work, charge what seem to be fair prices and have been generous in their care of me and my property. They seem to live well, not extravagantly.
I value the services they perform for me very highly, and I hope they pay their employees, some of whom are skilled workers, more than the minimum wage. But step back and consider minimum wage on the larger, corporate level, the hospitality industry, the medical industry, the food industry, electronics, giants like Walmart and Home Depot, Bernie & Phyl’s, Jordan’s, the myriad of chains that fill the malls along the sides of our roads. Who, really, in such giant businesses is going to be hurt by raising the minimum wage by $1 this year and 75 cents next? Will corporate profits suffer to the extent that top management must cut entry-level positions? And, here’s another thought: Instead of cutting entry-level positions, why not decrease – or at least slow the salary increases – of top management?
Figuring out fair distribution of profit is a tricky matter. There are a great many ways of looking at it. Our rugged national entrepreneurial spirit for capitalism has made us believe that hard work along with ability and opportunity give us the right to what we earn. But that can only work if a number of factors are taken into consideration.
Take ability for starters. People have different abilities, and those abilities, I agree, deserve different compensations. I understand that the highly skilled and trained hand surgeon who recently repaired a spiral fracture in the fifth metacarpal of my left hand deserves a higher level of compensation than the nurses who cared for me before and after the surgery. They perhaps didn’t have the surgeon’s natural ability or ambition to undertake the lengthy training required for specialized surgery.
I’m okay with that. But what about the next factor: opportunity? This is the real biggie for me. I know nothing about my hand surgeon except that he is a man and went (I can tell by the diplomas on the wall) to a good medical school. I know nothing about my nurses except that they were all women. Now, this isn’t a feminist rant – that’s a whole different topic. Many women seem to be drawn to nursing, doubtless often from societal conditioning, but how many might have liked to become doctors had they had the opportunity?
Opportunity means who your family is, where you grew up, what schools you were able to attend – all largely determined by your financial situation from the very outset of your life. Opportunity begets opportunity and, to a very great extent, wealth determines opportunity.
To me, financially enabled opportunity is the real unleveler of the playing field. It is what allows people to enter the work world at an advantageous position, regardless of their ability. They get a jumpstart over the people with fewer resources. They are the privileged ones. And what’s most important to remember: Many of these people don’t have a greater work ethic, don’t bring less desire to be successful for themselves and their families than those struggling along on impossibly low pay.
How do we determine what’s fair? It’s not just a question of raising taxes on the wealthiest, though I’m for that. It’s a question of what is a reasonable profit margin, a question of what people at the top honestly need to live reasonably, not extravagantly.
Please think about this: What would really happen if more of a company’s profit went into entry-level and lower level positions? How much could the profit realized by top management and shareholders actually be reduced before the business would have to close? Now, I’m not naive. I know one of the first responses to these questions would be: If profits fell shareholders would sell and move elsewhere. Well, those shareholders – many of whom probably aren’t working hard at all or with much ability to realize the earnings they receive from their stocks but rely entirely on their advantageous opportunity – need to do some fairness soul-searching as well.
(Katharine Gregg lives in Mason.)