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A $12 Minimum Wage in Retail?

A lefty organization tries to repeal supply and demand.

by
Tom Blumer

Bio

November 29, 2012 - 12:00 am
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Last week, just in time for the start of what yours truly and the vast majority of Americans call the “Christmas shopping season” — but which the press in virtual lockstep tags as the “holiday shopping season” — a policy analyst at a leftist think tank seriously proposed that all retailers voluntarily raise their employees’ minimum wage to $12.01 per hour, or $25,000 per year for those who work a forty-hour week year-round.

The study (“Retail’s Hidden Potential: How Raising Wages Would Benefit Workers, the Industry and the Overall Economy”; full PDF here) came from Demos, whose nice-sounding goal is to “make equality and democracy more than just ideals.”

Though it is often characterized as “non-partisan,” it boasts of “a partnership” with the openly liberal but really far-left American Prospect. Catherine Ruetschlin, the study’s author, appears to have had some possibly scrubbed involvement with Occupy Wall Street, and to have been a leader of an unsuccessful 2008-2009 effort aimed at “ridding the New School from the tyranny of Bob Kerrey.” Kerrey, the former Democratic U.S. senator, headed that New York City university for a decade before leaving when his second five-year term ended in January 2011.

According to her Demos bio, Ruetschlin “is currently completing a Ph.D. in Economics at The New School.” Before she receives that doctorate, she should be required to retake Econ 101, especially those pesky sections dealing with the profit motive and the law of supply and demand.

I won’t attempt to list all of the weaknesses in the Demos study; it would require at least a term paper to thoroughly expose them all. What I will address will more than suffice to discredit it.

In Ruetschlin’s alternative universe, if retailers raised all employees’ wages to at least $12 per hour, “the new floor would mean a 27 percent pay raise” on average for those earning below that threshold. Then, as if by magic, because of that increase and others granted to higher earners who would also demand to be paid more: “More than 700,000 Americans would be lifted out of poverty, and more than 1.5 million retail workers and their families would move up from in or near poverty.” Employing her trusty Keynesian stimulus calculator, she further projects: “As a result of the economic growth from a wage increase, employers would create 100,000 to 132,000 additional jobs.” And of course, the impact on retailers’ operations would be minimal, because: “The cost of the wage increase amounts to $20.8 billion, or just 1 percent of the $2.17 trillion in total annual sales by large retailers.”

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