Thursday, July 23, 2009

Business Owners Welcome Min Wage Increase; But They Don't Really Need a Law to Pay Higher Wages

BUSINESS FOR A FAIR MINIMUM WAGE (July 21, 2009, Boston, MA) -- Business owners across the nation are welcoming the July 24 increase in the federal minimum wage from $6.55 to $7.25 per hour. National business leaders and small business owners in states where workers are getting a raise say the increase will boost consumer buying power and promote economic recovery.

Nearly 1,000 business owners and executives including Costco CEO Jim Sinegal, U.S. Women’s Chamber of Commerce CEO Margot Dorfman, ABC Home CEO and 2009 Home Fashion Products Association Retailer of the Year Paulette Cole, Addus Healthcare CEO Mark Heaney, Credo Mobile President Michael Kieschnick, Business Alliance for Local Living Economies Co-Founder Doug Hammond, and small business owners from all 50 states -- have signed a statement supporting the minimum wage increase. As the Business For a Fair Minimum Wage statement points out, “Higher wages benefit business by increasing consumer purchasing power, reducing costly employee turnover, raising productivity, and improving product quality, customer satisfaction and company reputation.”

The statement supporting the minimum wage increase and a List of Signatories By State is available at

HT: NY Times Economix

MP: Seems like the obvious challenge for these business owners (which NY Times blogger Catherine Rampell points out), some of whom probably pay employees the minimum wage: If you support higher wages for unskilled workers, why did you wait until federal law forced you to pay $7.25 per hour, and why didn't you voluntarily pay that higher wage a year ago, two years ago, or five years ago?


At 7/23/2009 5:57 PM, Anonymous J said...

Those business owners probably are. It's their competitors who probably aren't and can least afford to. So you know, why compete when you can use the power of government to put your competitors out of business for you.....

At 7/23/2009 6:03 PM, Anonymous Anonymous said...

Well said, J.

At 7/23/2009 6:07 PM, Blogger Unknown Blogger said...

given the current administration & current Congress's handling of the AIG, Chrysler, and GM situations, I would make sure and come out in favor of the this as loudly as possible, regardless of the veracity of my statements.
The President's declaration of "We do NOT stand with them!" referring to the hedge funds that were looking out for THEIR clients likely sent chills up the spines of MANY CEO's throughout the US & this could be a manifestation of that fear.

At 7/23/2009 6:15 PM, Blogger Hot Sam said...

This comment has been removed by the author.

At 7/23/2009 6:17 PM, Anonymous Cheech (in) Marin said...

Did you plagiarize this out of Atlas Shrugged?

It sounds really familiar.

At 7/23/2009 7:00 PM, Blogger Angie said...

I agree with J: I suspect part of their elation is realizing that the effects of the higher wages will drive some of their smaller competitors out of business.

At 7/23/2009 7:21 PM, Anonymous Anonymous said...

Probably the companies pay more than the minimum wage to start. Which means why do we have to have the minimum wage in the first place?

I was talking to a fast food restaurant owner and he said he has to pay about $10 per hour to attract help.

At 7/23/2009 8:07 PM, Blogger Alan said...

"why didn't you voluntarily pay that higher wage a year ago, two years ago, or five years ago?"

They would probably reply that they could not afford to raise wages because then they could not compete with those heartless capitalists!

At 7/23/2009 8:41 PM, Anonymous Anonymous said...

Absent raising prices or sacrificing profit, 11% higher wages should favor productive workers and disfavor the least productive.

Welch became famous for cutting the bottom 10% each year.

At 7/23/2009 9:24 PM, Anonymous Anonymous said...

What is missing is the young starting workers, who will be left out even further than in the past. What will they do, hang out on the corner, collect welfare, shat?

At 7/23/2009 10:18 PM, Anonymous Anonymous said...

Did you plagiarize this out of Atlas Shrugged?

