News Story

Debate Du Jour: Minimum Wage Takes Center Stage

Video report: Zingerman's wants higher minimum wage

ANN ARBOR — The debate over increasing the minimum wage has made its way to Zingerman's, home of the $15 sandwich.

Zingerman's, the gourmet deli, recently held a "Sandwich Summit" to promote the idea of making it illegal to hire someone below a set wage. The shop supports raising the minimum wage at either the state or federal level, which would make it illegal to hire a worker for less than $9.50 an hour or more.

The market in Ann Arbor allows Zingerman's to charge $16.50 for a Reuben, $14.99 for a grilled chicken Caesar salad and $7.99 for a hot dog with all the works. Washtenaw County has the 5th highest per-capita earnings in the state of the 83 Michigan counties.

Zingerman's invited U.S. Rep. John Dingell, D-Dearborn, state lawmakers, local business owners and employees to make the case.

"When somebody goes to work and they put in hours, they work hard, they should be able to go home with enough pay to put a roof over their head and feed their kids," said State Rep. Jeff Irwin, D-Ann Arbor.

Rep. Irwin and Congressmen Dingell have interns on their staff who do not get paid. In fact, most of the elected officials in Michigan advocating for a higher minimum wage offer unpaid internships.

The participants at the event included some college graduates, who were in agreement that earning close to minimum wage in a difficult job market with student loans to pay off is a challenge. Several of those graduates were recent University of Michigan graduates now employed at Zingerman's.

The discussion got more complicated when it came to where the money to raise the minimum wage would come from.

One participant, a coffee shop owner and supporter of raising the minimum wage, was at a loss to explain how he would manage if forced to pay workers $2 more an hour. He wasn't sure if he could pass the cost on to customers.

The timing of the event came at a significant turn for Zingerman's. It recently gave its lowest paid workers a $1.50 an hour pay raise. Marketing Manager Peter Sickman-Garner said it was a sensitive issue with more senior staff, but the company made a big effort to communicate the merits and win support.

While it is too soon to tell how the increase will affect the company's bottom line, Zingerman’s might be in a better position than others to offset the cost. Zingerman's is a $50 million a year business, Sickman-Garner said. The sandwich shop sells high-end products with larger profit margins. Most sandwiches cost about $15.

Not all businesses cater to the high-end market and their only choice might be to cut entry level hiring, said F. Vincent Vernuccio, labor policy director at the Mackinac Center for Public Policy.

"Raising minimum wage doesn't equal more pay, it means fewer jobs," he said.

Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center, said certain consumers are unaffected by such debates.

"Zingerman's offers lunch for a segment of the population that can afford purchases like $15 Reubens, which would baffle the average consumer," LaFaive said. "But rich people can afford bad public policy better than the rest of us. The solution to this is not a broad mandate that drives up the prices of other shops and hurts non-rich people, but greater voluntary association that allows for lots of options so everyone can eat."

He added that many workers increase their earnings once they gain skills and experience.

Eric Olsen, who works at Zingerman's, is a case in point. He took a low paying job with the deli when he graduated from the University of Michigan with a degree in literature 10 years ago, but now he is a marketing and communications specialist with the company.


A video report on the event:

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.