My brother read my recent article on income inequality and asked me a question that I think is more generally at play in the debate: “Won’t the costs of increasing the minimum wage simply be passed on to consumers?” My first, rather knee-jerk, response to such a question is always why can’t these costs come out of salaries at the top of these companies or come out of corporate profits? I did, in that article, refer not just to raising the minimum wage but also to equalizing wages, which-if you didn’t get it-means salaries at the top might have to be adjusted lower (go ahead and call me a communist), as any solution to income inequality, almost by definition, will need to involve redistribution of existing wealth. Corporations for decades have maximized profits by lowering wages and decreasing benefits. Can’t we ask that corporations show a minimal responsibility not just to their workers but to the society of which they are a part? Such behavior is actually in the self-interest of these corporations-even Harvard says so.
But then I moved past my knee-jerk thinking and considered the question, and it became pretty interesting to me. So what if the costs of raising the minimum wage were passed on to consumers? When that question is posed, it is usually done so rhetorically, with the assumed answer that-God forbid!-it would be horribly unacceptable to raise prices for consumers, and thus we cannot raise the minimum wage-end of conversation. But what would it mean to pass the cost of a minimum wage hike on to consumers (who, let’s not forget, are typically workers, too, a fact often lost or neglected in such conversations)? I started to think about this question as something more than rhetorical, and my thinking led me to reflect also on how this debate on income inequality provides an important opportunity for us to really re-assess American values and, in ways we haven’t done, consciously craft-and pay for-the kind of world we want.
CNBC editor Heesun Wee reports, for example, that, “Particularly for younger consumers, including millennials, purchasing decisions are about more than cheap prices. Shoppers are buying based on a company’s values, which can include domestic manufacturing, environmentalism and ethically sourced raw materials, ranging from cocoa to cotton fibers.” These millennials, and no doubt others across generations, appear to be thinking very consciously about the type of world they want, buying organic goods and recycled products to protect the environment, free-range chickens to ensure humane treatment of the earth’s creatures, fair-trade coffee, and the like.
What would the cost be for this Better, if not Good, Society? Well, a 2011 study regarding wages at Walmart offers some insight into this issue, finding that to raise every worker at Walmart to at least a $12 per hour wage would cost the average Walmart customer 46 cents per trip or about $12.50 annually.
This doesn’t seem like much to pay so many can receive a more livable wage (we might have to pay more for a true living wage), but maybe I’m wrong…