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Saturday, July 5, 2014

Better pay is good for business

Posted By on Sat, Jul 5, 2014 at 12:10 PM

click to enlarge DOUBLE FIGURES: The burger chain pays at least $10.50 an hour to workers, again a federal minimum of $7.25. Arkansas's minimum is $62.5, for small businesses not covered by the federal minimum.
  • DOUBLE FIGURES: The burger chain pays at least $10.50 an hour to workers, again a federal minimum of $7.25. Arkansas's minimum is $62.5, for small businesses not covered by the federal minimum.
Here's more evidence from successful fast-food chains that paying better wages makes better employees, which is good for business.

Don't tell this to the Republican field for public office in Arkansas, which thinks the economy would be killed if Arkansas no longer had a $6.25 state minimum wage.

The article opens at a burrito restaurant in New Hampshire, where starting pay is $9 against $7.25 at a local McDonald's.

“That’s pretty high,” said Mr. Nawn, who hopes to work in sports broadcasting someday. “$9 is a good base, and the benefits are great.”

Mr. Nawn works at one of the handful of restaurant chains that deliberately pay well above the federal minimum wage. In-N-Out Burger, the chain based in California, pays all its employees at least $10.50 an hour, while Shake Shack, the trendy, lines-out-the-door burger emporium, has minimum pay of $9.50. Moo Cluck Moo, a fledgling company with two hamburger joints in Michigan, starts everyone at $15.

These companies’ founders were intent on paying their workers more than the going rate partly because they wanted to do the right thing, they said, and partly because they thought this would help their companies thrive long term.

Starbucks tops minimum wage and offers other benefits, but manages to grow handsomely.

The formula doesn't apply only in the fast food world. In the narrow-margin world of retailing, unionized Costco pays much higher wages than, for example, Walmart but regularly earns more. Walmart touts its average hourly pay, but it still starts some workers at minimum wage (a figure that changes depending on location). Starting minimums are the new battleground. Rightly so, because they determine whether a worker — perhaps the sole source of income for a family — is making enough to support that family.

IKEA just announced a move to raise its minimum wage by 17 percent — the minimum again pegged to local markets. It followed Gap and Old Navy in raising the floor for its new hires. IKEA's minimum will average around $10 an hour.

Remember all these trends when an Arkansas Republican politician tells you small business here can't afford to pay more than $6.25 and so they don't support a proposal to raise that minimum to $8.50 — BY 2017!

And don't let Asa Hutchinson get away with saying he's sympathetic, he just wants the legislature, not voters, to decide. The new Republican majority legislature rejected a Democratic legislator's effort to increase the minimum in 2013. There's been no indication that the state party has softened any on the issue.

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