Apr 20, 2014 0
From the Wall Street Journal, Michael Saltsman writes Why Subway Doesn’t Serve a $14 Reuben Sandwich:
Start with Costco, whose CEO, Craig Jelinek, is an outspoken advocate of raising the minimum wage. “At Costco, we know that paying employees good wages makes good sense for business,” Mr. Jelinek said in a statement in March of last year. Mr. Jelinek offers new employees $11.50 an hour, but his narrative omits a few key details. First, Costco charges its customers as much as $110 a year for the privilege of shopping at the store. That’s a $2 billion-per-year luxury no grocer or restaurant enjoys.
As a result, the warehouse retailer rakes in what amounts to a more than $10,000 profit per employee, according to data from business research company Hoovers. A casual dining restaurant, on the other hand, earns a roughly $2,000 profit per employee, which explains why most businesses aren’t following the president’s “just be more like Costco” advice.
There are exceptions. In a visit this month to the University of Michigan, for instance, the president stopped at the local deli Zingerman’s. He raved about its Reuben sandwich as well as the generous wages that the business offers. Like Mr. Jelinek, Zingerman’s co-founder Paul Saginaw supports hiking the minimum wage. He posted a minimum-wage manifesto on a company website last September.
As Mr. Obama relished the perfect sandwich prepared by well-paid employees, he neglected to mention how much he paid for the happy experience: Zingerman’s Reuben costs $14. That’s about three times as much as a Subway foot-long. When I was an undergraduate student at Michigan, I rarely dined at Zingerman’s because it was so expensive.
If every deli could charge $14 a sandwich, then perhaps an $11 or $12 minimum wage would be feasible. But your local sandwich shop cannot match the price points of a shop serving a parent-subsidized clientele in a college town. Expecting restaurants everywhere to do so is a recipe for business failure.
This is why our love of one size fits all, government knows best central planning can be so dangerous. It also shows how out of touch our elitist moral supremacists are with the working class.