The Great Wage Debate: Should Companies Pay Workers More?
Last week’s nationwide strikes by fast-food workers seeking higher wages have not only reenergized the debate over income inequality but have refocused attention on whether or not U.S. corporations have an obligation to pay their workers a “living wage.”
Related: Fast Food Fight! Workers Protest for HUGE Minimum Wage Hike
The Daily Ticker’s Henry Blodget has been an outspoken proponent of increasing the national minimum wage and has argued that corporations have a moral and fiduciary responsibility to their workers.
“If American corporations were not earning record profits, we wouldn’t be having this conversation,” Blodget says in the attached video. “But they are. Corporations need to simply share more. It doesn’t need to be socialism. It doesn’t need to be legislative. It just needs to be decency.”
Related: Whole Foods CEO: Here’s Why We Pay Our Employees More Than We Have To
Josh Barro, politics editor at Business Insider and an employee of Blodget’s, recently wrote a blog post detailing why he thinks his employer is wrong on this critical issue. He tells Blodget and Lauren Lyster that “shaming people into paying more is not an effective strategy” to boost wages.
“There is not an obligation that exists specifically between employers and employees," he says. "No individual company is better off by paying their workers more.”
Barro gives the example of what would happen to the McDonald's Big Mac if the company decided to double its employees' wages to $15 an hour: a price hike of $1.50 per Big Mac. He believes the onus is on the federal government to change the current employment situation.
“We need public policies aimed at increasing wages,” he explains. “We need a monetary policy that is aimed at creating full employment. I want the government to be involved so that we don’t have to depend on the private sector to do anything other than create profits for shareholders.”
Related: Is the Largest Private Employer Mooching Off Taxpayers to Keep Wages Low?
Blodget refutes the long-held position of many corporations that higher wages would lead to higher prices for consumers. He says there are economic benefits – not drawbacks – of paying people a better salary.
“It would have a very powerful impact on the economy,” he maintains. “If companies just started investing more… that’s more money circulating in the economy. It makes the middle class stronger. A great company serves three constituencies: customers, employees and shareholders. Balance all three and society is better off.”