Last week, Facebook took a stand in the minimum wage debate.
According to many reports, including this one, vendors or contractors in the U.S. who do a "substantial amount of work" with the social media company will be required to pay their workers at least $15 an hour. Other requirements include offering at least 15 paid days off for vacation, sick pay, and holidays. Additionally, individuals who do not currently receive parental leave will be offered $4,000 in "new child" benefits." Not surprisingly, the White House is happy with this decision.
And you know what? So am I. And as onerous as it sounds (and a $15 per hour rate can be very onerous for some, not to mention the time off requirement), so should you be.
By imposing these requirements on its vendors and contractors, Facebook is taking some risks. And opening a can of worms. They risk that important vendors may choose to not do business with the company anymore because they can't afford to or just plain resent the requirements imposed on them. And they risk that the companies who choose to stay on as suppliers or contractors may decide to raise their own prices in order to protect their margins (as any smart businessperson would do), which would ultimately end up in higher costs for both Facebook and their customers.
And the can of worms? How is Facebook going to enforce this rule? They have hundreds, if not thousands of contractors and vendors all across the world. Will they go to the expense of creating a separate audit team? Will they have to devise a new system of policies and procedures to makes sure new vendors are in compliance and existing vendors satisfy annual reviews? This seems like an enormous undertaking, even for such a giant company.
This is not a small decision for Facebook. Or for any company that chooses to make such a move. Microsoft is implementing a similar plan to Facebook's. Walmart, McDonald's, Target, and Starbucks are all companies that have raised their minimum wages without waiting around for Congress to vote on a Federal increase. And there's no question that this is a costly decision for them all. But these companies, and others, have decided that a higher minimum wage is just good business: paying more to their people (and requiring their vendors and contractors to do the same) means they can attract better people, keep their existing people happier, and (let's admit it) get some good PR out of the move as well. Whatever the reasons, it's all being done without the involvement of the government. And that's what most appealing to small business owners like me.
I am not a fan of minimum wage legislation. Not because I don't believe people should be earning more. It's because it's frustrating that we live in a world where the government feels it has to mandate business owners as to what they are required to pay employees. That choice should be between the business owner and his or her employees. Of course, many jobs in this country pay too little to allow a decent standard of living. And that's a problem that has to be addressed. Which is why I'm a fan of what Facebook is doing. They are trying to address this. They are taking on risks and costs. And I'd rather see a private company like Facebook take the initiative than the government.
So why in the world should you be happy that Facebook is doing this? If you contract with Facebook, Microsoft, the federal government, or others with similar plans, and the business is important enough, you may be forced to absorb these costs. Or increase billings to offset them. Or walk away from the customer. But what I like is this: It's your choice. It's not a law. It's an economic decision that you and your customer (i.e. Facebook) are making without the government being involved. Is this the right thing for you? For Facebook? I guess we'll let the markets decide. And that's always the best arbitrator.