Are Business Owners Naturally Greedy?

by Elgin Hushbeck, Jr.

GreedIn a recent segment on Global Christian Perspectives discussing my last blog post on the minimum wage, the claim was made about opposition to the minimum wage, “That’s greed. Everyone who has argued against a minimum wage, or even a living wage, has wanted to keep the bottom line for themselves.”  (@ the 50:00 min. mark).
While an argument commonly heard from supporters of increasing the minimum wage, it is nevertheless false.  There are many reasons to oppose the minimum wage. Many supporters of an increase seem to see this as simply an issue between struggling employees trying desperately to make ends meet, and greedy employers who seek to exploit their employees so as to rake in even more riches.  In this view supporters put themselves in the role of riding in on a white horse to force the employer to give up a small part of their wealth and return it to those who really earned it.
While such a depiction may work for a movie, or more likely a cartoon, it hardly represents reality.  Rather than a struggle between employer and employee, wages are in reality a part of a huge network of interactions. Sure, there is the employee to their employer, but the employer has similar interactions with customer and suppliers.  Then there is the interactions with government which unlike the others is one sided; government demands under threat of force. [ene_ptp] To insist by fiat demand that employers pay more to workers is problematic because it artificially puts constraints on one part a system governed by free interactions.  Can employers just demand that suppliers cut their costs to make up for the higher wages they must now pay their employees? Hardly, as their suppliers are under the same dictate to increase wages.  Can they just raise their prices?  Probably not, at least not all the way.  After all, if these employers really were as greedy as they are so often portrayed then certainly they would have already done so if they could.  The only other place the money can come from is the employers themselves, or from lower labor cost by cutting employees.
This is where the other part of the myth falls apart. Over half of all employees work for small businesses, and small businesses account for 65% of new jobs, yet most small businesses fail with 5 years. Owning a business is not a matter of exploiting your employees, it is hard work and very difficult to do. Many businesses are struggling, and it is not uncommon for a business owner to have to forego paying themselves, because there is not enough money left after paying their employees, and bills.  This is why following the recent increases in the minimum wage in both Seattle and San Francisco, many businesses simply closed while others cut back their staff resulting in a lot of people, not getting the increase in their wage that supporters promised, but seeing their wage go to zero.  So there are reasons to oppose the minimum wage beyond just greed.
“Business owner” is not just an abstract label; it represents real people, people who as a general rule work very hard and who are concerned about their employees. Yet not only is the charge that just greed is involved false, it is slanderous and thus wrong on both moral and intellectual grounds.  It is wrong on intellectual grounds because instead of dealing with the evidence, it short circuits the thinking process.  Those making the charge can, and often do, simply ignore any evidence present that runs counter to their beliefs as merely a ruse to mask greed. Thus such slanderous attacks become a form of self-justification, insulating the maker from any evidence that runs counter to their beliefs.
This can be seen in the fact that rarely do I see supporters actually addressing the arguments I raise concerning the damage done to those who lose their jobs, those who lose their businesses, and those who cannot get employed because they do not yet have the skills to be employed at the minimum wage level.  No, it is far easier to attack mythical greedy employers rather deal with actual damage done.
In terms of moral grounds, I believe it is immoral to falsely demonize large groups of people.  As I have written in the past, rather we must treat people as individuals, and I believe should assume the best until proven otherwise, and yes, I believe this even includes business owners.
Yet many of the arguments put forth to support a minimum wage hike are grounded implicitly and, at times as in the quote above, explicitly demonizing those who disagree. If we were to do this with any nationality, race, or religious group, etc., such demonization would be justly condemned. So why is demonizing business owners, or those who oppose the minimum wage because of the damage that is does any different?  Is it not even possible that they are good people who just have a different point of view?
Nor is it sufficient to say something to the effect of “Well they are not all greedy,” and then go back to arguments based on the premise that opposition is still based on greed.
I believe that if one person agrees to hire another, whatever the price that is a good thing.  Being employed is better than not being employed, as numerous studies on happiness and self-worth have demonstrated. I also hope that the employees will develop a track record as a good employee and this will allow them to quickly move up the wage scale. If the only job one can find is a minimum wage job, then it is much better to look to the person (do they have skills and work history to get a better paying job), or the job market (why are there not better paying jobs out there).  This, I believe would be far more beneficial than making it even more difficult for employers to hire people.
For me the minimum wage is a barrier to some from earning a starting wage.  We have far too many people who have never been able to enter into the job market so as to become productive members of society and who are thus are trapped in poverty and dependence. That is not an argument based on greed but on wanting the best for all people.
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  1. Perhaps to your amazement, I agree that greed is not the primary factor with small businesses. I have personal experience of having run a small business, and particularly in the case of a start-up, wages can be crippling. You’re quite right that self-employment offers you the unique opportunity to work extremely hard and make nothing (or a negative amount) whatever the minimum wage may be. It is therefore saddening to realise that in the case of the UK, at least, a substantial proportion of the notionally self-employed are actually workers for single companies forced into accepting “contractor” status, which gives no employment rights at all. Yes, some contractors (particularly in IT) can do extremely well and profit from both the flexibility and a somewhat more beneficial tax regime, but they are the exception.
    It is, of course, going to be a feature of a Capitalist Free Market economy that many businesses fail. An ardent free-marketeer should, surely, be welcoming this, and perhaps considering that businesses which cannot afford to pay their workers a living wage should vanish earlier rather than later?
    My basic point here is that work should yield enough money to keep an individual housed, clothed and fed without the need to work ridiculous (and often either dangerous or health-destroying) hours, and if it does not, the business which employs that worker is usually being subsidised by someone. It may be that that subsidy comes from government in the form of supplementary benefits for the low paid, it may be that they need to be subsidised by their family or friends – or, of course, they may be being subsidised by exchanging years of future able-bodied life for early burnout. Most minimum wage provisions assume that the young will, in fact, be subsidised by their parents and do not therefore qualify them until 21 or 25 (for instance); this seriously hampers those whose parents are for whatever reason unable or unwilling to subsidise them, and does not give them a fair opportunity in life, but there are always going to be compromises in politics.
    Personally, I do not favour minimum wage, I favour guaranteed minimum income – but I do demand a system which does not enslave people to two or three jobs, does not burn them out at an early age and which provides them with at least the bare minimum necessary to lead a decent life – and unless you conceded guaranteed minimum income, minimum wage (and at that a minimum wage which is a living wage) is a necessity in a caring society.

