Wednesday, January 31, 2007

Why Do Business Leaders Support a Minimum Wage Hike?

The Economist's Free Exchange blog answers the question as follows:
CEO's who support higher minimum wages are not, as the media often casts them, renegade heros speaking truth to power because their inner moral voice bids them be silent no more. They are by and large, like Mr Sinegal, the heads of companies that pay well above the minimum wage. Forcing up the labour costs of their competitors, while simultaneously collecting good PR for "daring" to support a higher minimum, is a terrific business move. But it is not altruistic, nor does it make him a "maverick". Costco's biggest competitor, Wal-Mart, also supports a higher minimum wage, and for the same reason. Wal-Mart's average wage is already above the new minimum; it will cost the company little, while possibly forcing mom-and-pop stores that compete with Wal-Mart out of business. This seems blindingly obvious to me. Though I don't expect we'll see "the minimum wage—it's great for Wal-Mart!" in any Democratic campaign commercials.

I think this is pretty clearly right. Most business leaders are cold and calculating about these things. If they can push for a policy that hurts their competitors and makes them look good in many people's eyes (and significant majorities support the minimum wage hike), they'll do it.

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