New York Times Editorial, Feb 27, 2014
Much of the discussion about the Democratic proposal to raise the minimum wage to $10.10 an hour by 2016 has rightly focused on the workers who will clearly benefit from the move. But what about businesses? How would higher wages affect them?
The answer — contrary to a great deal of reflexive hand-wringing by some conservative think tanks and politicians — is surprisingly positive. Scholarly studies and the experience of businesses themselves show that what companies lose when they pay more is often offset by lower turnover and increased productivity. Businesses are also able to deal with higher costs by modestly increasing prices and by giving smaller increases to higher-paid employees. ...
These clear benefits might help explain why Gap, the apparel chain, said last week that it would raise the minimum pay of its hourly employees to $9 an hour in 2014 and to $10 next year, which will benefit 65,000 of its 90,000 workers. The company’s chairman and chief executive, Glenn Murphy, said the move would “directly support our business, and is one that we expect to deliver a return many times over.”
Some retailers pay their workers even more. Costco, one of the most successful retailers in the country, has a starting wage of $11.50 per hour for most entry-level jobs, and its average wage for hourly workers is $21 an hour. Patrick Callans, a senior vice president for the company, said that Costco’s higher pay and benefits “allows us to attract and retain great employees.” A 2006 management case study argues that the higher pay has also helped the company keep “shrinkage,” or theft, fraud and errors, low by industry standards. ...
There is another way in which a higher minimum wage helps businesses: by increasing consumer spending. ...
The argument that a higher minimum wage would hurt business is old and tired. There is clear and compelling evidence that the economy and companies enjoy real benefits when workers are paid more.
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