
Rejecting industry dogma, Costco backs calls to lift minimum wage - SparksZilla
http://www.latimes.com/business/money/la-fi-mo-costco-wages-20130306,0,7790766.story
======
tptacek
I like Costco, I think we should raise the minimum wage, and I am a reliable
Democratic voter, which is one of the reasons I know that Costco is a key
corporate supporter of the Democratic party, and that the minimum wage is a
Democratic party identity issue.

Agree also with the other comment here that the minimum wage is a structural
advantage for Costco against Walmart.

~~~
MartinCron
I'm surprised we haven't heard more arguments for raising the minimum wage
over the last few years. The main argument _against_ it is that it leads to
inflation, but inflation has been the least of our worries recently.

~~~
dantheman
One of the biggest arguments against it is that raises unemployment by making
more people unemployable. Some people do not generate $10 + overhead cost per
hour.

Raising the minimum wage hurts the young the most since they need low skill,
low value jobs to learn and gain experience. By removing that rung of the
ladder we hurt them greatly throughout their life.

~~~
mmanfrin
That sure has happened in Australia.

These assessments of minimum wage that end at 'it raises unemployment' are
intellectually stunted; it belies a simplistic understanding of economics and
either an oversight or refusal to see that rising minimum wage makes for more
_spenders_ , which in turn drives demand. The higher-wage:higher-unemployment
argument is a go-to in the wheelhouse of supply-side economists.

~~~
jstalin
Then let's raise it to $1000 an hour. We'll all be rich.

To respond to the above comment, yes, it does lead to higher unemployment for
those with lower skills, particularly in an environment when unemployment is
already high.

Who would _you_ hire for $12 an hour? A teenager with no experience or someone
who was laid off but has 5-10 years of experience? We already see (at least in
the United States) that teen unemployment is the highest of all age groups at
23%, when average unemployment amongst all age groups is 7.9%. [1]

For comparison, Germany has no statutory minimum wage (except for a few
specific employment groups). Not exactly a bastion of poverty and destitution.
[2]

[1]: <http://www.bls.gov/news.release/empsit.a.htm> [2]:
<http://www.economist.com/node/21536648>

~~~
MartinCron
_Then let's raise it to $1000 an hour. We'll all be rich_

Ridiculous arguments are ridiculous. The rest of your point is more than
strong enough to stand on its own without that kind of nonsense.

~~~
Dove
I don't think it's nonsense. The things that are wrong with a $1000 minimum
wage are the _same_ things that are wrong with a $10 minimum wage. They're
just happening to different people.

Setting a $1000 minimum wage would destroy essentially all jobs. There's
nothing I or most people could do that's worth that much. Nothing at all. With
my job gone, my income is zero and the products and services I contributed to
society don't exist. Such a law would make me permanently poor, and would make
society incrementally poorer.

This is _what I think happens_ to people whose natural output is below the
minimum wage. Because their skills and education justify $6/hr but not $9,
they aren't allowed to make that $6. They _and society_ are $6/hr poorer for
it.

I believe firmly that people should be allowed to work if they want to, on
whatever terms they find agreeable and can get. If you want to help them
beyond that, I'm sure they'll think that's swell. But it shouldn't come in the
form of destroying their job.

~~~
superuser2
You're ignoring the fact that if you made $1000/hr, you could afford (and thus
would be charged) higher prices for everything else, and so would everyone.
Thus you _would_ be producing $1000/hr, it's just that a thousand then would
mean less than it does now. That's inflation. So long as people spend and the
economy grows faster than that, we're better off than we were.

~~~
Dove
Inflation doesn't work that way. You can't legislate it into existence, and
you can't legislate it away. If you could, it would be an easy problem to
solve.

Inflation occurs when you add to the money supply more than you add to the
economy. The California gold rush caused inflation. Countries with
hyperinflation have governments that are printing money at incredible rates.

