Advocates of the South Dakota ballot initiative to raise our minimum wage should read this article from The Next New Deal. The article points to studies and meta-studies (that's studies of studies) showing that raising the minimum wage does not increase unemployment. It concludes with this fascinating statistical tidbit on the mismatch between the current minimum wage and what workers are really worth:
The buying power of minimum wage has steadily been waning due to the effects of inflation for the past 40 years. When prices increase, a worker’s paycheck buys less and less. To put it in perspective, we look to another brief by John Schmitt: if minimum wage had continued to match productivity growth, it would have been $21.72 per hour in 2012. If we only adjust for the cost of living, a minimum wage pegged to inflation would be $10.52 [Emily Chong, "Debunking the Minimum Wage Myth: Higher Wages Will Not Reduce Jobs," The Next New Deal, 2013.08.07].
If we were paying people for what their labor is worth, they'd be getting almost triple what we guarantee them now. Wow.
In related news, Think Progress points to the successful business practices of the employee-owned WinCo grocery chain, which is beating Walmart on worker pay and benefits:
The company, which will soon have close to 100 stores with the latest openings in Texas, has almost 15,000 employees. Those who work at the store long enough qualify for a pension plan into which the company puts an amount equal to 20 percent of their yearly pay. More than 400 “front-line” workers — clerks, cashiers, and others who are not at the executive level — have retirement accounts that are worth at least $1 million, according to a company spokesman.
It also provides full health benefits for those who work at least 24 hours a week, beyond the requirements in the Affordable Care Act. While the company is private and hasn’t made wage information available, Glassdoor reports that cashiers and clerks make more than $11 an hour. Thanks to these benefits and wages, the company has low turnover. An industry analyst estimated that the average hourly worker stays with the company for more than eight years.
The same level workers can expect $8 an hour at Walmart and part-time workers won’t get health care coverage. Even half of full-time workers aren’t covered because the costs are so high. Thanks to its low pay and few benefits, workers rely on $1 million worth of public benefits in a single store just to get by [Bryce Covert, "The Company with Lower Prices and Better Benefits Than Walmart," Think Progress, 2013.08.09].
I've noted before how easy it would be to raise hundreds of thousands of Walmart workers out of poverty simply by each of us tipping one Walmart worker 30 cents on each shopping trip. But WinCo gives its workers better wages and benefits without taking more money out of customers' pockets. They beat Walmart on price:
Yet WinCo’s prices are often lower than Walmart’s. To drive them down, the company doesn’t rely on distributors to get products and instead sends its own trucks to get food and other goods in bulk, which can amount to a 10 to 50 percent discount. It requires that customers bag their own groceries to cut down on the cost of a worker doing it for them. It doesn’t take credit cards to eliminate the processing fees. And its stands and displays are “pragmatic” and “lack frills” [Covert, 2013.08.09].
Paying employees full value for their labor is not a liability: it's a moral imperative. As research and practice show, it also won't sink your business.
Update 15:30 CDT: McDonald's put together a website to help its employees create household budgets. McDonald's own figures show that you can get by on minimum wage... if you get a second job, work 74 hours a week, find a health insurance policy that costs only $20 a month, and don't eat.