Republicans oppose raising the minimum wage because they claim that it will cost jobs. Despite the fact that there is plenty of evidence of the opposite. After all, if working-class people earn more money, they spend it. If rich people make more money, they send it to offshore tax havens!
But here’s something interesting. An article in The Atlantic points out that companies that pay higher wages actually survived the last recession far better than those that pay minimum wage. It sounds counter-intuitive, but if you think about it, it isn’t really.
For example, consider QuikTrip, a chain of combination convenience stores and gas stations. That’s a job that practically screams minimum wage. But while the average cashier in the US makes just over $20,000 a year, QuickTrip pays their entry-level employees $40,000 a year plus benefits! How did that work out? During the recession, while most low-cost retailers were shutting down stores and laying off employees, QuikTrip was was expanding to new locations and hiring more workers.
Or consider Trader Joes and Costco Wholesale, which are both companies known for their low low prices. But both of them pay wages far above average. Why? Because when a company pays workers a decent wage, they are rewarded with lower turnover. That in turn lowers training costs, increases efficiency, and increases sales. At QuikTrip, sales per square foot are 50% higher than the average convenience store chain. And when your employees are happier they do their jobs better, and that naturally translates into happier, more loyal customers.
When financial times are tough, too many companies make the mistake of trying to save money by cutting back on employees. That’s what happened to Borders and Circuit City. Both companies responded to the recession by cutting staff — and both ultimately went bankrupt.
What’s really ironic about this is that many of these same companies that are trying to save money by cutting workers salaries and benefits are simultaneously raising how much they pay their top executives. They think that they have to pay top dollar for a CEO in order to do better as a company.
The evidence shows that they have it completely backward.