That's completely orthogonal to minimum wage. If you say I must have a
$1000/hr job, it's in current dollars. Even if my employer wanted to pay me
more, he can't -- he doesn't have the money to! Even if _everyone_ wanted to
switch over to doing that, they couldn't; there isn't enough money in the
system! If everyone woke up tomorrow and agreed that a dollar was worth 1000x
less, they'd all be 1000x poorer and nobody could afford anything.

No, the minimum wage doesn't change the value of a dollar. It just changes
who's allowed to earn one.

~~~
sergiosgc
It's not the money supply. It's the money flow, which you can model as a
product of money supply and money circulation speed. A $1000USD minimum wage
will increase circulation speed and from there induce inflation.

~~~
Dove
Let me get this straight.

You think a minimum wage increase will increase the velocity of money, which
will cause inflation, which is a good thing.

That's the argument? Is that argument . . . original?

~~~
superuser2
No, it's not original. It's called the "multiplier effect" and it's a pretty
standard economic principle. See Forbes:

[http://www.forbes.com/sites/timworstall/2013/02/25/overestim...](http://www.forbes.com/sites/timworstall/2013/02/25/overestimating-
the-effect-of-a-minimum-wage-rise/)

------
jurassic
This doesn't surprise me at all. Since they already pay their workers a lot
more than minimum wage, the increase would mainly be a hit to their primary
competitor that relies on low wages: Walmart/Sam's Club.

~~~
adventured
It wouldn't hit Walmart at all, they don't pay minimum wage.

Nationally the average full time Walmart associate earns $12.57 / hour. That
has increased by roughly 30% in seven years.

~~~
smackfu
You are citing the full-time age for Walmart who is famous for not having
people as full-time so they don't have to pay benefits?

~~~
adventured
How many of Walmart's employees are full time?

I live in a relatively poor part of the country, and starting part-time
associates here make about $9.50 / hour. 30% above minimum wage already.

A minimum wage increase will not hit Walmart.

------
Symmetry
Whenever I hear people talking about the minimum wage I want to know why they
don't talk about the earned income tax credit instead.

EITC: Money is given to the poor people that need it most. The money that goes
to them comes out of progressive taxation. Very little dis-employment effect.

Minimum wage: Money mostly comes from higher prices, which fall
disproportionately on poor people. Fairly substantial dis-employment effect.

The only reason to favor the later is that politicians can rely on the public
not noticing that they're paying for it.

~~~
eli_gottlieb
Two reasons, from two different political ideologies.

Right: because it's giving money to moochers. Period. Makers and takers, man.
(This is what the Republican Party _actually ran their campaign on_ this past
November.)

Left: because it's an effective subsidy for sub-living-wage employers.

~~~
jcampbell1
Nice political talking points, but the EITC has been expanded consistently by
both parties. See the growth of EITC benefits:

[http://www.taxpolicycenter.org/briefing-book/key-
elements/fa...](http://www.taxpolicycenter.org/briefing-book/key-
elements/family/images/Taxation-Family-Graphs-Real-Fed-Spending-
graph5-8-6-11_1.gif)

~~~
eli_gottlieb
"Both parties"? The Democratic Party is not the Left. They're the center to
center-right corporatists. There is no Left in the United States at the
governmental level.

~~~
jcampbell1
I was just offering that while the EITC can be rejected by both politcal
dogmas, both parties have embraced the concept. e.g.

Left: EITC provides relief for the poor.

Right: EITC is workfare, not welfare.

Since both parties have expanded the program over the last 30 years, my
version aligns with the facts better.

------
kevinpet
The most utterly evil profit maximizing business would always prefer that the
government mandated minimum wage is somewhere near what they pay their lowest
paid employees.

Sad state of journalism that a group of businesses lobbying for their self
interest is swallowed so frequently as selfless action for the public good.

~~~
corresation
_The most utterly evil profit maximizing business would always prefer that the
government mandated minimum wage is somewhere near what they pay their lowest
paid employees._

How so? Costco in this case has always benefited from a happier, more loyal,
consistent workforce because they have a job that many other service workers
actually strive for. I fail to understand how reducing the advantage of their
position helps maximize their profit.