Well Cheech, you and your sidekick, Tommy, explain economics way better than Robert Miller's girlfriend does. ROTFLMAO

At 7/23/2009 10:58 PM, Anonymous Robert Miller's Man Friend said...

Robert Miller is the best economist. Better than Cheech can ever dream about being. Cheech is a second-rate ninny.

At 7/23/2009 11:28 PM, Anonymous Cheech (in) Marin said...

A dime bag is going to stay at $20? Talk about inflation!

Seriously that's one awesome video. Some days I wish I could go to work stoned.

Rob's got only one man-friend and that's me! His wife doesn't let him have more than one.

At 7/24/2009 3:41 AM, Blogger KO said...

It's all PR. You could get businesses in all 50 states to sign a statement the other way as well. Not the same ones, but no one is going to circulate that letter.

In California, the higher minimum wage killed of menial jobs, and many small businesses years ago. So why not gain some political points by supporting something that doesn't change anything for you, but changes things for competitors elsewhere?

With stimulus funds going 2 to 1 to counties that voted for Obama, it's clear you get rewarded for being on the team.

At 7/24/2009 3:51 AM, Anonymous Anonymous said...

What is a "Local Living Economy", and why does an organization promoting it have an opinion on wages?

At 7/24/2009 6:11 AM, Blogger OBloodyHell said...

> If you support higher wages for unskilled workers, why did you wait until federal law forced you to pay $7.25 per hour

I can't speak for now, but I can tell you that historically CostCo has ALWAYS paid well above-minimum wage.

Some bright boy noted a long time ago that you could substantially limit "shrinkage" (i.e., sometimes shoplifting, but more often employee theft) by paying good wages, which made people not want to risk a good job to get a small perk. As a result, CostCo's "shrinkage" in the 1980s was typically 2%, where industry norms are more like 4%.

I know in the 80s Costco paid its checkout people $10 an hour when most of the industry was around $4-5/hr for the same labor. I assume this differential is still the case without verifying it (feel free, I'm curious if it's changed)


Hence (and even if this hasn't been maintained -- still): for CostCo this is a competitive move just like WalMart's support for mandatory health legislation -- it's a move to substantially limit competition by introducing a defacto barrier to expanding employment for small businesses, which, IIRC, you yourself have noted for the WalMart case, Mark.

I'm surprised I need to point this out.

At 7/24/2009 10:57 AM, Anonymous Anonymous said...

So why don't businesses raise wages unilaterally?

Simple really, they have a coordination problem. If one business raises wages it reduces it's margin with no benefit to aggregate demand. If they all raise wages simultaneously, jolted bij the government, they DO raise agregate demand and that boost could just be worth the initial hit to margins.

Note also that bumping up the minimum wage is likely to have a ripple effect in the payscales just above it. People who used to be paid above minimum wage but end up at or near the new higher munimum will usually get a raise to put them back where they "belong" in the pay hierarchy.

And yes, a minimum wage hike can be good for business in this way as long as you don't overdo it. At some point the wage cost of a wroker would become to high relative to output (but that point is usually way higher then any minimumwage in a modern economy).

At 7/24/2009 11:58 AM, Blogger OBloodyHell said...

> And yes, a minimum wage hike can be good for business in this way as long as you don't overdo it.

An artificially induced wage hike is never, ever good for business *or* for workers. It does nothing but raise the cost of production, without raising the value of production. This inevitably reduces wage hikes for all other workers and/or prevents the hiring of additional workers, raising the defacto load on the existing workers to produce the same results. And any un-hired workers are left to find work elsewhere.

The notion of a positive benefit from a wage hike is nothing but a corollary logic error to the Broken Window Fallacy.

If it doesn't improve productivity, it's not beneficial to business, employee, OR consumer.


No "if"s

No "and"s

No "but"s


At 7/24/2009 12:24 PM, Blogger juandos said...


Ha! Ha! Ha! Ha! Ha! Ha!


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