    1. Chris,
      We have some areas of agreement. I would point out that I am ok with businesses failing. My point was only that most business owners are not sitting on huge amounts of money. As for the part about subsidies, they are going to happen no matter what we do, unless we just ignore poverty, which neither of us are in favor of doing. Thus I would much rather subsidize someone working at a low wage, than someone who does not work at all. The low wage worker has a much better chance of moving up the wage scale and getting off subsidies, than the person not working at all. Thus in the US only about 1% of workers earn the minimum wage, and most do not earn it for long.
      Concerning minimum incomes we do have what is called the earned income tax credit to boost the incomes of low wage earners. Because of this the lowest 40% of wage earners do not pay income tax but actually get a refund that is larger than the amount they paid in. To me this is fair in that if the government wants to do this, than the government should pay for it from the taxes raised, rather than impose the burden on a business owner that is already struggling.
      It really comes down to the issue of what right does anyone have to the labor of another. This is my problem with a guaranteed minimum income. Arbitrarily raising wages only compounds the problem, if it didn’t you could make the minimum wage $100 / hour. Small increases phased in over time are an attempt to minimize the problem so it will not be so noticeable, but that does not help if you are one of the unlucky ones to lose your job.
      Instead of focusing on a minimum wage, why not focus on why it is so hard to start a business. Why are there so many barriers to entry? Why is running a business so hard? Why are businesses not growing and hiring more people? If we got to a point where employers were struggling to find people to hire because of a strong economy, the minimum wage would become a non-issue and everyone would be better off, not just the lucky ones who did not get laid off or have their employer go out of business.

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