~~~
AlbertoPier
This is the same company that was for the higher taxes for the rich and then
made sure to get a huge loan to pay bonuses ahead of schedule so the Costco
execs and board members could avoid the tax hike. Hypocrites.

~~~
corresation
_Hypocrites_

I don't beleive that makes them hypocrites. I can simultaneous believe in
higher taxes, while optimizing my own situation based upon the current tax
code. The notion that the only people who can argue for higher taxes have to
maximize their own exposure is not robust.

------
w3pm
Costco is free to pay their employees as high of wages as they'd like, no
legislation required. This lobbying isn't out of their good will but a
strategic play to hurt competitors that rely on lower wages. Such is politics.

~~~
throwaway420
That Costco isn't doing this purely out of goodwill needs to be mentioned
further.

If Costco already starts all employees at $11.50, increasing the minimum wage
to any point less than $11.50 doesn't initially impact their own bottom line,
but just serves to increase their competitor's costs.

~~~
dfxm12
The other side is that if people see an increase in their pay, they'll have
more money to spend (hopefully at Costco).

~~~
caw
Not at Costco. The average wage of a person who shops at Costco is 74k. Sams
Club perhaps; the customers they attract are at a lower income.

[http://www.nytimes.com/2005/07/17/business/yourmoney/17costc...](http://www.nytimes.com/2005/07/17/business/yourmoney/17costco.html?pagewanted=all&_r=0)

------
mistercow
The more time goes on, the more I think maybe a minimum guaranteed income is
the solution that makes the most sense. Maybe we should just accept that there
isn't going to be enough work for everyone, and that that's going to become
_more_ true in the future, not less. And furthermore, maybe we should accept
that that's a _good_ thing, as long as we shape our economy accordingly.

~~~
jimzvz
> _The more time goes on, the more I think maybe a minimum guaranteed income
> is the solution that makes the most sense._

Why? Someone has to pay for it.

~~~
mistercow
>Why?

See the rest of my comment.

>Someone has to pay for it.

Of course, and those would be the people who choose to work in order to earn
more than the guaranteed minimum. The result would be more available jobs with
more relaxing hours, giving people more time to spend with their families, on
side projects, or on creative pursuits that enrich our culture.

The idea that automation and technological advancement can cause people to go
hungry is frankly crazy. Instead of celebrating the fact that humans don't
have to waste their time on menial crap, we are forced by our economic system
to wring our hands over the fact that that menial crap can no longer be used
as an arbitrary metric for distributing resources.

~~~
jimzvz
> _Of course, and those would be the people who choose to work in order to
> earn more than the guaranteed minimum. The result would be more available
> jobs with more relaxing hours, giving people more time to spend with their
> families, on side projects, or on creative pursuits that enrich our
> culture._

I don't follow this logic. The easier it is for people to skate through life
without working or working effectively, the less incentive they have to
contribute. The people that pay for this life will decrease and quality of
life will decrease for everyone.

~~~
mistercow
>The easier it is for people to skate through life without working or working
effectively, the less incentive they have to contribute.

We do not currently have a problem with people not wanting to work. We
currently have a problem with people being unable to _find_ work.

>The people that pay for this life will decrease and quality of life will
decrease for everyone.

That's why the system has to be dynamic. If you have a surplus of jobs, you
reduce the GMI so that people have to work more. If you have a deficit of
jobs, you increase the GMI accordingly.

