But, business owners say they can't afford to increase minimum wage. It'd ruin the economy they say. It'll bring down capitalism, they claim. $7.25 an hour--maybe even $10 an hour--is fair. But, a minimum wage of $15 an hour--like what Los Angeles recently passed--and which won't take effect for five years--well, that's just unreasonable.
With the support of the local Chambers of Commerce, employers declare that raising wages would mean an increase in retail prices. What many small business owners don't fully understand is that their customers are usually from the lower- and middle-classes. When wages are depressed, purchasing is diminished. By paying their own employees sub-standard wages, the owners, no matter how good employers they may be, cause fewer purchases for all community businesses.
For megacorporation retailers, the situation is slightly different, one based upon a corporate philosophy of "maximizing profits" and paying bigger dividends to investors than wages to the people who actually do the work.
At Walmart, the six Walton family owners have a combined worth of about $160 billion. Management just raised the minimum wage to $10.10 an hour, and then complained it was costing $65 million a month. Assume even a $1 billion a year increase for Walmart's workers, that would still leave a net profit of about $15 billion a year.
McDonald's CEO Dan Thompson earned $9.5 million last year; his full-time workers earn an average of $16,000--$19,000 a year. A pay increase would affect the owners of 30,000 franchise locations, but increase the price of a double quarter-pounder cheeseburger only pennies. Anyone willing to pay $6.79 for a fast-food burger probably won't notice a $6.85 charge.
A study conducted by Dr. Kathleen Maclay of the University of California revealed that American taxpayers contribute about $7 billion a year in welfare payments to the low-paid workers in the fast-foods industry. In contrast, McDonald's had about $5.7 billion in net profits in 2013.
Back on Wall Street, brokers and traders would be apoplectic if all corporations improved wages, benefits, and working conditions. There would be less return on investment, and clients might not invest as much. Clients who don't invest as much also means the Wall Street Zoo will receive less income, since much of their own wages are determined by commissions.
So, Wall Street needs to make sure they hustle customers and keep them pouring money into corporations.
It's just "good business practices." After all, they and the million-dollar company executives they support deserve it. They studied business in college.
[Dr. Brasch is an award-winning social issues journalist. His latest book is Fracking Pennsylvania, an analysis of the history, economics, and politics of fracking, as well as its environmental and health effects.]
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