Minimum Wage Increases

President Obama has argued that we should raise the minimum wage over the next three years from $7.25 (a figure a few members of congress seem to even know) to$10.10 and hour. Andrew Tobias made a case for a $15.00 an hour minimum wage. Of course, many argue that this would just lower the number of workers because business couldn’t afford to pay such wages. [A note, if the minimum wage had kept pace with U.S. productivity since 1968 it would be currently $21.72 and hour.]

So, let’s take another look a good old Wal-Mart the mammoth seller and poor payer of wages. Thus equating low wages with low retail prices. Also note that this is 60% of what Costco pays its workers. But here is how the number work as Tobias figures them. If Wal-Mart paid all it employees $12.00 an hour, and kept it outrageous profits for it owners, this would raise Wal-Mart prices 1%.

Sure, this is only one instance. But my argument is that if a small business couldn’t afford to pay a descent minimum wage perhaps they shouldn’t be in business and more effective businesses could take their place. We find it easy to talk about inefficient lazy workers, but rarely talk about ineffectual and lazily run small businesses.