With inequality increasing throughout the world she jurisdictions are fighting back by raising the minimum wage. Business owners must pay employees at least the minimum wage set by the government, no matter how little they want to actually pay people. Minimum wage increases were rare for the first years of this century so it’s good to see places like New York raise theirs. An added bonus of the recent wage increase is that business have seen revenue gains similar to that of the workers.
The focus on single restaurants also ignores the larger economic impact of raising the minimum wage. According to an analysis by the Federal Reserve Bank of Chicago, if low-wage workers have more money in their pockets, they will have more money to spend, potentially expanding the number of consumers who can afford to eat out.
In fact, some people — including those from the Economic Policy Institute — have posited that a minimum-wage increase will actually lead to an increase in employment because of the effects of giving low-wage workers a raise. Other advantages to restaurants may include lower turnover rates and better job performance.
John Driscoll is the CEO of a health care company and he sees value in paying people what they’re worth. A few years ago he turned around a company from a downward trajectory to a profitable and growing concern by raising the wages of the average worker and freezing the salaries of executives. In an age when inequality is growing due partially to increased executive compensation this story might sound out of place. Really, this story should be heard and shared everywhere because it shows that if you pay people fairly for doing their job then the whole company benefits. Just paying those at the top a lot of money while paying the minim for others does not equal success.
What that meant for our company was that if we just froze the wages of our most senior team – less than 20 executives – we could radically increase the wages and improve the lives of nearly 500 of our teammates.
Raising wages in the midst of a business turnaround was not easy. We needed our executive team to buy into a vision of business success where every employee had a fair shot at success. It worked.
Our business has tripled over the past five years. Our minimum wage is now approaching $16.50 per hour and last year we broadened profit sharing to all levels of the company.
Raising the minimum wage helps you no matter how much you earn. The next time the debate about whether or not your region of the world should raise wages you ought to argue for rating wages. The only downside of getting paid more is that…well, nothing really. Don’t believe the lies that raising minimum wage increases leads to job losses because there’s no evidence that that is the case.
Economist Arindrajit Dube of the University of Massachusetts at Amherst, who is perhaps the leading expert on the economic impact of the minimum wage, and his co-authors Doruk Cengiz (also at UMass), Attila Lindner of University College London, and Ben Zipperer of the Economic Policy Institute conducted the study. They used detailed data and advanced statistical methods to parse the effects of minimum-wage increases on low-skilled workers—including those making at or around the minimum wage—as well as on high-skilled workers and the economy as a whole.
The study finds that minimum-wage increases occurring over more than three-and-a-half decades resulted in higher wages for low-skilled workers, with no reduction in low-wage employment five years out. This was true overall, and separately for younger workers, less educated workers, and minorities. Low-wage workers saw a wage gain of 7 percent after an increase in the minimum wage.