Raising the minimum wage has led to increased sales for Wetzel’s Pretzels.
CEO Bill Phelps said on CNBC’s “Squawk Box” that after California increased the state’s minimum wage from $8 per hour to $9 in 2014, “same-store sales were up 8% in the next six months.” When it was raised again by another dollar, the company saw sales increase once more by over 7%. There are 300 Wetzel’s Pretzels locations across the country, and the company is set to open its first one in New York City this Friday.
Phelps says that the correlation he’s seen between minimum wage hikes and increased sales is “not [a] coincidence.” He explained that low income earners got a 10% overall increase but an approximate 30% increase in disposable income, which ended up being great for his company. Wetzel’s Pretzels is an impulse buy and when people have more money to spend, they spend it.
The federal minimum wage currently stands at $7.25. It hasn’t been raised in seven years, which Phelps said is “crazy.” California reached a deal on Monday that will increase the state’s minimum wage to $15 by 2022; New York Governor Andrew Cuomo is working to increase the state’s pay floor to $15 as well.
President of American Enterprise Institute Arthur Brooks also appeared on “Squawk Box.” He said in opposition to Phelps, “The biggest problem with the minimum wage is it destroys jobs at the very bottom, and we don’t create jobs where we would have created otherwise”—a point refuted separately by Clifford Hudson, CEO of Sonic, in his company’s quarterly conference call. Phelps responded to Brooks simply by saying, “Our business has been better since the minimum wage has caught up.”