High Minimum Wage Driving Jobs Away?

September 11, 2006 · Filed Under For the love of HR 

Chicago Mayor Vetoes Big Box Minimum Wage

This would have required “big box” retailers such as Wal-Mart, Target and Home Depot to pay $10/hr plus $3/hr in benefits to employees whenever operating within city limits. While I find this particular proposal (and similar proposals) interesting, this is mainly to spearhead the topic of my post: Do high minimum wages drive employers (and jobs) away?

My feeling has always been that it depends. In a retail environment where prices are already competitive and price shopping is common, I would say that it would have an effect.  In a tech sector where you can afford a bit of price buffer (a high minimum wage will likely not effect any workers) and with high differentiation and specialization, it probably has little effect.  For industries that are necessary that carry low skill workers, the costs will be passed to consumers but there will be few attributable job losses. So overall, I think the type of wage increases we have seen over the last couple of decades have not been as harmful to our businesses.  That’s not to say that it couldn’t be harmful.
Overall, like many things in business, moderation wins out overall. Moderate wage increases followed by a cooling period have shown the best results over all industries. And that’s where I feel Chicago really missed out on their wage proposal.  Their increase to big box employers was 100% above baseline costs for other retail outlets in Chicago.

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