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Minimum wage is an attempt to force the externalities of a business underpaying its employees back on to the business. I hear this argument a lot but it doesn'
by twoodfin 9y ago
Minimum wage is an attempt to force the externalities of a business underpaying its employees back on to the business.
I hear this argument a lot but it doesn't make any sense to me. Costco and Walmart both move into town. Walmart hires 100 formerly unemployed residents at $10/hour. Costco runs a less labor-intensive operation and hires 20 at $20/hour. For the sake of argument, they both sell the same amount of goods. Why is Walmart being "subsidized" but Costco is not? Walmart's paying 2.5X the wages to folks who were previously relying 100% on the taxpayer.
- mexfff 9y agoIt's not the case that people employed by Walmart were previously relying 100% on the taxpayer. Many of them may have been working for smaller retail outfits which treated their workers decently and went out of business because they couldn't compete on price with Walmart.
- twoodfin 9y agoThe point of my example (which has some mapping to the real world) is that Costco does successfully compete with Walmart and pays “decent” wages, but to a lot fewer people. Costco has put smaller retail outlets out of business, too.
- maxerickson 9y agoCostco doesn't compete with Walmart. It is much more selective about where it places stores (each store needs to serve many more people) and it stocks a smaller number of mostly higher revenue items.
- maxerickson 9y agoThe claim is that employees working for the wages Walmart pays still collect government benefits. Whether to impute those benefits to the store is a fair question, but the idea is that Walmart employees are literally collecting more government payments than the Costco employees.