When I began exercising regularly, I had a decision to make. Was I going to keep buying inexpensive sneakers and suffer through foot pain and high-cost medical care, or invest in a more expensive shoe that protects my feet and last longer? After wasting a lot of time and money on low-cost shoes, I finally got wise and chose the latter. Albeit small in comparison, my dilemma is similar to a more significant issue that many businesses face when considering whether to support raising the minimum wage.
In fact, the benefits for businesses of raising the minimum wage far outweigh the costs.
Doing so reduces the two biggest drags on business productivity – employee absenteeism and turnover. Economists have long recognized that better-paid employees are more efficient, more effective, and more productive.
Most importantly, raising wages puts more money in the pockets of consumers, who in turn buy more goods and services. Over a relatively short amount of time, businesses see more customers and higher revenues—more than offsetting the early jump in payroll costs associated with paying higher wages. That’s why the states that have raised the minimum wage haven’t seen any increase in unemployment compared to the states that haven’t raised their wages—businesses earn enough new revenues to keep their staff on hand over the long-term.
The good news for employment is that even if businesses have to reduce labor costs in the short run, before the increased sales kick in, they often avoid layoffs, instead reducing hours. Because employees earn more per hour, they still come out ahead.
These and other benefits have led thousands of North Carolina companies to integrate higher wages into their business strategy. Hundreds of businesses in Asheville have become “living wage certified” through the organization Just Economics, and dozens of businesses in the Triangle have committed to paying a living wage through the Durham Living Wage Project and the Orange County Living Wage Project.
Some of these businesses have found that paying higher wages has led to a more loyal and experienced staff, resulting in less inventory waste, better products, stronger customer service, increased customer satisfaction, which all leads to long-term growth.
It’s not just businesses that benefit from higher wages. Economists have repeatedly found that states that increased their minimum wages have seen better economic performance, lower unemployment, and higher job creation rates compared to states that didn’t raise their wages.
Raising the minimum wage puts more dollars into the economy, which in turn creates more customers, more sales, and bigger profits. For example, a recent study by the NC Justice Center found that raising the minimum wage to $10 an hour would increase paychecks for North Carolina’s workers by $2 billion a year. That’s $2 billion in increased consumer spending at local businesses, boosting business sales, business profits, and creating more than 5,000 new jobs.
The study also highlighted the widespread public support for raising the minimum wage, noting that: a) 58 percent of North Carolinians support raising the minimum wage, and b) more than half of self-identified conservative voters support local ordinances requiring that local businesses pay their employees a living wage.
To grow our economy, we need business leaders to continue to step up. And we are seeing just that as North Carolina business leaders are working in conjunction with RaisingWagesNC.org and employees to create a path to a living wage.
Before business owners or state officials decide that they can’t afford to pay higher wages, they first have to answer whether they can honestly afford not to.
Vicki Lee Parker is the Executive Director of the North Carolina Business Council, a nonpartisan, nonprofit that gives a voice to businesses that focus on the Triple Bottom Line – people, planet, and profits.