How to Raise the Minimum Wage without Legislation

Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.
Man counting money

Walmart and McDonald’s recently have raised wages to $9 an hour or more, substantially higher than the federal minimum wage of $7.25 an hour. They did so following a highly publicized campaign by protesters to force McDonald’s to increase wages and benefits. Walmart, the notorious cost cutter, was under pressure to raise wages as well.

Both companies did so without Congress passing President Obama’s bill to raise the federal minimum wage to $10.10.

This story demonstrates that wages can rise without government intervening in the private contracts between employees and firms.

Walmart and McDonald’s both raised wages because they had the means to do so. Walmart made $16 billion in the past year from which to pay higher wages. The company’s profit margin of 3.4% was almost double Costco’s profit margin of 2%.

McDonald’s does even better. It earned $1.8 billion in profits after taxes in 2014 and has a profit margin of 17%. That’s more than twice what YUM brands produced with its KFC, Taco Bell and Pizza Hut brands. So you can see why McDonald’s was the leader in raising wages.

Of course, the marketplace, more than the legislature, forced those companies to raise wages. Competitors were luring away good employees from these companies by offering higher wages. A tightened labor market and higher productivity will do more to raise wages “naturally” than the “artificial” means of government edict.

Natural vs. Artificial Means of Raising Wages

At Chapman University, where I teach as a Presidential Fellow, I divide the blackboard into two parts — one is a list of “natural” ways to raise wages, and the other is “artificial” ways to raise wages, as follows:

 

NATURAL WAYS TO RAISE WAGES ARTIFICIAL WAYS TO RAISE WAGES
Increased productivity Minimum wage law
        Increased company profits Living wage law
Training, education Unions
Competition Restrict immigrants

Once students see there are natural, genuine ways to raise wages, they are less likely to vote for artificial means to raise wages.

You Blew It! Worst Airport in the Country?

I had the misfortune of spending time in Dallas this past weekend, which meant flying in and out of the infamous Dallas/Fort Worth International Airport. Can you imagine an airport bigger than the size of Manhattan? Yes, it’s true — 27 acres.

I’ve flown in and out of every major airport in the country, and there are some pretty bad ones, including New York (all of them), Atlanta and Chicago, but I don’t think any of them can compare to the horrors and monstrosity of DFW.

If you have the misfortune of renting a car at DFW, you know that the rental car location is miles away from your airline and getting there is a nightmare. We had to ask directions twice to drop off our rental car, and in the end, an employee drove us there!

After dropping off my car, I had to take two buses to get to my gate and almost missed my flight even after arriving two hours early. There are so many twists and turns in DFW to get to an airline’s gate that I swear you cannot tell which way is north or south. And it’s always under construction. What a mess.

Here’s a suggestion: Rather than keep building on top of an old system, why not just tear down the entire airport and start over again?

In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about annuities and possible alternatives. I also invite you to comment in the space provided below my commentary.

O Las Vegas Money Show, May 12-14, Caesars Palace: I will be the keynote speaker at this year’s Vegas Money Show! I will be speaking on “Is the Golden Age of Investing Over? Not for this Market-Beating Strategy!” Other speakers include Andy Busch, Marilyn Cohen, Roger Conrad, Bob Carlson, David T. Phillips, Jeff Hirsch, Mark Hulbert, Louis Navellier, Jim Stack and Wayne Allyn Root, as well as my Eagle Financial Publications colleagues Doug Fabian, Chris Versace and Bryan Perry.

Be a guest of Eagle Financial Publications and register for FREE by using priority code 038654 and calling 800-970-4355 (toll free in the United States and Canada) or sign up online.

O I want to invite you on a cruise, Sept. 13-20, with Newt GingrichChris Versace and me, among others. I will be doing a special one-on-one interview with Newt Gingrich on the cruise. Come spend seven fabulous days aboard the six-star luxury liner, the Crystal Symphony. We will travel from New York to Montreal with a roster of noted historical scholars, political pundits and renowned market experts who will share their insights and perspectives on the current environment in Washington and Wall Street. For further information, including how to sign up, call 800-435-4534 or visit www.PoliticsAndYourPortfolio.com. Not to be missed! The deadline to sign up is April 30!

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