Wednesday, January 31, 2007

Costco and the Minimum Wage

The Washington Post reported yesterday that Costco CEO Jim Sinegal is endorsing raising the minimum wage. I don't want to address the article directly because I would just be saying the same things and pointing out the same things that many people (including myself) have already said concerning raising the minimum wage. Rather, I'm posting about this because I read a post on Cato that suggested (rather strongly) an ulterior motive for Sinegal's interest in raising the minimum wage: to stifle low-end competition.

Now, I have no way of knowing Sinegal's motives and I am inclined to give him the benefit of the doubt and assume that he is sincerely attached to a flawed economic policy until proven otherwise.

I just wanted to point out some more unintended consequences of minimum wage increases (or any government intervention, for that matter) and note how it is oftentimes in certain businesses' best interest to endorse government intervention when that intervention will hurt the business' competitors.


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