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Proof That Raising The Minimum Wage Would Not Put Mom and Pop Stores Out Of Business

Many people have been talking about raising the minimum wage.  Even the NHLN posted a message called ‘In 1968 Minimum Wage Should Have Been $10 per hour, Why Is It Only $7.25 Now?“.  After that post many people commented that it would hurt businesses who are currently paying their employees minimum wage.  Now there is evidence that refutes that.

A study done by the National Employment Law Project (NELP) explained how minimum wage changes would not really hurt the companies who are paying minimum wage. They found:

  • The majority (66 percent) of low‐wage workers are not employed by small businesses, but rather by large corporations with over 100 employees;
  • The 50 largest employers of low‐wage workers have largely recovered from the recession and most are in strong financial positions:  92 percent were profitable last year; 78 percent have been profitable for the last three years; 75 percent have higher revenues now than before the recession; 73 percent have higher cash holdings; and 63 percent have higher operating margins (a measure of profitability).
  • Top executive compensation averaged $9.4 million last year at these firms, and they have returned $174.8 billion to shareholders in dividends or share buybacks over the past five years.

The changes in minimum wage laws would mostly effect large corporations.  Over 50% of people employed in minimum wage jobs working in one of these five areas:

  1. Food Services
  2. Accommodations (hotel industry)
  3. Retail Trade
  4. Arts, Entertainment, and Recreation
  5. Administrative Services

The top three worst employers are McDonalds, Yum Foods (Taco Bell, KFC, and Pizza Hut) and Walmart.  According to the study:

Each of these corporations was profitable during all of the last three fiscal years, and each of them now earns profits that are substantially higher than their pre‐recession levels.  Figure 3 shows the profit growth of these top low‐wage employers over the last four fiscal years.


That is not the worst of it. “Of the 50 largest employers of low-wage workers, more than 90 percent were profitable last year, and three-quarters of them are enjoying greater revenues than they did before the recession.”  Most of these large corporations have rebounded from the recession and are making very health profits yet the workers are still being oppressed.

So to all of those people who believe that private industry cannot support a higher minimum wage this report clearly shows that “the nation’s top low‐wage employers can readily afford to pay for a higher minimum wage for their lowest‐paid employees“.



About Matt Murray

Matt Murray is the creator and an author on the NH Labor News. He is a union member and advocate for labor and progressive politics. He also works with other unions and members to help spread our message. Follow him on Twitter @NHLabor_News
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