Throwing your fellow businessmen under the minimum wage bus
I am disappointed to see some CEOs of large businesses voicing support for raising the federally mandated minimum wage. For instance, Craig Jelinek — the CEO and President of Costco — said:
An important reason for the success of Costco’s business model is the attraction and retention of great employees. 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.
I do not think a business leader should ever ask the federal government to raise the minimum wage. An executive like Jelinek is completely free to pay all of his employees above the current minimum wage—and he does. Jelinek argues that this is good for his business. It might be. But it is probably very difficult to calculate whether such a strategy is paying off. Regardless, shouldn’t this be something that every business leader is free to decide for himself?
Not if we listen to Jelinek. When he encourages the government to raise the minimum wage, he is implying that businessmen should be deprived of this freedom. He is asking the government to force all businessmen to pay at least $9 per hour even if they cannot afford it, even if this consumes their budget for expansion and growth.
David Houston, an owner of the Barney’s Beanery bar and restaurant chain in the Los Angeles area, argues that being forced to pay higher wages means that he may have to “look to cut staff.” He also states that “It would just squeeze the heck out of us. … It would effectively absorb about half of my profits on a monthly basis if we went to $9.25.” Houston already successfully took the Beanery from a popular single location to five-location chain in roughly ten years. If his profits are slashed, will he have the money to continue growing?
By actively calling for an increased minimum wage, Jelinek is effectively calling for businessmen like Houston—and would-be entrepreneurs—to be thrown under the bus.