FYI, it can work this way - 'doesn't' is not the same thing as 'can't'. To give an example, Sam's Club - from the same fine people who depend upon the government to subsidize their payroll at Wal-Mart - pays really low wages. Costco, on the other hand, pays a living wage...and Costco is clearly outperforming Sam's Club.
Here's why (from the Harvard Business Review):
Costco’s practices are clearly more expensive, but they have an offsetting cost-containment effect: Turnover is unusually low, at 17% overall and just 6% after one year’s employment. In contrast, turnover at Wal-Mart is 44% a year, close to the industry average. In skilled and semi-skilled jobs, the fully loaded cost of replacing a worker who leaves (excluding lost productivity) is typically 1.5 to 2.5 times the worker’s annual salary. To be conservative, let’s assume that the total cost of replacing an hourly employee at Costco or Sam’s Club is only 60% of his or her annual salary. If a Costco employee quits, the cost of replacing him or her is therefore $21,216. If a Sam’s Club employee leaves, the cost is $12,617. At first glance, it may seem that the low-wage approach at Sam’s Club would result in lower turnover costs. But if its turnover rate is the same as Wal-Mart’s, Sam’s Club loses more than twice as many people as Costco does: 44% versus 17%. By this calculation, the total annual cost to Costco of employee churn is $244 million, whereas the total annual cost to Sam’s Club is $612 million. That’s $5,274 per Sam’s Club employee, versus $3,628 per Costco employee.
So paying a living wage to your workers - instead of paying the 'going rate' - is actually SAVING Costco beaucoup bucks. So much for your theory that "that's not the way the world works".
No argument there - hey, I wipe butts for a living, and I'm doing pretty well. But as I demonstrated above, that's no reason not to pay a living wage.
Think about it - what's the turnover at Mickey D's? Pretty doggone high, right? But what would happen if, say, McDonald's was to minimize its turnover rate just as Costco has by paying its people a living wage? Not only would they save money just as Costco does, but they could also use the practice as an advertisement, for there's a LOT of people out there (including me) who would prefer to patronize a business that pays a living wage even if they have to charge 25 cents extra per item.