Minimum wage

Introduction

Square-Off: Is Raising the Minimum Wage a Good Idea?

Raising the minimum wage won big last November. A handful of states passed legislation to significantly hike pay floors across the country, which may represent a building sea change in public opinion away from business interests. From New York City to Seattle, the "Fight for $15" is increasingly becoming a reality. Twenty-nine states and the District of Columbia now have higher minimum wages than the federal mandate of $7.25 an hour. Advocates of the hikes say the wage floor has lagged far b ..

Businesses depend on customers who can afford to buy what they are selling. When millions of workers can’t make ends meet because their wages haven’t kept up with the cost of living, it hurts business and it hurts the economy.

Holly Sklar

Holly Sklar Minimum wage

The minimum wage sets the floor under worker paychecks. Stuck at $7.25 an hour since 2009, the federal minimum wage comes to just $15,080 a year for full-time work. When the minimum wage is too low, it not only mires workers in poverty, it undermines the consumer demand at the heart of our economy.

Raising the minimum wage boosts the economy, as low-wage workers are the most likely to spend any additional pay. Their increased buying power translates into more purchases at businesses large and small, and helps boost aggregate consumer demand.

A higher minimum wage makes good economic sense in other ways too. For example, businesses that are more invested in their employees have employees that are more invested in the business.

Low pay typically means high employee turnover. With reduced turnover, businesses see savings on recruiting and training costs. They see less product waste and greater customer satisfaction. Employees often make the difference between repeat customers and lost customers.

When workers are paid enough to live on, they don’t have the continual stress of worrying how they will make rent or afford other basics. They are happier and more productive.

Business support for raising the minimum wage is widespread. In a 2016 survey of 1,000 business executives across the country conducted by LuntzGlobal for the Council of State Chambers, 80% of respondents said they supported raising their state’s minimum wage.

Twenty-nine states have minimum wages that are a little or a lot above the federal $7.25 level. But we need federal action to lift the floor under our economy nationwide and assure an adequate minimum wage wherever people live and do business. Gradually phasing in minimum wage increases enables lower-wage companies to adjust to raises over time and to benefit from lower turnover and increased consumer spending.

Raising America’s minimum wage is smart economic policy.

Holly Sklar is the founder and CEO of Business for a Fair Minimum Wage, a national network of business owners, executives and business organizations that believe a fair minimum wage makes good business sense.

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9 responses to “Raising the Minimum Wage Makes Economic Sense”

  1. That is the dumbest thing I have read in weeks.

    I challenge this inept non thinker to establish how many adults are trapped in minimum wage jobs. Minimum wage jobs are for entry level work and almost exclusively for non skilled workers. My state mandates a minimum wage of $11 and hour and forcing it up to $15 over the next few years.

    My minimum wage positions are very low skilled positions. I have only ever hired high school students to do the work, because I do not need someone trying to support a family to do it. They are also very part time positions and mostly seasonal.

    Guess what Ms. Sklar. I will now force my other employees to take a turn doing these mundane tasks, because I will not pay a teenager $11 to $15 an hour to do mundane tasks. Now moronic do-gooders have kept three to four high school teenagers from getting any work experience and some pocket money.

    This is why the fast food restaurants are replacing teenagers with kiosks. They will not pay confiscatory wages for someone to take orders, when the kiosk will never call in sick, never ask for additional days off, nor ask for a raise.

    It is a matter of simple economics, when you raise the minimum wage beyond the point that technology becomes a valid alternative investment.

    I also bet Ms. Sklar is a progressive liberal, all in favor of the more government spending… Trust the free market and let the market dictate the wage people earn. Those that do not better themselves are responsible for their own state of affairs.

    Stupid, Stupid, Stupid.

  2. So when you pay $15/hr for a job that is $7/hr, the employer has to raise prices. Customers don’t want to pay 30-50% more than the value of that product, so they quit purchasing the product. The employer then eliminates jobs to compensate, or goes out of business.

    How does that help the economy?

  3. So true. Henry Ford paid wages that not only kept people happily employed, they could afford to buy his product. Car prices were normally way out of range for the average working person. This propelled the Ford company to the number one spot – one that competitors couldn’t touch for years. All of the meaningful and important work he did on process and flow would have amounted to nothing if people couldn’t afford his product. There is a bigger picture than just the line item.

  4. Really, it is the wage level that keeps workers “mired in poverty” and nothing to do with the value of their labor? By that logic we should never adopt new technologies that increase output and productivity because it would put some level of the workforce out of a job. The Henry Ford example is flat out wrong. It wasn’t the wages he paid or his implementation of the 40 hours work week that made cars affordable for the masses, it was the invention of the mass assembly line which created division of labor. This vastly improved the productivity of his workforce and significantly lowered the cost of producing his automobiles. Division of labor is a basic concept in the study of economics and yes, it does result in downward pressure on the wages of people employed in performing routine, repeatable functions.

  5. I seriously recommend to analyze Argentinian and Latam economic behavior. This idea only generate unemployment, poverty, higher inflation and unpayable external debt. Numbers don’t lie.
    Please avoid magic solutions. I understand the proposal from a social point of view, but not from an economic one. And worst if it proposed by a CFO.

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