------
hkmurakami
_> And why Costco, a public company that has investors watching every penny
and questioning every management decision?_

I guess the author doesn't know that Costco is one of the few companies out
there who famously give the middle finger to Wall Street analysts (who want
them to reduce wages and benefits, and increase the price of goods sold)

~~~
tomrod
Costco is still subject to economic reality. They make money by reducing
overhead as much as possible and exercising monopsony power over brands
(Walmart does this also for certain vendors).

I haven't looked enough into the issue to answer decisively, but I suspect
they probably can't cut much more than they already have, unless their food is
a cost center.

------
sukuriant
This is a dangerous statement; but I know that raising the minimum wage
doesn't really hurt people making six figures; but, doesn't it hurt people
making only a small multiplier of minimum wage? Like people making 1.25x
minimum, and 1.5x minimum, because they'll now be making 1.05x and 1.15x
minimum wage, reducing their own personal buying power once the prices settle
again..?

I'm all for people earning more functional income. I've said before that I
hate the corporate-level, money-hungry models of wages; but I had been taught
that increasing the minimum wage, though it helps for a short while, ends up
hurting in the end

~~~
lifeisstillgood
This is the wrong approach - simply ask what level of wage is needed to
prevent a worker _having_ to claim state benefits. Anything else is
subsidising the employer

~~~
crapshoot101
not true and way too simplistic. If they can't get employed at all because the
minimum wage is too high, the entire burden falls on those same state
benefits.

~~~
stan_rogers
That assumes that a business would be willing to rage quit. It either needs
employees, or it doesn't. How many businesses do you think are carrying an
excess of employees at the moment just because the wages are cheap? How many
are supplying customers who woulld no longer decide they want the
product/service because _a small percentage of the total cost of delivery_ has
increased my a relatively small amount, increasing prices very slightly? It is
only those jobs that can be offshored at little or no (overall) cost that
would be affected, barring ideology-over-sense zealots out to prove a point.

~~~
crapshoot101
No, it assumes that in a flexible labor environment in the medium term, a
business will adjust to the value of the worker. If the minimum wage goes up
to $20 tomorrow, I may not let go of a lot of my temp employees today, but I
will certainly do so in time. This isn't rocket science - this is economics
101. And I say this as someone who supports a gradual rise in the minimum wage
(ie, a legislative solution that would link it to the CPI seems like the best
way to take it out out of the hands of future legislators who want to play
politics) - but the idea that there is no cost to increasing the minimum wage
is silly.

Also, the "small percent of the total cost of delivery" is is a red herring;
labor cost as a portion of total delivery cost varies greatly according to
industry. To use a silly example, if the minimum wage was increased to $30
tomorrow, you don't think McDonald's starts firing employees?

------
stretchwithme
The labor market is governed by the law of supply and demand, just like any
other. If you arbitrarily increase the price of something, in this case low-
skilled labor, surpluses are the result.

If you want to help people, find a way that doesn't destroy the incentives to
hire them and the incentives to become a more valuable employee.

------
aneth4
This makes complete sense:

1) Costco already pays much more than the minimum wage, so they would not be
affected directly from a cost perspective.

2) Competitors do not necessarily pay more than minimum wage, so this can only
increase the costs of competitors.

3) Increasing minimum wage gives income to the lowest income people who will
spend all of this money and are likely value shoppers of the kind attracted to
big box stores like Costco.

There is nothing for Costco to lose here.

While I admire Costcos ethics all around, I can't say this is an entirely
selfless gesture. Costco behaves rationally good with a long term view rather
than irrationally bad with a short term view.

~~~
danielharan
Not selfless at all, although the world is still a much better place for
companies behaving this way.

------
jdreaver
They want a wage of $10.10 per hour? I bet a Costco employee starts around
$10.20 per hour.

~~~
SatvikBeri
You're on the right track. From the article:

"Costco pays a starting wage of $11.50 an hour, gives most employees
healthcare and other benefits, and has not switched to the model adopted by
many big-box retailers of using temporary firms in warehouses to keep costs
low."

A higher minimum wage costs Costco nothing and hurts their competitors.

