How do employers benefit from a higher minimum wage?

Raising wages reduces costly employee turnover and increases productivity. When the minimum wage goes up, employers can reap such benefits without being placed at a competitive disadvantage, because all companies in their field are required to do the same.

Research has documented how, especially in low-wage industries, raising wages reduces turnover, because workers who are paid more stay with their current employer longer.

study of the effect of a wage increase for workers at the San Francisco Airport, for example, found that annual turnover among security screeners plunged from 95 percent to 19 percent after their hourly wage rose from $6.45 to $10 per hour.

This reduced labor market churn yields significant savings for employers by reducing recruitment, re-training, and re-staffing costs, which studies and trade association analyses have found to be significant, even in low-wage sectors.