Does increasing workers’ pay also increase profit?

A new economic model, or a return to an old one?

Breaking the Cycle

Bradley J / CC 2.0 Bradley J / CC 2.0

We have been hearing a lot lately about the cycle of poverty and the desire to raise minimum wage.

Proponents of the measure say that a $15 per hour minimum wage will give more purchasing power to a huge swath of workers, leading to an overall economic boost; opponents say that simply increasing the dollar amount ignores the real problems and will only lead to inflation. Worse, opponents say it will bankrupt many small businesses and raise the price of basic goods and services for all consumers.

That’s why I found this article so interesting. Fortune Magazine becomes one of many media outlets covering Bar Marco, a restaurant in Pittsburgh that decided to do away with tipping and raise all of its employees’ wages to $35,000 per year. The result? The restaurant’s profits have tripled in just two months.

Of course, increasing wages is not the…

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