~~~
georgemcbay
I wouldn't say it costs them _nothing_. If competitors are forced to raise
their wages near Costco's, Costco either needs to up the ante or lose some of
the luster they've created in treating their employees so well compared to the
average retailer.

I'm not saying they don't have good business reasons for this, they do, but it
isn't _all_ pure business upside for them.

~~~
datasage
Some of the costs from vendors may also increase as a result.

~~~
pixl97
In theory, that is a shared cost amongst all their competitors.

------
windsurfer
Blogspam. Original is here: [http://www.latimes.com/business/money/la-fi-mo-
costco-wages-...](http://www.latimes.com/business/money/la-fi-mo-costco-
wages-20130306,0,7790766.story)

~~~
SparksZilla
Not blogspam. Circa is a pretty cool tool that tells a news story by pulling
in all the sources talking about it, and then updates the story as new
information comes in. Take a look at them; it's really useful.

~~~
windsurfer
Never heard of Circa, but I don't think it's allowed anyways. From the
guidelines (<http://ycombinator.com/newsguidelines.html>)

 _Please submit the original source. If a blog post reports on something they
found on another site, submit the latter._

~~~
SparksZilla
I see the point of this guideline, but will still argue that Circa provides
more value to the readers here since it links out to multiple sources (also
linked to SFgate: [http://blog.sfgate.com/nov05election/2013/03/04/george-
mille...](http://blog.sfgate.com/nov05election/2013/03/04/george-miller-to-
introduce-minimum-wage-bill/)), therefore giving readers a more holistic view
of the story.

------
sageikosa
I'm pretty sure that increasing the cost of labor will drive the prices of
labor dependent goods and services up, while also probably flattening growth
or decreasing employment numbers when employers try to maximize the margins on
the labor they already employ.

~~~
antoko
I'm pretty sure that giving lots of people more disposable income will
increase demand. Which will in turn increase revenues and allow successful
businesses to expand, increasing employment numbers, creating a positive
feedback loop.

In reality however things are a little more complicated.

~~~
mentat
Part of the argument is that this isn't disposable income, that it's in fact
needed as a baseline against poverty.

~~~
ctdonath
Define "poverty".

The lack of a meaningful definition shared by both law and society is the root
of much of the consternation over the topic.

~~~
wildgift
There are many, but one would be the lack of opportunity to improve ones
situation by self-improvement. For example, you might be working two jobs to
pay rent and other necessary expenses, so you have no time to learn new
skills. Another would be that you cannot afford to send your kids to school (i
mean K-12 public school) because you need them to work in the fields, so you
can't create inter-generational opportunities.

People working at minimum wage can find themselves in such situations.

At this time, you _can_ get ahead on MW, if you team up with other MW workers
to live together and one person can get enough "family" support to get to the
next level. However, our society, being very individualistic, doesn't really
recognize this.

~~~
ctdonath
_one would be the lack of opportunity to improve ones situation by self-
improvement._

It's not a matter of opportunity, it's a matter of choice.

Time and again I've watched those with opportunity squander it, while others
lacking opportunity fight to get it (and got it). I've had a 4AM bus driver
take my evening C++ class, passing despite often dozing off therein, finding
funding despite not having the steep tuition. I've known a chronically
bedridden invalid who managed to run a profitable, um, pharmaceutical service
from his gurney. I've worked multiple jobs and still learned new skills, even
getting hired despite _not_ having the core skill and learning it sink-or-
swim. I've watched kids destroy windows while I was fixing their couch. I've
seen eminently capable students with amazing affinity to programming fail a
beginning C++ course for lack of effort, not understanding. Opportunity IS
there; taking it or making it is up to the individual.

Instances of true "poor for lack of opportunity" are exceedingly rare. They
have my sympathy and aid; I'm frustrated by the vast numbers who insist they
are and in truth aren't.

