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Target shows the way on the minimum wage

By in Press Enterprise on October 6, 2017

By Michael Saltsman

Big-box retailer Target announced last month that it will voluntarily raise its pay floor to $15 an hour by 2020. It’s the latest example of why a government wage mandate of this magnitude is unnecessary.

Supporters of the labor union-backed campaign for a $15 minimum wage took credit for the retailer’s decision, but the company’s CEO offered a more self-interested rationale: Recruiting “top-quality” help to staff its stores for the holiday season. The company is following in the footsteps of other large retailers and restaurants that have voluntarily raised their pay floor in recent years.

It’s not just corporations taking these steps; the tight labor market has caused independent operators to raise wages as well. On a recent trip to northern Michigan, I observed one local fast-food restaurant advertising for new hires at a starting wage above $11 an hour — more than $2 above the state’s minimum wage.

It’s not unusual for companies to raise employee pay above the minimum wage absent government action; in fact, it’s routine. During the years between the last two federal minimum wage increases — one in 1996-1997, and again in 2007-2009 — the number of hourly employees earning at or below the federal minimum dropped every year. By 2006, just 2 percent of the hourly workforce was paid the federal minimum wage.

Proponents of raising the minimum wage posit a world in which employees are powerless to improve their paychecks absent outside intervention. The data shows otherwise: Economists from Miami and Trinity Universities have documented that most minimum wage employees earn a raise within 1-12 months on the job. The key is making sure that starter opportunities exist so that employees can gain the experience necessary to earn that raise.

A $15 minimum wage works opposite that goal, according to recent empirical evidence from two west coast cities. […]    

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