by Mish

Some think this is an unforeseen consequence. I see at as a planned consequence.

The Wall Street Journal reports Push for $15 Raises Pay—and Tensions.

The growing push to raise the minimum wage to as much as $15 an hour is creating new issues in the workplace: While some of America’s lowest-paid workers will get fatter paychecks, their veteran colleagues may feel underpaid.

At Gap Inc. and Wal-Mart Stores Inc., which recently increased wages, store managers have had to address employee questions about fairness and pay. Some companies have raised pay for veteran workers, and others plan to offer extra fringe benefits, fearing that valuable workers might otherwise jump ship.

In Seattle, where city laws require many large employers to phase in a $15 minimum wage by 2017, Mud Bay store employees now earn at least $12 an hour, with 50-cent hourly pay hikes planned for September and January 2017.

“I’d love to be able to pay you a dollar more but there are costs,” Ms. Knowles told store employees, adding, “we’re still in business to make money.”

Some economists say minimum wage increases could boost productivity, curb worker turnover and prompt stronger spending from low-income families. Detractors warn wage hikes could come with higher prices for consumers and weigh employers down with hefty costs.

Rising Wages and Productivity

Apparently a rising tide does not lift all boats, at least yet.

Whoever dreamt up the notion that rising wages increase productivity is an economic fool.

Generally speaking it’s the opposite.

Rising productivity supports higher wages. However, there are global pressures and robotic pressures that influence that decision.

If anything, higher wages appear to have made more people unhappy than the happy new hires.

Meanwhile the debate is on. Was this a planned occurrence by those pushing for higher minimum wages or was it an unforeseen consequence.

Debate is Moot

I vote for the former, but it really does not matter.

Either way, store expansion will slow. Businesses that are profitable at $7.25 may not be at all profitable at $15.

It is idiotic to dispute that simple truth but many do so.

Mike “Mish” Shedlock

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