Megan McArdle looks at the arguments about the minimum wage.
Why can't companies be more like Costco and Trader Joe's?
If they were, there'd be no need for either.
Paying a high wage can reduce turnover, get you better quality workers, and induce those workers to work harder, smarter, better. But there’s a catch: This only works if your wage is higher than the wage for other, similar jobs. If your job is unusually well paid for the type of work, people are going to be keenly interested in keeping that job. They’ll be extra nice to the customers, extra nice to their co-workers, and extra diligent about making sure the bathrooms are clean. If everyone raises the minimum wage, however, there’s no incentive to work extra-hard to keep your job.