The minimum wage debate in retail, a practical solution!

The debate is on, what effect will the increase in the minimum wage have on independent retailers? Some states and even some cities have taken it upon themselves to mandate the new minimum wage at between $12.50- $15.00 an hour to be phased in over the new few years. Wall-Mart has announced it will increase their minimum but not to the$15 level. The main issues central to the debate are how will these increases effect store profits and will there a net negative effect on retail employment. We don’t a lot of data to reference but both Costco and Trader Joe’s have consistently paid above the minimum wage scale and maintained their profitability. Costco has been a model of worker productivity resulting in greater profitability. One of the factors for this is certainly their compensation plan. Economics 101 tells me that when a minimum wage worker receives a $2 or $3 per hour increase 100% of that goes back into the economy as retail spending, the prime driver of our economy. The issue has been become political fodder with no real substantive debate. I have a simple and pragmatic solution. Tie the minimum wage to the CPI and adjust it yearly the same way Social Security benefits are adjusted. This approach accomplishes a couple of things: It takes the issues out of the political arena, and the incremental adjustments become manageable for retailers to absorb. My closing thought is a few years ago congress decided to avoid the political debate over their salary increases and make them automatic, so they do understand the concept of how depoliticize an issue.