Spreading Money AroundSome business leaders have backed counternarrative that wage hikes will benefit all levels of economy. Monday, June 22, 2015
With the city of Los Angeles set to raise the minimum wage to $15 an hour by 2020, much of the drama surrounding the pay increase will now shift to nearby municipalities. Los Angeles County and several surrounding cities are already debating a hike, with supporters touting the benefits to workers and communities even as opponents predict major job losses and business flight.
The public conversation around lifting the minimum wage is both familiar and distressing. We have come to accept a narrative that pits the interests of low-wage workers and their families against those of business and the economic climate.
But what if this narrative is more myth than fact? What if there were actually a convergence between the interests of workers at the bottom of the economic ladder and businesses?
This counternarrative is actually starting to gain some traction among visionary business leaders who understand that low wages are hurting our consumer-driven economy – and the businesses that depend on it. The argument that raising wages is essential not only for workers but for business growth has been embraced by a growing contingent of dissenters who reject the conventional wisdom that sees any mandated pay increases as a threat to our market economy.
On the national level, groups like Businesses for a Fair Minimum Wage and Patriotic Millionaires have publicly endorsed minimum-wage hikes. So have high-profile figures such as Container Store Chief Executive Kip Tindell, the new head of the National Retail Federation.
In Los Angeles, hundreds of businesses backed last year’s minimum-wage increase for hotel workers, and many more supported the recent push for a citywide pay hike. Early endorsers included Eli Broad and Rick Caruso.
The shifting attitudes about raising the minimum wage among business leaders reflect growing alarm over an economy that has largely failed for the past three decades to reverse stagnating wages even as the cost of living has risen dramatically. In Los Angeles, depressed wages and escalating housing costs have been cited as a key reason for the region’s spike in homelessness. Seen through a business lens, this trend means that people who once could afford to rent homes and buy goods and services are now struggling mightily, converted from consumers to social service dependents.
Some business leaders are also starting to point out another cost of the low-wage economy: an unequal playing field for businesses that provide decent wages and benefits. Minimum-wage increases are one of the most effective ways of leveling the field for employers that provide decent compensation of their own accord. Conversely, the idea that providing good wages and benefits inevitably hurts the bottom line is increasingly being challenged, even by mainstream media. As Fortune magazine wrote last year, “Now some (employers) are realizing that high-road employment practices are what help produce the returns shareholders expect.”
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