President Obama has argued that “there’s no solid evidence that a higher minimum wage costs jobs.” Here is what some reputable CEOs have to say about that.
Those who are opposed to hiking the minimum wage:
“So if your costs go up by X million by taking an initiative like this, what are companies going to do? It doesn’t mean their sales are going to get better, it just means that you’re going to have to offset that expense and how are you going to offset that expense? The worst thing that can happen is we end up laying off people.” – Macy’s CEO Terry Lundgren
“If they did this minimum wage thing, I’m telling you there’d be another 15 to 20 percent [of small businesses] that are going to go away… You can’t afford it.” – Former McDonalds CEO Ed Rensi
“This industry should be the poster child for how it ought to work because we give people a place to start… To those who scream in protest at the idea of someone going from the bottom rung to penthouse suite simply by working hard, Miller points to Dawn Lafreeda. After starting at Denny’s as a hostess when she was 16 years-old, Lafreeda bought her own franchise by the time she turned 24. Today she’s one of Denny’s biggest franchisees with 70 locations in six states and revenues of over $60 million…” – Denny’s CEO John Miller
“Everybody must remember if our expenses go up in a business, somehow or another you have to compensate for that in the bottom line.” Culver’s CEO Craig Culver, who supports a “two-tiered system,” whereby the minimum wage for adults is $10.10, and the minimum wage for teenagers is lower.
Those who are in favor of hiking the minimum wage:
In an article in which CNN said Starbucks CEO Howard Schultz “backs” raising the minimum wage, the CEO fell short of saying it should be $10.10. “We may not be able to afford to provide all the benefits if we had to go to $10 an hour,” the CEO told Oprah. But the CEO added that he didn’t think he’d have to raise the price of Starbucks’ (already overpriced) coffee.
“At Costco, we know that paying employees good wages makes good sense for business. We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low.”- Costco CEO Craig Jelinek
Contrary to Obama’s (and the hard left‘s) assertion that “there’s no solid evidence that a higher minimum wage costs jobs,” and despite well-known statist economists like Paul Krugman advocating that the minimum wage can be hiked without negative consequences, that’s hardly the clear case.
The Washington Post reported a 2006 study that surveyed more than 100 studies, and came to an opposite conclusion: “raising the minimum wage leads to economic distortions and often has unintended adverse consequences for the employment opportunities of low-skilled workers.”
There may not be a definitive answer on whether or not raising the minimum wage will lead to grave damage to the economy. But given that George W. Bush raised the minimum wage from $5.15 an hour to $7.25 an hour, and Barack Obama seeks to raise the minimum wage (beyond federal workers) from $7.25 an hour to $10.10 an hour, and each have annual jobs creation rate of around +0.22% – by far the lowest going back to Herbert Hoover – it might be time to try something different.
Instead of letting just a handful of fallible men decide, let the marketplace of millions of Americans decide.
In an open market, individuals should seek out the job opportunities where the labor demand implies they can be paid more. Individuals have a choice – if you don’t have the job skills to compete for your dream job right now, find a job that needs to be done and make money doing it (many entry-level low-skill jobs, like in sanitation or in shipping, pay relatively well), or improve oneself through education and job training. If the entry-level job is low wage, get in that job and prove you deserve more.
While many point to the profits of corporations or the salaries of CEOs as a basis for arguing that all workers should be paid more, this falsely holds profits as a zero-sum game and ignores the value-contributions that good CEOs make to companies that justify paying them higher salaries. Most shareholders or business owners aren’t stupid: they don’t pay CEOs more for fun or as an affront to those who make less.
What many of these corporate CEOs are surely well aware of (see former McDonalds CEO’s comment) is that legislating an equal standard for all has unequal effects in terms of how individuals and small businesses are impacted. Some people are rewarded who do not merit it; others are held back from seizing more opportunity through their hard work and talent. That’s one reason why the economy flourishes in freedom, and languishes under central planning.