A minimum wage story

A reader writes in:

I thought I’d share my experience with minimum wage, or lack of.

Earlier last year I hired a fresh graduate student – she was at the time my first hire for the new company. Her starting salary was less than 20k, an amount that would be tough (but manageable) to live off. It may seem rough considering Singapore is one of the more expensive cities in the world but she lives with her parents. I was simply unwilling/unable to pay any higher as I was starting a business however she was happy to get a job and to prove herself.

She has since proved her worth and has been a relief to my workload enabling me to focus on getting new business. Her first salary increase was after six months, she got 25%. Her second review is coming up shortly, it marks one year since she started and she is being raised to double her starting salary. Not bad for someone just one year out of uni.

 Another example – I recently hired a virtual assistant through Odesk. It was a take it or leave it proposition, I thought it could be helpful but not essential. 

There were a lot of offers from $1 an hour through to $40 an hour.

One applicant I liked, from the Philippines, offered to do the work for $3.50 which I felt was ridiculously low and unfair. I spoke to her several times on Skype and I raised my point to which she had this to say.

“Sir, if I work at local company I maybe get $1 an hour, these are long and hard jobs and I have young children. If I do this job I get more money but I can stay at home to care for my children at the same time.”

She then pointed out that many Filipinos leave their families and move overseas to work as maids and are extremely happy when they get jobs paying $400 SGD a month and here I was offering a job that paid more for her to stay at home with her family.

Long story short I hired her and she has been amazing. She is also loving her diverse role and the new skills she is learning – I have her doing anything I can think of from building databases, researching assignments, uploading for websites through to basic accounts and emailing for me.

And yes, I did ask her to stop calling me Sir.

 I realise these examples are not applicable to NZ directly however they do highlight two situations where a minimum wage would been worse off for both me and the employees. 

The minimum wage is one of those classic trade-offs. It is good for those in low paid jobs, who get more income. But it can be bad for those seeking a job. If you have a minimum wage, the challenge is setting it at a level that doesn’t drive too many people out of jobs.

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