The low minimum wage undermines U.S. economy
As a business owner who runs a manufacturing company with 150 employees, I strongly support increasing the federal minimum wage, which has been stuck at just $7.25 an hour since July 24, 2009. It will provide concrete benefits to businesses and will strengthen our overall economy.
Fair wages are part of the formula for success at my company, Spectronics Corp., the world’s leading manufacturer of ultraviolet equipment and fluorescent materials. Raising the minimum wage will help America succeed as well.
Consumer spending drives about 70 percent of our nation’s economy. And wages drive consumer spending.
The single biggest problem faced by small businesses today is weak consumer demand. Increasing the minimum wage is a great way to spur economic growth by jump-starting consumer spending. It will allow workers to buy essentials they can’t afford now, and most of the money they spend will go right back into local businesses.
That is also good for our tax base.
A higher minimum wage will also result in lower employee turnover. Turnover costs money, and reducing turnover means lower costs for hiring and training new workers. In addition, higher wages bring increased productivity. Employers who invest in their workforce have employees who are more invested in the company and in satisfying its customers.
At my company, nearly 71 percent of employees have been with us for over 10 years. Compare that to low-paying chains with continual turnover or the local retail store where one of my daughters worked for a year. She and many of her co-workers were paid minimum wage, and she saw that the biggest problem they faced was high turnover. Much time and effort was spent training the constant flow of new employees, which adversely impacted customer service since they made more mistakes due to their inexperience.
Raising the minimum wage encourages better business practices. An inadequate minimum wage fits the old adage, “Penny wise and pound foolish.”
Fortunately, most business owners are already paying employees more than minimum wage. Those companies that do pay their workers poverty wages at or near $7.25 are in effect being subsidized by other businesses and taxpayers, since low-wage employees are far more likely to turn to government assistance programs to get by. That’s simply not fair.
Companies like mine, Costco and In N Out Burger, for example, which thrive with fair wages, show every day that companies like Walmart and McDonald’s are choosing to take advantage of the low minimum wage and shortchange their workers — and our nation.
Whenever we talk about raising the minimum wage, critics claim that it will cause increased unemployment. But this assertion has been carefully refuted in an extensive series of studies of the impact of actual minimum wage increases. For example, a study by the Institute for Research on Labor and Employment published in the Review of Economics and Statistics in November 2010 compared every pair of neighboring U.S. counties that had differing minimum wage levels at any time between 1990 and 2006. It found no adverse employment effects from higher minimum wages.
The $7.25 minimum wage comes to just $15,080 a year for full-time workers. That’s too low to live on and it’s undermining our economy.
If the minimum wage had been automatically adjusted for the cost of living since the 1960s, businesses would be paying $10.74 today. The Fair Minimum Wage Act would gradually increase the minimum wage to $10.10 over three years, and then adjust it annually for inflation. These provisions are fair and reasonable.
Employers who pretend they cannot pay a minimum wage equivalent to what their counterparts paid in the 1960s should be ashamed of themselves.
Raising the minimum wage is an overdue investment in our economy.
Jon Cooper is the owner and president of Spectronics Corp., based in Westbury, N.Y. He is also a member of Business for a Fair Minimum Wage.