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.
- Is DC’s “Wal-Mart Living Wage Bill” A Good or a Bad Idea? (urbanscrawldc.com)
- Costco: The Anti-Wal-Mart (gawker.com)
- President Obama Calls For the Minimum Wage to Be Increased To a Living Wage (politicususa.com)
- Council leaders move ahead with bid to bring in ‘living wage’ (coventrytelegraph.net)
- Wellington to be a living wage capital (stuff.co.nz)
- Minimum Wage Scary Stats (davidmckeon.wordpress.com)
- Are American Taxpayers Subsidizing Wal-Mart’s Low Wages? (businessweek.com)
- Small-business owners across the political spectrum say raise the minimum wage (miamiherald.com)
- Minimum Wage and the Cost of Living (turnarkansasblue.wordpress.com)