Harming the Competition: Why some companies want a higher minimum wage

Capitol Confidential ^ | 2/9/2014 | Jarrett Skorup

[MichCapCon]

A recent USA Today article highlighted President Obama visiting a Costco store where he repeated his call for an increase in the minimum wage.

The president chose the location because the average wage for the wholesale warehouse chain is $21 per hour and reports indicate that most employees start around $17 per hour.

The CEO of Costco repeatedly has urged for a higher mandated wage floor and the reporter highlighted the difference between Costco and Wal-Mart in employee pay. Wal-Mart has an average hourly wage of $11.83 per hour.

In Michigan, the owner of Zingerman’s delicatessen in Ann Arbor has also lobbied for a higher minimum wage. Paul Saginaw pays his workers higher than the minimum and wants to force the competition to join in.

But while the heads of Costco and Zingerman's and other businesses that have joined the call (including the previous CEO of Wal-Mart) may legitimately want to improve people's lives, an increase in the minimum wage likely would help their own bottom line by harming that of their competitors.

Many, probably most, of the workers making minimum wage are at restaurants, fast food joints, and small mom-and-pop shops. Since Costco and Zingerman's have starting wages significantly above the current minimum, they will not be affected much by an increase. So the real harm will come to the stores they are competing with for business.

An increase up to $10.10 an hour (as the president has called for) or $15 an hour (as some union driven fast food protests demand) would drive up the costs for competitors. Subway may have to give up its $5 footlong deals with a minimum wage increase, making the more expensive sandwiches at Zingerman's (most cost $14, veggies and cheese extra) more attractive to consumers.

According to a study from professors Joseph Sabia of American University and Richard Burkhauser from Cornell University using reported data from the federal government, only 11.3 percent of workers who would gain from an increase in the minimum wage to $9.50 an hour live in poor households. In fact, 63.2 percent are people who live in households that are relatively well off.

The minimum wage is a poor way to help low-income wage earners and will harm them by making it less likely entry level workers will get that first job. The government should focus on policies that will increase job growth, not decrease it.

[Our man in washington]

Use the government to screw your competition. Nothing new about that.

[cripplecreek]

Yup. The push to ban smoking in Michigan bars was heavily funded by casinos who had a loophole by virtue of having 10,000 sq feet of space for smoking areas.

Its the same reason Detroit is the only major city in the country without ethnic food vendors downtown. How is the Hard Rock Cafe going to sell a $25 burger if there’s a guy out on the street selling real Detroit Coney dogs for $5.

[PGalt]

Unaccountable totalitarians need to hide their plunder of the currency, the devaluation of the fiat paper, from the masses. Enter their accomplices/co-conspirators, the corrupt politicians, as champions of the downtrodden raising their minimum wage.

Root cause? Never addressed.

DISMANTLE unaccountable totalitarian/socialist collectives.

[Nip]

Increasing the minimum wage, to what ever value you think is “fair”, will cause other problems.

Remember that there many other things tied to a person’s wages - take a look at you pay stub for a partial list. IMHO all of those will go up to since the rates “charged” are based on the income collected. Then, there are those items that are co-paid - the employer pays part of the “charges”. Then there are items that are totally paid by the employer. Finally, there is the cost of doing business - utilities, multiple levels of taxes and fees, and the list goes on and on.

Bottom line - all of the above comes from the monies collected over the counter. There is no other source.

I read an article a few years ago that claimed that the total cost, to the employer, for an employee was roughly twice what the employee took home in wages. If accurate, that means that your $ 15.00 an hour fast food worker has to generate, as a minimum, $ 30.00 of across the counter business every hour. That goes for everyone in the business; that is what 6 to 8 people per shift hour? That’s around $ 200.00 per shift hour, or 40 Big Macs with fries and drinks (at today’s prices).

As much as I don’t like Big Macs, “that ain’t going to happen Captain”.

You can easily figure out what is going to happen next.