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On Thursday, Costco announced it would raise the hourly wage for 130,000 of its American employees. CEO Richard Galanti, while discussing the company’s fiscal third-quarter earnings, said that starting wages for employees would be raised $1 an hour to $14.50 an hour while other hourly wages would be hiked 25 to 50 cents an hour.
Galanti added that the new wage increases would be probably be added to the company’s regular wage hikes. He acknowledged that the tax cuts would garner Costco an added $300 million each year.
The impetus for the wage hike was the windfall Costco received from the GOP tax cut; the company made $32.36 billion in sales and membership revenue in the twelve weeks ending May 13. That represented a 12.1% increase over the same period last year. Costco has enjoyed four straight quarters of double-digit sales growth.
“My hours went from 30 to 20 a week,” said one Whole Foods employee in Illinois.
Workers interviewed for this story were reluctant to speak on the record for fear of retaliation.
The Illinois-based worker explained that once the $15 minimum wage was enacted, part-time employee hours at their store were cut from an average of 30 to 21 hours a week, and full-time employees saw average hours reduced from 37.5 hours to 34.5 hours.
Your examples have nothing to do with supply side and demand side economics. Those are more like policy-side prescriptions. One could just as easily claim that Amazon/Whole Foods could have raised hours working as well as hourly compensation because, after all, Amazon/Whole Foods received the same tax cut that Costco did. Or, one could also claim that Costco would have to cut hours to make up for its raise in hourly wages, just as Amazon/Whole Foods did. The two companies are both on equal footing and are doing nothing more than responding to individual company circumstances.
Your examples have nothing to do with supply side and demand side economics. Those are more like policy-side prescriptions
WTF?
What is Supply Side theory and Demand side theory besides "policy-side prescriptions"? I'm fully willing to debate the other part of your statement, but the part quoted above is bizarre.
What is Supply Side theory and Demand side theory besides "policy-side prescriptions"? I'm fully willing to debate the other part of your statement, but the part quoted above is bizarre.
You did not describe anything resembling policy side prescriptions. That was the point. Instead, you described two different companies with differing circumstances. Their individual circumstances had nothing to do with supply side or demand side economics.
My statement was intended to read: "Your examples have nothing to do with supply side and demand side economics. Those [supply side and demand side economics] are more like policy-side prescriptions."
You did not describe anything resembling policy side prescriptions. That was the point. Instead, you described two different companies with differing circumstances.
While that might be true, the majority of companies have similar circumstances.
Minimum wage studies have borne that out.
The study that Liberals like to cite has a major flaw in its methodology.
The study said minimum wage had no impact, because labor hours didn't change.
Well, why would they?
If a fast-food restaurant is open for a certain number of hours each, it requires a minimum amount of labor hours.
The minimum wage didn't cause stores to open later or close earlier, but it did impact individual employees, which is what the study failed to consider.
If I'm an employer and forced to pay higher wages, I'm going to seriously re-evaluate how I allocate my labor resources.
I'm going to allocate more hours to the best employees and cut the hours of the mediocre and marginal employees.
That is, in fact, exactly what happened.
That's the Great Irony, because the minimum wage was intended to help the mediocre and marginal, but the end result is the mediocre and marginal got smaller paychecks, since they were given fewer hours of work, so they ended up being the losers.
Traditional demand side theory has hardly a mention about a legislated minimum wage.
Lowering interest rates or raising public spending on infrastructure during a recession are the center pieces of Keynesian or demand side economics. Those two items have nothing to do with a lower or higher minimum wage.
"Keynes stated in 1930 that tax-financed wealth redistribution was a smarter way to help the poor than fixing wages at above-market rates." For example, the Earned Income Tax Credit (ETIC) or some other similar mechanism would be supported by Keynes.
Traditional demand side theory has hardly a mention about a legislated minimum wage.
A lot of developed countries don't have a MW, but they have labor unions that set the floor at $15-$20/hr.
The OP's example of Whole Foods cutting worker hours is silly. As though the work that they were previously doing could magically get done in less time! Rather they are trying to persuade lower quality existing employees to leave and hire better ones.
And Costco sure as hell didn't raise wages because they got a tax cut. No employer pays more than they need to in order to hire and retain the workers they want/need.
Demand vs Supply Side is a silly argument anyway. Supply Side boosting only works if there is a capital shortage, and in the US that hasn't been true, ever. And the opposite is true now; loads of capital, depressed demand.
The reason the OP's post was ridiculous is because he cited Costco as being the beneficiary of the republican tax cuts, but he completely forgot that Whole Foods was also a beneficiary of the exact same tax cuts! So he went on to cite Costco both raising wages and keeping hours intact as somehow being an example of "supply side economics" while Whole Foods also raised wages but had to cut hours, and somehow concluded that was an example of "demand side economics." But the stupid thing is that Whole Foods got the exact same tax cut Costco did, so why should Costco be an example of "supply side economics" while Whole Foods wasn't?
People need to get in the habit of thinking about what they're writing, before they write it.
...If I'm an employer and forced to pay higher wages, I'm going to seriously re-evaluate how I allocate my labor resources.
I'm going to allocate more hours to the best employees and cut the hours of the mediocre and marginal employees.
Why wouldn't you do this anyway? On what basis would you wait for regulatory pressures to force your hand, instead of being proactive?
I would opine instead, that the best strategy is the push the more efficient/motivated employees harder, increasing their hours until their productivity flags. Then back off on the number of hours. If aggregate production is sufficient, dismiss the less-effective employees. If production is insufficient, gradually dial-up the hours of the less effective employees, going down the line.
Some companies want to horde the savings to make their books look good to investors, then you got others that invest in their employees such as Costco. Becoming more rare these days for big box retailers to do. Most would just fire you, hire a monkey for cheaper labor, while giving the VP's million dollar bonus on top of their wages. You know, the ones that does exactly NOTHING to earn it. Unless you consider cooking and manipulation of the market... work..
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