When Wal-Mart (WMT) announced its support for mandatory employer-based healthcare, many members of the media scratched their collective heads trying to figure out why the formerly “evil” company had suddenly become one of the “good” guys.
The most cynical explanation anyone could muster was that maybe Wal-Mart was just doing this all for good publicity. But hey, even if their intentions weren’t totally pure, it’s a win-win, right?
The idea that maybe their support was actually a very greedy scheme, in that it’s all a ploy to raise costs on their competitors, didn’t occur to anyone.
You see the same pattern repeated ad nauseam. A power plant supports environmental regulations (that will raise costs on their competitors much more). A financial company supports consumer protection (goodbye payday loan competitors) and on and on it goes.
Yesterday, NYT reporter Catherine Rampell commented on a “somewhat surprising petition” by small businesses favouring a minimum wage increase. Businesses, favouring increased wages… wha!?!
It turns out there’s nothing to be confused about (at all) as Alex Tabarrox quickly proves:
Put aside the fact that this so-called petition is coming after the law is already passed–can anyone say cheap talk–it’s really not surprising that some employers support the minimum wage. Rather than a violation of Econ 101, as Rampell suggests, it’s more an implication of Econ 101. Simply take a look at why the employers say they are supporting the law. Uniformly the responses go like this:
Social justice, honest day’s labour, inequality…. followed by:
I have always paid above minimum wage.
I’m a small business owner but don’t have any minimum wage employees, nor would I ever.
I’ve always paid my workers, even unskilled laborers, more than minimum wage …
I’m one of those businesses that supports a so-called “living wage” and refuse to pay less than $12/hour…
Note that I don’t think that these employers are being dishonest in their support for “social justice” but I do think that it’s easy to be in favour of the minimum wage when it doesn’t cost you anything. [Ed: emphasis added]
Indeed, these employers will benefit from an increase in the minimum wage because it will raise the costs of their rivals.
This is not a hard concept to grasp, really. It’s just not. But the failure of the media to even consider this facet of regulatory debates, and to just take everything at face value really is a disservice.
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