Requiring corporations to follow ‘progressive labor standards’ by providing higher wages and better benefits can help even the playing field for small businesses and workers

Protesters calling for higher wages for fast-food workers stand outside a McDonald's restaurant in Oakland, California December 5, 2013.

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Protesters calling for higher wages for fast-food workers stand outside a McDonald’s restaurant in Oakland, California December 5, 2013.
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REUTERS/Noah Berger

  • Zach Silk is the president of Civic Ventures and recurring co-host on the Pitchfork Economics podcast.
  • In this opinion piece, he says that opposition to a minimum wage raise – especially at the expense of small businesses – has proven to be unfounded in Seattle.
  • Now, Civic Ventures is proposing “progressive labor standards” that require larger businesses – like Walmart – to pay a higher wage, as well as provide good benefits and a solid retirement plan.
  • For more on this topic, listen to the latest episode of Pitchfork Economics.
  • Visit Business Insider’s homepage for more stories.

Trickle-downers love to feign concern that progressive policies are terrible for small business. When we were embroiled in the Fight for $15 here in Seattle, conservatives on both sides of the aisle and plenty of big corporations argued that the increased minimum wage would kill business – and not just any business, the argument went. They claimed it would specifically kill the small restaurant you visit for your wedding anniversary, the neighborhood bookstore where you buy books for your kids, the locally owned hair salon that keeps an open slot for you every month and a half without your asking.

They were wrong. Of course. The fact is that since Seattle raised its minimum wage, we have more restaurants than ever. Two independent neighborhood bookstores opened here in the last year alone. And people are still getting their hair cut at their favorite barber shop. When more restaurant workers make enough money to eat in restaurants, it turns out, that’s good for everyone.

But here at Civic Ventures, we’re always trying to find ways to improve civic products. And we think we’re on to something big. We call it “progressive labor standards,” and it’s based on a huge idea that came to us during Washington State’s campaign to raise the minimum wage.

See, for too long we’ve pushed to raise worker standards in big cities, and then we’ve increased standards a little bit in rural areas to keep up. We bought into the argument that high-wealth locations like Seattle could easily absorb a $15 minimum wage, while rural Washington state might only be able to tolerate a $13.50 minimum wage. This geographic demarcation was rudimentary, but we thought it was the best way to handle a complex problem.

Admittedly, it wasn’t an ideal solution. America’s heartland is arguably more in need of middle-out economics than our thriving urban areas, and it’s bad for everyone if towns and other rural areas continually lag behind cities. But then our founder, Nick Hanauer, realized something: What if, rather than dividing our progressive policies between urban areas and rural areas, we demanded more of the employers who profit the most from the whole economy? What if we applied our labor standards progressively so that the largest and most powerful are held to the highest standard regardless of where they are geographically located?

Zach Silk.

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Zach Silk.
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Courtesy of Zach Silk

We used to expect our largest employers to be leaders and good neighbors. The biggest businesses in any given area used to provide the highest wages, the best benefits, and the strongest retirement plans. Now, the largest employer in most rural areas – Walmart – keeps wages low, offers few to no benefits to part-time workers, and basically leaves workers in the lurch on retirement. And it’s not just Walmart – drive down any small-town main drag in America and you’ll see that most of the businesses are large corporations and famously bad employers: Walgreens, Chevron, McDonald’s, etc. They suck all of the profits out of the community and into the hands of shareholders, executives, and Wall Street.

Progressive labor standards would change all of that. Large employers would be required to pay a higher wage, good benefits, and support a solid retirement plan – no matter where they’re located. Rather than serving shareholders first at the expense of everyone else, our nation’s largest employers would live up to their responsibility as corporate leaders and good neighbors. This would be great for workers and the local economy, obviously, but it would also be a much-needed boost for small business.

We’ve all heard the sad stories of a Walmart moving in to a small town. Businesses on Main Street have been wiped out by the stifling of competition thanks to a system that favors giant businesses which can afford to charge artificially low prices for a while. By eliminating the race-to-the-bottom employment practices of large employers, progressive labor standards clear the way for small businesses to grow and experiment and compete in the same space.

But isn’t this sacrificing the recent advances we’ve made with the $15 minimum wage and other labor standards? Not at all. The minimum wage should still be high for everyone; it should just be higher for international businesses that traditionally earn billion-dollar profits on an annual basis.

A thoughtful implementation of progressive labor standards will benefit small business and workers by re-establishing the importance of the American worker above all. In order to keep a competitive workforce, small business will have to maintain a wage and benefit structure that is somewhat on par with their larger neighboring businesses. But just about anyone who has worked at both a large chain business and a small independent business can tell you that the flexibility and personal touch of a small business is often worth a small pay cut.

Many of America’s mightiest corporations started as small businesses, but small business and entrepreneurship have never fully recovered from the Great Recession. Instead, giant corporations have enjoyed outsize benefits from a system that is increasingly tipped in their favor. Democrats can seize this opportunity to rebuild the Main-Street-to-Wall-Street pipeline that produced so many of the last century’s greatest success stories, while also ensuring that workers get to go along for the ride this time.

If you’d like to learn more about progressive labor standards, the latest episode of Pitchfork Economics features discussions with Boise Mayor Dave Bieter and Washington Post columnist E.J. Dionne about how to better include rural populations into the economy. The idea is new and untested, but the same people who are scoffing now were at one time repulsed by the idea of a $15 minimum wage. We’ll take that as a good sign.

Listen to the podcast: In 2014, venture capitalist Nick Hanauer warned his fellow plutocrats that our growing crisis of economic inequality would lead to an uprising or a dictatorship. Two years later, angry voters elected Donald Trump. In Pitchfork Economics, Nick explores why the pitchforks are coming, who they’re coming for, and how the stories we tell about the economy can change the economy itself.