Whether it’s federal spending, gay marriage or gun control, we are a divided nation when it comes to hot-button issues.
According to a recent national Gallup poll, 87 percent of Democrats, 72 percent of independents and 53 percent of Republicans approve of raising the federal minimum wage. As the CEO of a business with 300 employees, it might seem counter-intuitive for me to side with the masses on this point, but I’m all for raising the rate. Let me explain.
Right now, the federal rate is $7.25 an hour. Taking inflation into account, a worker earning that in 2014 is worse off than one who made the base hourly wage of $1.60 in 1968.
Fortunately, 21 states mandate a higher rate, and California is one of them. Our state minimum wage is $8 per hour, but on July 1, it’ll move to $9. Starting Jan. 1, 2016, it’ll be an even $10.
READ MORE: A Reader’s Guide to the Minimum Wage Push
The call to bump up the rate has reached a fever pitch in recent weeks and that’s largely due to President Barack Obama’s call to give low-income Americans a raise. If Obama gets his way, the federal minimum wage would jump to $10.10, a move he says is needed to more closely reflect a living wage.
Some of San Diego’s political and labor leaders have pushed for an even higher wage in America’s Finest City that could outpace the planned state increases.
Unfortunately, business leaders from trade associations, chambers of commerce and even some of my fellow CEOs have come out publicly against a raise in the federal minimum wage and any attempt by San Diego’s government to improve on California’s minimum.
I respectfully disagree with my colleagues in the business community. Opposing an increase in the minimum wage is a failure to recognize the value of our human resources, and the positive effect they have on our region’s economy.
The most popular argument against a minimum wage hike is that small businesses will make less money and in turn, will have to collectively lay off millions of employees.
That argument ignores economic reality. The vast majority of minimum wage workers aren’t employed by small businesses. In fact, most small businesses pay their employees above the minimum wage. In all, two-thirds of America’s low-wage workers are currently employed by large companies with 100 or more employees.
Of the 50 largest employers of these minimum-wage workers (Walmart, KFC, McDonald’s, etc.), more than 90 percent were profitable last year. A raise in the minimum wage would hardly make an impact worthy of layoffs.
Raising the minimum wage makes social and fiscal sense for two main reasons.
First, economist James Galbraith says raising the minimum wage would increase the income of a staggering 28 million Americans, most of them women. Women currently work these low-paying jobs to a much greater degree than men, so they would see the greatest impact.
Second, many economists and legislators point to various bellwethers, like a general increase in home prices and a decrease in unemployment claims, to suggest we are recovering from the recession. While this may be true, what is definitely true is that it won’t be the wealthy and super wealthy who will benefit from an increase in the minimum wage. It will be the low-income wage earners and the middle class who currently make below $10.10 per hour. With an increase in the minimum wage, these 28 million Americans will now be able to spend more on essential and non-essential goods.
This kind of consumer spending is what greases the wheels of our economy, and gets it moving in a measurable way.
The vast majority of the 300 employees at my company are entry-level, and I can tell you that paying a living wage results in better attendance, less turnover and improved morale, performance and productivity.
In other words, the very foundation of a profitable enterprise.
Gabriel Bristol is CEO of Desert Call Connection. Bristol’s commentary has been edited for style and clarity. See anything in there we should fact check? Tell us what to check out here.