Posted Online: March 09, 2014, 12:00 am
Minimum wage hike coming; it should
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By Don Wooten
Live long enough and you will hear the same arguments over and over. Some are never finally settled, even when proven wrong.
One of many current revivals is the fight over the minimum wage. When I started working, on my 14th birthday, the minimum wage was 40 cents an hour. That's what I earned at Clyde Collins Chemical C. as an office boy. It's also what my 22-year-old sister made as an operator for the Bell Telephone Co.
Federal legislation to raise the minimum wage has generated a lot of heat since then, each time accompanied by the same forecasts of financial Armageddon: people would lose jobs as employers cut back on hiring; prices would rise, causing customers to decrease spending; in recent times, the argument has been that jobs would be shifted overseas.
None of these predictions proved true, yet they are in circulation again
as Congress once again wrangles over the issue. Admittedly, jobs have been shipped overseas, but that came about as managers sought to cut workers at existing wages. Now, the smarter companies are bringing jobs back to this country for increased productivity and better quality. (There is also the matter of increased transportation costs.)
But providing workers with a living wage pays off, as has been demonstrated each time a hike has been approved.The pressure to do so is especially strong just now, as twenty-one states and an increasing number of corporations are getting a jump on Congress with their own minimum pay raises.
The assumption is that vulture states will lure manufacturers to relocate to save money, but that's seldom a wise choice. You get what you pay for in work performance, staff loyalty and stability. Prices may rise a bit, but you wind up with more people able to buy things.
A shining example is my favorite big box company, Costco. They were something of a pariah on Wall Street because they did all the wrong things: paid employees well, provided health insurance and retirement, promoted from within the company, paid as much attention to the well-being of their employees as to customers and products.
Costco's co-founder and CEO, Jim Sinegal, started in retail as a bagger, fell in love with the business, and rose steadily to a top management position. He partnered with a fellow retail executive, Jeff Brotman, to found Costco, one of the most successful retail operations in the nation.
When Costco went public, Sinegal was assured that the company's stock would be a drag on the market: he was spending too much money on his employees. Instead, its value increased, over time, by 5,000 percent. Before his retirement two years ago, his base pay was $350,000. His stock holdings and options raised the total to over $2 million, pocket change in the estimate of many corporate heads.
Sinegal had the right idea: share the wealth with employees and the business will succeed. Most of his entry workers earn $11.50 an hour. Average hourly wage is $21. Once people are hired by Costco, they tend to stay and rise in the ranks. To make visible his commitment, Sinegal took the unusual step of visiting each Costco store in the country.
In mid-January, he received the National Retail Association's Gold Medal, the industry's most coveted award. He has set a management standard that corporate executives honor, but seldom imitate.
There is a dawning awareness in this country that, in a consumer-based economy, it's important to have consumers: workers who earn enough to keep cash moving through the market. There are small shops which will have short-term trouble with the proposed increase to $10.10 (in two steps, in as many years), but well-run businesses have survived a succession of such changes, as will current ones.
That's a tough argument to make to marginal operations and to government agencies, at all levels, which depend on seasonal help. Cash-strapped non-profits are in the same boat. It's hard to consider the greater good when the immediate need seems so daunting. But it's coming, despite a furious rear-guard action from some business groups and conservative theorists.
There will be a push for Congressional action this spring, but some observers think it may be stalled in election year politics. It's hard to predict.
The concerted action of many Arizona businesses to defeat that state's anti-gay legislation may be a harbinger of the business community's willingness to include customers in their political calculations. The minimum wage should be an important part of their thinking.
Don Wooten of Rock Island is a former state senator and veteran broadcaster; firstname.lastname@example.org.