After Company Raises Minimum Salary To $70,000, Revenue And Profits Double | ThinkProgress

Now is this the same company where a while ago we heard it was a disaster with his top people quitting because they weren't making much more than those on the bottom, etc.

Funny how this works, economists say it's sound, yet raising minimum wage even a bit is supposed to be such a disaster. Look at the trouble Alberta is in because they raised the minimum wage to $15.

Economists say this is a sound plan? Link?

Meaning the new wage scale has to be subsidized. If business expands enough to provide ample profits to both support the new wage scale and to pay off the debts necessary to subsidize the initial wage action then it might work.

Come back and tell us how great this is in two years. If it still works then I imagine other businesses that have the flexibility to do this will also try it.

But if you're dreaming of a $70,000 minimum wage then you're dreaming because not every business model can support that kind of thing.

Costco has a more realistic take with a starting salary of about 40 - 45 K and good benefits.

Economists say this is a sound plan? Link?

How about reading the OP?

Of course not. What it does show is that paying people more, within a business's capability has positive benefits. And businesses that can't pay at least a decent min wage should not be in business - that model relies on govt subsidies, as we see with Walmart for instance.

Of course not. What it does show is that paying people more, within a business's capability has positive benefits. And businesses that can't pay at least a decent min wage should not be in business - that model relies on govt subsidies, as we see with Walmart for instance.

But, economists say it's a "sound plan" so surely it would work in every industry.

I totally agree. In my stint in the restaurant business I got to try an experiment where a new restaurant opened up and while the minimum wage was $4.25 I started everyone at $7.50 and told them there'd be no raises and if they wanted to get a raise they'd have to promote up.

Employee turnover at the other shops I was in charge of ran around 110% to 150% annually. At this location turnover was about 18%.

Part of why this was so was because none of my staff could afford to quit and start at another fast food place where they'd start at $4.25. Even if they HATED the job they couldn't afford to quit. One employee called it a "Velvet Trap" - a term I've sometimes used since then.

Due to retention and growing expertise the restaurant ran with targeted labor cost and we also promoted a disproportionate number of staff to management.

When the company sold the shop the experiment ended.

My lesson was that if I paid people more than they could ever make somewhere else I'd retain them and benefit from their expertise. The shortcoming of the idea was that if every other fast food place did the same thing then the advantage of doing it would be lost. Meaning that a legislated increase to $7.50 would not have done me any good at all.

So perhaps this guy can make his $70,000 idea work but if too many others do the same thing then his advantage will be lost.