Op-Ed By Dean Cycon
Taunton Daily Gazette, January 13. 2014
We've all heard the arguments against raising the minimum wage: It's bad for business and will result in higher unemployment.
I'm in the coffee business, and those arguments don't amount to a hill of beans.
Let's start with the idea that paying people more than the current minimum hourly wage of $8 in Massachusetts is bad for business. On the contrary. Most successful, thriving businesses, including mine, pay well above $8. The entry-level starting wage at Dean's Beans is $12 per hour. We raise employees to $12.50 after six months, then review wages annually.
This helps our business. Better wages and benefits reduce staff turnover, increase productivity and improve customer service. It's why most highly successful companies, big and small, from Costco to mine, pay above minimum wage. It works.
An important way that increasing the minimum wage is actually good for business is that it boosts consumer demand. Low-wage workers are the people who most need to spend what they earn. That's money that goes right back into our businesses and our communities. All businesses need customers with money in their pockets to buy their products and services. It's a big driver of our local economies.
The other argument we hear is that raising the minimum wage will increase unemployment. Opponents of the minimum wage have used this argument since the beginning. Our state has a proud history of being the first to introduce a minimum wage, a century ago. Every time it comes up for discussion, the opponents trot out this old chestnut of traditional economic theory.
But the theory has actually been disproven by a growing list of rigorous studies of minimum wage increases. Evidence shows that increasing the minimum wage does not cause job losses.
So why these continuing arguments to keep the minimum wage down?
Some companies have business models that are built on minimizing wages, rather than maximizing the value of employees.
That's bad for the rest of us. Their low wages mean not only less consumer demand to drive the economy, but when their employees are paid wages so low that they qualify for food stamps or other public assistance, it's our taxes that are, in effect, subsidizing the companies who pay low wages.
There are other approaches. As Costco CEO Craig Jelinek has said, "An important reason for the success of Costco's business model is the attraction and retention of great employees. Instead of minimizing wages, we know it's a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty."
In the end, we need a sustainable Massachusetts workforce. And it's certainly not sustainable for our lowest-paid workers to be in poverty.
Instead, low-wage businesses can adapt to a minimum wage hike — just as they have before — whenever the minimum wage has been increased.
If the minimum wage had kept pace with the rising cost of living since 1968, it would already be nearly $11. The Massachusetts Senate voted in November to gradually increase the minimum wage over three years to $11, and then adjust it annually for inflation to keep up with the cost of living. The Massachusetts House of Representatives should follow suit. I signed the petition in favor of an increase on the Business for a Fair Minimum Wage website, and I encourage other business owners to do the same.
I'm committed to the integrity of our business by treating workers respectfully and rewarding them fairly for their efforts. I'm also committed to the integrity of our local community by ensuring that our workforce can afford to shop locally and keep local stores in business.
The overdue raise in the minimum wage won't hurt businesses, but it will make a meaningful difference for the workforce and the economy.
And those other arguments? Well, they're just full of beans.
Dean Cycon is founder and CEO of Dean's Beans Organic Coffee Co. in Orange. He is a member of Business for a Fair Minimum Wage. An earlier version of this article originally appeared in the Worcester Business Journal.
Copyright 2014 Dean Cycon