$11 Minimum Wage? Hmmm… YES, but…

English: Exterior of a Wal-Mart Supercenter in...

English: Exterior of a Wal-Mart Supercenter in Madison Heights, Virginia. (Photo credit: Wikipedia)

One of the labor-rights movements right now is calling for an $11/hour minimum wage in the United States — bringing the per-hour cost of labor much closer to a living wage figure.  While I completely agree that a double digit minimum or a living-wage should be a goal, I see several problems with this.

The first I see is the small business.  Small business owners often don’t make a lot of money, particularly when they first start out — often taking what’s left after all the bills are paid, and that’s NOT assuming the company has some sort of “rainy day fund.”  Small business owners may find such a surge in output to employees that they may find little money left in the till after the bills and payroll are made.  This would be unfortunate.

The second, I see being much more sinister and calculated.  We already know “Big Box” companies like Wal-Mart and Meijer have a reputation for dolling out hours “just below” full-time to avoid having to pay their employees’ health care, or other benefits, but get almost the same benefits of having a full-time labor force.  Often very underpaid, they wind up having to go on forms of assistance to get medical care.  While it’s arguable and readily easy to assume that a company like Wal-Mart could fairly easily absorb such a rise in wages, my fear is that they will cut hours.  All of a sudden, the 38-hour employee finds himself at 27 hours.  Or worse, the full-time 40+ hour a week person finds himself at 30 hours, and now, his or her benefits cut as a result.

However, COSTCO, the Big-Box retailer that’s known for paying it’s employees very handsomely, enjoys a successful and relatively happy workforce, with a CEO who, while underpaid compared to his CEO-brethren, still lives a very comfortable life.  I feel he deserves recognition as such in any such a debate.

Is this pure conjecture — surely.  But is it out of the realm of possibility?  I don’t think so.  Big-Box retailers in general are known for looking for ways to cut costs while keeping productivity high.  My fear is a wage increase could make an already lame situation much worse.

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