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What Would Happen to Companies Like Target If They Paid $15 an Hour?

David Callahan
Henry Ford famously shocked the nation in 1914 when he announced that he was doubling the wages of Ford's workers to $5 an hour. Ford's logic was that better paid American workers would become bigger spending consumers -- not only buying more Model Ts, but more of everything. Which is pretty much what happened in the U.S. over the next 50 years as a new middle class sprang into being. 
So which corporate leader in a low-wage industry could we imagine stepping forward to be the Henry Ford of today? With labor organizers in the fast food industry upping their pressure on employers to raise wages to $15 an hour -- more than twice the minimum wage -- that's a timely question. 
Could it be David Novak, the CEO of Yum! Brands, which is one of the largest employers in America as the owner of KFC, Taco Bell, and other chains? Donald Thompson, the CEO of McDonald's? Doug McMillon of Walmart?
Probably none of the above, given how worried corporate leaders are these days about their stock price and how beholden they are to their large institutional investors. It's not 1914 anymore. 
Still, a Henry Ford type figure could actually do wonders for the long-term growth of their company. As Demos research has shown, higher wages for retail workers wouldn't just boost the U.S. economy overall by increasing consumer demand, but a portion of those wage increases would be spent in the very establishments paying the raises. If Target workers made more money, they'd spend some of it buying more stuff at Target -- even if the prices were higher because of the wage increases. 
More importantly, though, a big wage increase by Yum! Brands or Target would reverberate through the low-wage economy, forcing competitors to raise wages. That's what happened when Ford raised its wages. Other car companies and manufacturers had to follow suit in order to compete for the best workers. Sales of the Model T boomed. 
So if Target raised its wages to $15 an hour, it'd take a big hit in the short term to its profits and stock value, and would have to raise prices somewhat. But the Walmart in the mall down the street might also feel compelled to raise its wages, and so on. And Target would soon have a more flush customer base all over the area who are getting paid better wages. Target's higher pay would also lower its employee turnover and increase staff motivation, which would also compensate for its higher wage costs. 
This isn't sounding like so a bad deal, right? And, in fact, CEOs like Henry Ford are already out there -- people like Costco's Craig Jelinek and Dan Bane of Trader Joe's, who get that higher wages actually help the bottom line. Now we just need a CEO of one of the true giants to step forward and show some leadership.