------
kokey
Large, established retailers, in general, will favour a higher minimum wage if
it's enforced on themselves and all their competitors. It's actually good for
them, since they operate at a scale that can do more with less people.
Unfortunately it reduces the market to a combination of large retailers, and
small family run operations which can effectively get members of their family
to work for less than the minimum wage, and very little in between.

~~~
Evbn
That's a good thing. Efficient businesses with happy employees prosper.
Inefficient sweatshops shut down.

------
paltman
just another story of a business getting involved in public policy in order to
hurt competitors. costco can (and already does) pay workers more than minimum
wage as is in line with their operating philosophy. government shouldn't be in
the business of regulating wages, that's an agreement between an employer and
employee.

------
lifeisstillgood
Here is a plan - set the minimum wage at a level where one person working full
time will not have to collect any state benefits in order to raise their
family.

Any other level, is an indirect but tangible subsidy to companies who employ
minimum wage staff

~~~
Dove
Teenagers don't need to support a family. Without much in the way of valuable
skills, they may still want a job for spending money and experience. Your
proposed minimum wage would make this illegal.

College students don't need to support a family. They may want to take a low-
paying internship to build experience in their chosen field. Your proposed
minimum wage could make this illegal.

Mothers of school-age children who are supported by their husbands don't need
to support a family. They may wish to do part-time, low-skilled work to build
expertise in preparation for a future career after their children leave. Your
proposed minimum wage would make this illegal.

Retirees with pensions don't need to support a family. They may wish to do
work, possibly even very low-skilled work, as a way to combine a hobby with a
sense of being useful. Or possibly as a launching-pad for more of a "fun"
career than the "serious" career they've already finished. Your proposed
minimum wage could make this illegal.

Low-skilled immigrants _do_ sometimes need to support a family. When one
member can't do it alone, sometimes mom, dad, and the oldest kid hold down
four full-time jobs between them to make it work. The arrangement isn't
permanent; it lasts until they can do better. But in the mean time, they _can_
support themselves. Your proposed minimum wage law could make it impossible
for them to support themselves this way, and force them to rely on charity.
This in turn could make it impossible for them to immigrate at all.

Some people have very low expenses. A paid-off house, a renter, a garden in
the backyard, and a low-paying job can be enough to make ends meet. Setting
the minimum wage at a level such that someone with a mortgage and unproductive
hobbies can raise a family would force this person, who could otherwise
support themselves, to rely on charity.

I could go on. My point is that the world is a complicated place. Not every
worker is a single-head-of-household-with-three-children sort of worker. Not
every job is a permanent career. They can be educational, transitional,
temporary. They can be held by all sorts of people for all sorts of reasons.

Provide assistance to the poor if you like, but don't make work illegal. Don't
ever do that. There's a huge potential to hurt a lot of people, just because
they're living lifestyles you aren't familiar with.

~~~
lifeisstillgood
The "wages good enough to send your kids to college" proposal is really a
thought experiment - let's imagine we are going to see an doubling of
productivity in the economy as Software Eats The World. But no increase in the
number of jobs.

There will be a dramatic decline in employment as all those journalists and
factory operators and researchers get laid off.

So what do we do? Corporations are going gang busters, the share of a vastly
increased wealth is not going to the majority of the people.

So let's whack up the minimum wage - make it 60k. (remember we just doubled
GDP). All other wages have to rise as well to maintain parity. And so the
share of GDP to wages gets rebalanced - but there are less jobs? That's ok we
have gone back to the sngle worker family, and the world has nice picket
fences again.

This is a poor solution to a good scenario - obviously the 50s solution is
socially sub optimal, obviously the above scenario carries massive inflation
risk.

But the essence is the same - the jobs are gone. How do we fix it? Minimum
wage is one lever that if pulled hard in one direction will lift the veil on
the oncoming storm.

We need all the warning we can get

~~~
Dove
_let's imagine we are going to see an doubling of productivity in the economy
as Software Eats The World. But no increase in the number of jobs._

I'm not comfortable with that assumption. All that software isn't going to
write itself...

