Fewer better trained employees means better profits

The increase in the minimum wage went into effect on May 26. It is now $4.05 an hour. All around the island I hear ranting and raving by many business people: “Oh, what shall I do? How can I survive? What is happening to this island?” But wait, let’s think through the problem. We may come to the conclusion that we may be better off.

There is a law in economics called the “law of diminishing returns.” Simply explained, it states that by adding more and more resources or people to a project does not necessarily make the project more successful or completed faster. In the whole operation there comes a point that by adding more resources or more people will make that project slower and less productive rather than improving it.

Let’s use an example such as watering a plant. We realize that a certain amount of water will allow the plant to grow healthy. But if we continue to add more and more water to the plant in the belief that more water will make the plant grow faster and healthier, we will notice that the extra water actually destroys the plant as the soil becomes waterlogged.

How does this “law of diminishing returns” apply to our local nonresident workforce? With the implementation of federalization, we will be seeing many contract workers returning to their countries. This seems to worry many business people. However it is really a situation that if we study carefully, we will discover new opportunities to improving our businesses.

Examine a construction job such as building a house in Hawaii, and compare it to a house being built here. I have noticed in Hawaii and in the mainland that a house is usually built with only a handful of workers. Each of the workers are skilled in their particular trades. The workers use modern tools to do the job. For example, how many carpenters here use skill saws? How many use chipping guns? Does any carpenter use an electric sanding machine? Have any of us seen a pneumatic nailing gun? Have you noticed how sand is sifted? How many have graduated from trades schools? Though the workers are dedicated and hard workers, unfortunately many of the techniques they use are slow and out of date.

Do we really need 20 to 30 workers to build a house? Because of too much manual labor, an army of workers is needed to build a two or three bedroom house. But by using highly skilled workers, we can utilize fewer workers. As a result, the house is built faster and with higher standards. The cost will be lower because of an increase of productivity while the workers’ wages will be higher.

In a restaurant do we need all the waiters and waitresses? I have noticed that the more waiters and waitresses in a restaurant, the worse the service is. Again why do restaurants in the mainland use fewer waiters and fewer kitchen help? Could it be because they are better trained, thereby working more efficiently?

When I lived in Tokyo years ago, salaries were very low. Every department store had about 10 girls behind small counters serving customers. As wages were raised, some of the girls disappeared. But the sales amount stayed the same. I have noticed the same in Honolulu, Los Angeles, and many other cities. When wages are low, many employees are used. But as salaries are raised, fewer employees are used. Yet sales do not drop. Why is this so?

If employees are properly trained and paid decent wages, they are motivated. As a result their work performance is higher and faster. But few of us business owners have taken the time to study this. Instead we have had the luxury of using cheap and plentiful nonresident workers, thinking that it is a blessing. Few of us actually check the standard of performance. When it doesn’t match with our expectations, we simply shrug it off and mumble, “Well, what more can we expect from them?”

Now that fewer and fewer of nonresident workers will be available, we must change our attitude on how we use our employees. The time has come to consider hiring and training resident workers. We must motivate them, pay them decent wages, and treat them with respect, making sure they feel needed and appreciated. Frankly speaking, we can do with fewer employees once we accept this fact and work toward improving our employee relationship.

Currently we have about 22,417 registered nonresident workers. How many of them are motivated? How many of them are really skilled? My comments are not directed against nonresident workers. I have many in my companies and respect their hard work and dedication. But times are changing and unless we change with it we will be left behind.

I truly believe that by training and motivating our local labor force, we will experience less and less need for a nonresident work force. We have an ample labor force of local residents. But we must first train them, motivate them, pay decent wages, and then believe in their ability to work.

Currently there are about 8,500 people on the NAP program. Consider that if almost half of the local people on welfare were to be trained, what an asset would they become. Consider if we also trained females to become skilled employees in various industries, how valuable they will also become.

Consider reducing the unnecessarily large number of government workers and train them to work in the private sector. Consider how much more money will remain in local circulation. The sum total of this is that many people out of jobs will have a job and earn decent wages with pride and dignity instead of relying on food stamps.

A word to employers: Study how we can better train the local workforce. Pay them a better wage. Motivate them. By doing this, we will reap more benefits than anticipated. Neglect this advice and we will rant even louder as our business suffers. By using less nonresident workers and more local workers even by paying a higher wage than the minimum, we can save money on labor costs. If you doubt this, study your costs for hiring and keeping nonresident workers.

Slowly we must wean ourselves of the constant begging from the Federal government for more and more handouts. Frankly speaking, when we accomplish this, we will have grown up as a nation. We must create our own economy. We must all work to be self-sufficient. Once we do that no one can take it away. We will also be able to participate better in the benefits of foreign investors instead of being passive observers.

More cheap foreign labor is not the answer. We could send home at least 40 to 50 percent of our current nonresident workers and replace them with our own local people. While the no-resident workers have done a fantastic job in building our islands, it is time to consider training our local work force. I personally owe them much respect and thanks but times are changing.

We have the ability to help ourselves. Now we must have the will and determination to do so. More doesn’t mean better. But fewer skilled workers earning decent wages mean a stronger economy and a better livelihood for all of us. This would solve much of our sagging economy. Fewer better trained employees means better profits!