The Soapbox

Joined: 06/03/2005 Posts: 31275
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I think you’d be surprised by the characteristics of minimum wage workers.

First of all, VERY few workers make the minimum wage. Only 2% of workers in the US earn the minimum wage (and about 4% of HOURLY workers). Roughly half of minimum wage workers are under the age of 25 and roughly 25% are under the age of 19. 2/3 are part time and less than 10% have a college degree. These are generally NOT skilled workers and demand for their services / ability to justify paying for their services will be greatly reduced if you DOUBLE the cost to hire these workers.

Your point on other workers just above the minimum wage also being impacted is spot on. An increase in the minimum wage of that magnitude would cascade all the way up the wage chain. And I don't think that's a good thing either. Basic economics says that when you raise the price of something, you get less demand for it. An artificial increase in the price of labor will ultimately lead to less demand for labor.

And empirical evidence from a raise in the minimum wage to a rate that is still WELL BELOW the prevailing market rate isn't very convincing to me. Almost no one in California or NYC makes the minimum wage to begin with, so of course raising it won't have an impact. Just like putting price cap of $5.00 per gallon on a price of gas wouldn’t impact gas supply. It would be irrelevant because the market price for gas is already well below the cap level and it would be foolish to conclude that price gaps on gas don’t impact supply just because a $5.00 cap on gas didn’t impact supply.

And Target pays its employees above the minimum wage for several reasons I suspect. First, in many cases, I'm sure it needs to even to attract basic talent. Secondly, they probably do it for the same reason as Costco... it allows them to attract a higher caliber worker and also reduces turnover (which also reduces costs). I'm not saying there aren't reasons for paying above the minimum wage... I think the costco model absolutely works and is a perfectly good approach But it's not the right approach for all businesses and all jobs. And if you force the higher pay model onto jobs that don't justify the higher pay, those jobs will go away or they will go to higher skilled workers.

(In response to this post by southdenverhoo)

Posted: 04/20/2016 at 07:33AM

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