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Debating a minimum wage increase

President Obama made waves on Tuesday by promising a minimum wage increase for federally contracted employees in his State of the Union address.

The next day he visited a Costco store in the Washington suburbs to advocate for higher pay for all hourly workers.

The president chose Costco because its employees earn an average of more than $20 per hour before overtime (well above minimum wage), and the benefits to the retailer are obvious, CBS Baltimore reports. “I guarantee you if workers have a little more money in their pocket, they’ll spend more at Costco,” said Obama.

One Twitter user illustrated a similar point:

Also under scrutiny is the tip wage, used primarily for restaurant servers and delivery workers, which has remained at $2.13 since 1991. The National Restaurant Association claims in a recent New York Times article that raising the tip wage would result in higher prices for diners and fewer wait staff. Worker advocates counter that previous minimum wage boosts that benefited back of house staff did not aversely affect restaurants as critics had warned.

Any changes to the minimum wage seem likely to provoke pushback from supermarkets, too. A D.C. measure for a “living wage” aimed squarely at mega-stores like Walmart led to threats of the retailer reneging on planned stores before Mayor Gray vetoed the law last September.

However, research shows that paying retail workers more results in customers that are happier — and spend more. If retailers like Costco and Trader Joe’s can make higher wages part of their success stories, why can’t all supermarkets do the same?

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