Raising the Minimum Wage for Working Men and Women in California and the Rest of America

Businesses Back Min-Wage Hike

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For the future of Massachusetts, the move by state Senate President Therese Murray (D-Plymouth) to hike the minimum wage to $11 per hour comes not a moment too soon.

As business executives and owners, we are sensitive to every factor that influences our ability to grow our businesses. No matter what some may claim, it’s horrifically shortsighted, as well as bad for business, to pay for work at a minimum wage that is far too low. When society sets the minimum price of a day’s work below what is needed for a family to make ends meet, the economic basis for business growth disappears.

A hundred years ago, Henry Ford, a committed capitalist, instinctively knew better than to pay his workers so little that they couldn’t afford to buy his wares. Today we have forgotten this basic lesson of the free market. Sadly, we have allowed inflation to eat up the purchasing power of the dollar. In fact, the minimum wage would be $10.75 today if it had kept up with the rising cost of living since the 1960s instead of being allowed to fall behind.

Ford also discovered that, in addition to creating consumer demand, paying a decent living wage lowers employee turnover, which saves costs for businesses by increasing productivity, product quality and customer satisfaction.

Some business groups voice the fear that the requirement to pay a better wage will cause large numbers of businesses, particularly small ones, to slow their hiring and harm the prospects of those it is intended to help. Not only is this fear short-sighted, but according to the best research available, it’s simply not the case. In a 2013 report “Why Does the Minimum Wage Have No Discernible Effect on Employment?” the Center for Economic and Policy Research spotlights two recent studies analyzing the extensive research conducted since the early 1990s. The center concludes that “the minimum wage has little or no discernible effect on the employment prospects of low-wage workers.”

Thus we support raising the minimum wage and adjusting it yearly to inflation to keep pace with the cost of living. As part of the Alliance for Business Leadership, we have the support of leading business innovators and investors allied to invent a more just and sustainable society. And surprisingly to some, a recent national poll shows that 67 percent of small business owner agree with us.

It would be unreasonable to expect a business that employs largely low-skilled workers to raise their pay unilaterally. It’s not surprising that individual well-meaning business owners find themselves unable to take a step that would put them at a competitive disadvantage. But as a commonwealth, we have the opportunity to take that step on behalf of all businesses and their workers on a level playing field, and reap the benefits together as employees, investors, and business owners.

While swift action in the Massachusetts Legislature would seem likely given the recent approval by the Senate, some have argued for delay on this desperately-needed bill in order to combine it with other measures. While further business reforms are always welcome, it would simply be wrong-headed to delay implementation of a new minimum wage law.

Massachusetts led the nation in economic recovery from the recession. Increasing consumer buying power now is just what we need to keep us on track for future growth.

Tom Dretler is co-founder and CEO of Shorelight Education. Kip Hollister is founder and CEO of Hollister Staffing. Both are members of the Alliance for Business Leadership. “As You Were Saying” is a regular Herald feature. We invite readers to submit guest columns of no more than 600 words. Email to oped@bostonherald.com. Columns are subject to editing and become Herald property.

• Category: National, Notable • Tags: Kip Hollister, Tom Dretler