As it presently stands, someone working full time for the federal minimum wage makes only $1,160 per month, and that’s before payroll taxes. It’s difficult for a single person to make ends meet on that little, and it’s almost impossible for a single-parent family to have food, shelter, and clothing on less than $1,200 per month. Parents start taking second jobs and the kids become latchkey kids. They wait at home or on the street without supervision, and there’s no one there to help them with homework (or even to make sure they do it); soon there’s another juvenile delinquent causing problems and costing us taxpayer dollars.
In his State of the Union address, President Obama called for a hike in the federal minimum wage. We have since been reminded of the Republican stance on the minimum wage since the GOP members of the House of Representatives voted unanimously against raising the federal minimum wage from $7.25/hr to $10.10/hr this past March 15.
Costco’s CEO Craig Jelinik recently called for that same increase in the federal minimum wage, as this Huffington Post article points out, quoting Jelinik:
‘At Costco, we know that paying employees good wages makes good sense for business. Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty. We support efforts to increase the federal minimum wage.’ Costco is known for paying its workers wages that are generally above average for the retail industry. The average Costco worker made about $45,000 in 2011, according to Fortune. That’s compared to an average of about $17,486 per year for a worker at comparable Walmart-owned Sam’s Club.
And apparently the additional wage pays off. Costco makes more than $10,000 in profits per employee, while Walmart takes home about $7,400 per worker, according to The Daily Beast (Walmart and Costco aren’t exactly the same type of business, however).
In addition to offering its workers high pay and the opportunity to unionize, Costco also provides a benefit many of its competitors don’t: health insurance for part time and full time employees.
Those who think it makes economic sense to cut payroll as much as possible should read that again. Costco is paying its employees over two-and-a-half times what Sam’s Club pays theirs, and Costco offers benefits and unionization to boot. They’re still making big bucks despite the higher payroll, too (according to the same reference): “Costco reported a profit of $537 million last quarter, up from $394 million during the same period last year”
The article notes that Costco and Sam’s club are not exactly the same business, but they are certainly quite similar. Does this mean that every burger joint and hot dog stand should suddenly begin paying their employees middle-class wages? Of course not. But the benefit in paying higher wages, as the Costco CEO pointed out, is, “It’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty.” And the numbers back him up.
The example of Costco as compared to Sam’s Club would seem like a distraction from the gist of this article, which is more concerned with the federal minimum wage. I included the example to show that the benefits of treating one’s employees right often outweigh the costs, especially as compared to those businesses that try to extract as much work as they can from their employees while paying as little as they can get away with.
Now, let’s get to the main issue: the federal minimum wage. Why is it that a person working a full time job should still need federal taxpayer assistance to be able to remain fed, sheltered, and clothed? This makes no sense. When someone with a full time job has to take federal assistance to make ends meet, then while the business may think it’s saving money, the nation as a whole is essentially subsidizing the wages that business is paying.
There’s been much in the news about how we need to cut entitlements such as food stamps and Medicaid, but the answer is obvious: we need to address the reason why full time workers still qualify for, and still need those programs. The solution is deceptively simple: if we want to slash taxpayer entitlements, then require that the minimum wage be sufficient for one to live just above the poverty level (for one’s particular state or region) as long as one works 40 hours per week.
Read that last sentence carefully. If such a law were passed only for full time workers, then we’d see many employers cut hours to where most of their workers no longer could be considered full time. I am saying that the minimum wage should be such that a worker remains just above the poverty level as long as that individual works 40 hours per week, regardless of how many different jobs he or she has to work to make up that whole 40 hours. By doing this, we would be rewarding those who work, we’d be slashing the taxpayer-funded entitlements that the Republicans hate so much, and the people would be standing on their own feet instead of depending on the federal dole.