But leave that aside. What do people whose jobs have been made obsolete by
technology do? What they've always done -- something else!

And a high minimum wage won't help them. People learning new skills need to be
able to make _low_ wages. That's how they get enough experience to get good
enough at something new to eventually be able to make _high_ wages.

~~~
pixl97
Making an assumption that there will always be 'something else' that they can
to to earn a living is just an assumption too. Attempting to find an optimal
social solution before the unemployed riot and burn the factories is a good
idea.

------
protomyth
A bit of statistics about minimum wage workers
<http://www.bls.gov/cps/minwage2011.htm>

------
bjhoops1
I support a minimum wage increase (trickle-down economics is moronic and makes
much less sense than a bottom-up approach, but I digress), but let's not
forget that a minimum wage increase helps Costco's bottom line, since their
biggest competitor's business model is completely tied to low wages. Just
saying let's not pretend this is as righteous of a move as it would be if it
were coming from Wal-Mart (who stands to lose). :P

------
davidroberts
It makes sense for Costco, because they pay above minimum wage anyway, and any
increase in the minimum wage will hurt their competitors more than them.

------
kyllo
Costco employees start higher than minimum wage already, so this won't affect
them. But it's in Costco's interest for their competitors to have higher labor
costs. So, Costco supports minimum wage increases.

Labor unions do the same thing.

------
AlbertoPier
Costco is supporting the rise in minimum wage only because it helps them. They
have lower labor cost then their competitors. I can hardly see any employees
in Costco warehouses. This is the same type of hypocrisy as them supporting
higher taxes for the rich and then getting a huge loan to pay ahead of
schedule bonuses for the execs and board members to avoid new tax rates.

------
smsm42
It probably hurt small independent shops much more than it would hurt Costco,
due to economies of scale - if you have 100 workers and you had to raise wages
10%, you probably could do the same with 90 workers or cut a little service
here and there without too much effect, but if you have just one worker and
you don't have enough money for 10% raise, you're toast.

~~~
brc
..and that is what it would be about. If Costco can hurt their competition by
forcing up their labour force costs, plus at the same time give a good aura,
and advertise their hiring policies to potential employees, it's a win-win-
win.

This type of thing isn't done off the cuff, there would be very careful
analysis behind it.

Most people would think this is against Wal-Mart or other large retailers, but
where it would really bit is the very small corner-store operations, which not
only collectively sell a lot of stuff, they prevent customers from going into
bigger stores for small items like milk and bread.

------
matterhorn
Raising the minimum wage will increase unemployment. Additionally, having any
minimum wage at all increases unemployment. On top of the unemployment
problem, a minimum wage is an intrusion into the rights of the individual to
voluntarily enter into business with others.

~~~
ahoyhere
Proof?

------
scotty79
I'd much preferred if they removed minimum wage and almost all of the welfare
programs and replaced it with basic income guarantee
(<http://en.wikipedia.org/wiki/Basic_income_guarantee>)

~~~
bruceboughton
I can't imagine you'd find much public support for giving millionaires a
weekly wage. What does this offer over the minimum wage? Is it that the
universality makes it cheaper to administer or is the universality a principle
rather than a pragmatic concession?

In the UK, there is a movement for a living wage which seems to be more about
a higher, regionally-calibrated minimum wage.

~~~
scotty79
Theres probably lots of well thought arguments for basic income guarantee but
here's the things I could come up with:

\- much cheaper than welfare because you don't need to hire people who decide
if you deserve it

\- less corruption than welfare because you can't bribe people who decide
whether you deserve it.

\- you don't have to hide that you are working in order not to loose the
benefit, so possibly more money from taxes and healthier, more honest social
climate. Also no need for minimum wage.

\- no need for government sponsored pension or formalized retirement age

\- you no longer have to care so much about unemployment. From political issue
it becomes only yet another indicator of the state of economy. Hence the
government can safely shed off large quantities of its employees.

\- no need for minimum wage, wages can safely drop below any currently
conceivable minimums.

\- more worker mobility since you don't have your whole income at stake when
you decide to look for new job.

\- strong incentive for having kids since they add to family income, also
parents have sense of security that they will be able to support a child and
have time to raise it as well.

\- more money in hands of more careful consumers. Poor people tend to spend
money more wisely as they choose products more carefully with regards to ratio
between price and quality. More purchasing power in hands of dedicated
consumers, results in more efficient market.

