Howard Schultz, CEO of Starbucks, is in favour of raising the Federal minimum wage. Quoted in the Huffington Post:
"On balance, I am a supporter of the minimum wage going up," he said. "We've got to be very careful what we wish for because some employers -- and there could be a lot of them -- will be scared away from hiring new people or creating incremental hours for part-time people as a result of that wage going up."The Federal minimum wage is $7.25/hr and Obama is proposing to raise it to $9/hr. Since Starbucks baristas generally earn close to $9/hr, this change is unlikely to hurt Starbucks much. But smaller coffee chains that rely on minimum wage employees to undercut Starbucks and prevent their customers going next door for a banana latte and gluten-free cookie are going to be squeezed and forced to raise their prices, thus migrating more customers to Starbucks. I have to admire Schultz's business sense, but let's not fool ourself that his support for the minimum wage is anything but self-serving.
One point that's being lost among all the minimum wage discussion is that this pertains to the minimum wage set by the US Federal Government, not the states. Minimum wages can also be set in states and even cities. New York state is planning to raise the minimum wage from $7.25 to $8.75 for instance. The Federal minimum wage doesn't apply to small firms whose commerce doesn't cross state lines, but it looks like Burger King etc. are all exposed to this. So in a poor state where wages are low (often Republican-leaning states), the federal minimum wage hike is likely to leapfrog any state or city minimum wage setting. It's likely to have less of an effect in Democrat states like California and New York where wages and minimum wage levels are already high.
Interestingly, it's really going to hit employers of tipped workers (waitresses etc.) Since they are often employed on $2-$4/hr and rely on tips to hit $7.25, and the employer is responsible for paying the gap if tips fall short, and given that prices and hence tips are unlikely to rise, the employer may have to find another $1.75/hr - 50% or more of his current wage payments.
The Huff Post article has a slideshow of "People who hate the minimum wage", and first up is ex-Republican presidential candidate contender Herman Cain:
Though Republican presidential candidate Herman Cain never outright advocated abolishing the minimum wage, he did argue that minimum wage laws prevent workers at the margins from getting their first jobs. Cain was an executive in the restaurant industry, which is one of the largest employers of low-wage workers.Sounds to me as if Herman Cain was ideally positioned to see the effect of minimum wage laws on low-wage workers. Why aren't we listening to what he has to say?