Policy Points: The Argument for Increasing the Minimum Wage

By David Bolotsky

I don’t like labels, but let’s see if you can place my opinions somewhere on the political left-right spectrum. I’m in favor of self-reliance. So I’m against businesses relying on government to provide unnecessary tax transfers. And I’m for fiscal responsibility. It’s fiscally irresponsible to have taxpayers compelled to subsidize the most basic necessities of workers at for-profit companies.

Sounds fairly conservative, doesn’t it? Yet these positions are not common among many conservatives today. In fact, by refusing to allow the minimum wage to rise to reasonable levels (reasonable in terms of the cost of living and in terms of our definition of poverty), they’re defeating some of the core principles of conservatism. Why should taxpayers subsidize an employer’s poverty wages with Medicaid, food stamps and tax breaks? In the spirit of Henry Ford, shouldn’t we want our workers to be able to afford our products and services?

We employ hundreds of entry-level customer service and warehouse workers at Uncommon Goods. And I’m in favor of government making it mandatory for businesses like mine to pay them a wage they can live on.  Unfortunately, today’s $7.25 minimum wage is worth a third less than the minimum wage of 1968 – 45 years ago.

As a business owner, I have to deal with annual price increases in rent, utility bills and supplies. Our workers also face higher costs for their necessities, and should see their wages rise to keep pace with these increases.

Yes, I’ve heard the arguments against raising the minimum wage, but it turns out that they’re more myth than fact:

“This would kill a lot of small businesses!” Really? Turns out that’s inconsistent with what small business owners think. Over two thirds of them support raising the minimum wage, largely for the Ford effect: they would like to see the economy grow and provide them with more customers.

“It will put more people out of work!” Not according to a massive pile of studies that have shown there is no correlation between increases in the minimum wage and unemployment or business closures. At our company, we are hiring more than ever in 2013 and our starting wage just for seasonal warehouse workers is $12 per hour, up from $11 a year ago and $10 the year before. Full-time employees get more. And we continue to be profitable, thank you.

“You’re sending American jobs overseas!” The vast majority of minimum wage positions are in service jobs like retail and fast food. A counter person in Nanking can’t hand you your Double Whopper with Cheese in Cincinnati. And many of these workers aren’t at McDonald’s: they’re our health aides, childcare workers, security guards. Don’t you want the people protecting you and your children to make a decent living?

“Why should we overpay teens?” The average age of today’s fast food employee is 29, and over 26 percent of those workers are parents. Puts a different perspective on their wages, doesn’t it?

Businesses big and small are getting the message. Unlike most of its Big Box competitors, Costco is experiencing record profits, despite (or maybe because of) paying its people an average two and a half times what Walmart workers typically earn. In other words, more Costco wages can flow back into the company coffers from more productive, happy, loyal employees.

There are numerous arguments in favor of a sane, moral minimum wage that’s adusted annually for the cost of living. First, a predictable 2-3 percent annual increase is easier for businesses to manage than a sudden spike after years of stagnation, which is what we’re facing now. Second, it will ease the pressure on taxpayers and government to provide corporate welfare in the form of support for employees of companies that pay poverty wages. Third, it will raise the buying power of a large segment of the workforce, spurring our economy at a time when we really need that boost. Fourth, you get more productivity and lower turnover when employees are fairly compensated. Finally (and I think this applies to most business owners), you’ll feel better about the way you have contributed to your workers, your community and your country. It’s flat-out patriotism.

Ten states currently index their minimum wage to rise with inflation: Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washington. Make that 11 states: New Jersey voters just passed Public Question 2, raising their minimum wage a dollar to $8.25 and tying future increases to the consumer price index. It’s time for the federal government to follow suit. It has been over four years since our country’s lowest paid workers have gotten a raise.

What I’m proposing is that businesses nationwide join me in supporting fairness, logic and, frankly, self-interest, by signing this petition in favor of raising the minimum wage to keep pace with the cost of living. It will drive consumer demand, help our economy, increase worker loyalty, and reduce the corporate welfare going to minimum wage employers. Keeping up with the rising cost of living is all that these workers are asking – and we should support them.

David Bolotsky, founder and CEO of UncommonGoods, an online and catalog retail business based in Brooklyn, NY.

Policy Points is produced by the American Sustainable Business Council. The editor is Richard Eidlin, Director – Public Policy and Business Engagement.

[image credit: Wisconsin Jobs Now: Flickr cc]