~~~
bruceboughton
>> \- you no longer have to care so much about unemployment. From political
issue it becomes only yet another indicator of the state of economy. Hence the
government can safely shed off large quantities of its employees.

i.e. the slide to a welfare-dependent state where people don't feel the need
to work for their luxuries and economic stagnation

>> \- strong incentive for having kids since they add to family income, also
parents have sense of security that they will be able to support a child and
have time to raise it as well.

At 7bn, I'm not sure more kids is the answer.

~~~
scotty79
> i.e. the slide to a welfare-dependent state where people don't feel the need
> to work for their luxuries and economic stagnation

That's the main counterpoint to the basic income guarantee. If people are no
longer afraid that they starve or die of cold or heat on the street they won't
work. Funny thing is that same people that voice this concern usually think
that working is usual way how the people fulfill their higher needs
(belonging, esteem, self-actualization).

> At 7bn, I'm not sure more kids is the answer.

There is a strong fear in many rich countries that their original populations
that are currently growing old will eventually die out and be replaced by
immigrants.

Personally I'm not against population growth. Having more educated kids in
rich countries might be beneficial.

------
vijayboyapati
This is terrible. Costco can get away with a higher minimum wage because they
sell at a higher end. All this is doing is forcing Walmart to stop competing
at the lower end of the spectrum of goods. The only people harmed by that are
the poor.

------
mhartl
The minimum wage is as perfect a litmus test as we have for separating those
who think they understand basic economics from those who actually do.

------
jimzvz
Higher labour costs just push business overseas. Is this not true?

~~~
aneth4
To China, where there is a rapidly increasing minimum wage. The Chinese
understand income distribution will naturally fall extremely toward the
powerful, and the powerless will make too little money to create a middle
class. Raising the minimum wage distributes income to low income people who
spend all their money and contribute to the consumer economy.

~~~
Volpe
Are you really saying there is not a middle class in china?

~~~
aneth4
I did not say that at all. There is a rapidly growing middle class in China.

------
ahoyhere
"especially at a time when finances are stable at best"

Sloppy reporting. Here's what the author should have written:

> Just four years after the worst shock to the economy since the Great
> Depression, U.S. corporate profits are stronger than ever.

> In the third quarter, corporate earnings were $1.75 trillion, up 18.6% from
> a year ago, according to last week'si gross domestic product report. That
> took after-tax profits to their greatest percentage of GDP in history.

> But the record profits come at the same time that workers' wages have fallen
> to their lowest-ever share of GDP.

[http://money.cnn.com/2012/12/03/news/economy/record-
corporat...](http://money.cnn.com/2012/12/03/news/economy/record-corporate-
profits/index.html)

Whoever gets the mouthpiece gets to frame the debate.

The debate is wrong.

What's happening is this: Corporations have people on the hook, because the
people are poor & desperate, meanwhile the corporations are more flush with
cash than ever before. They know that everyone is running around, pretending
we're in a terrible financial crisis… because we are, if you're an individual.
The profit-taking is immense and ordinary people are suffering.

This is not a debate about "Well gee can Joe-Bob really produce $8 of value an
hour?" because the profits say yes, Joe-Bob is definitely producing much more
value than he costs. Even more so, given that this is a time when CEO
compensation (a cost that reduces profit) has skyrocketed, compared to the
average worker's wage.

Good for Costco. They have always behaved well towards workers, with regards
to pay and benefits, even when things really _were_ bad.

