Last night the media were abuzz with news that Walmart may support increasing the minimum wage. But that story may have been … premature. (More)
Last night, Bloomberg News’ Renee Dudley broke the news that Walmart may support increasing the federal minimum wage:
Walmart is weighing the impact of additional payroll costs against possibly attracting more consumer dollars to its stores, David Tovar, a company spokesman, said today in a telephone interview. Increasing the minimum wage means that some of the 140 million people who shop at the chain weekly would “now have additional income,” Tovar said.
In the mid-2000s, Wal,art backed an increase in the federal minimum wage that eventually took effect in 2007. Asked whether Walmart would support another raise in the federal minimum wage, Tovar said: “That’s something we’re looking at. Whenever there’s debates, it’s not like we look once and make a decision. We look a few times from other angles.”
Early this morning, we notified all our employees that starting here in the U.S., Gap Inc. will make a strategic investment to do more for our employees by increasing the minimum hourly rate for our employees to $9 in 2014 and $10 in 2015. This will ultimately benefit about 65,000 store employees.
To us, this is not a political issue. Our decision to invest in frontline employees will directly support our business, and is one that we expect to deliver a return many times over.
The Washington Post’s Lydia DePillis explained why supporting a minimum wage increase would make sense for Walmart:
Walmart has very real influence on its customers’ earnings potential. As Dan Gross outlined in the Daily Beast last year, it employs about 1 percent of those 140 million customers, and its wages set the standard for everyone around it as well. Its core shoppers are also those making minimum wage in other establishments. When they can’t spend much, rather than saving by shopping at Walmart, they’ll go to dollar stores instead – a lesson the company learned when food stamps were cut this year. A hike to $10.10 would mean 900,000 are no longer poor.
Walmart also is much better able to absorb a minimum wage increase than its smaller competitors – especially if everybody has to pay it. The National Retail Federation and National Federation of Independent Businesses stridently oppose any minimum wage hikes, because every single one of their members are smaller than Walmart. A study out of the University of California-Berkeley found that if Walmart raised its minimum wage to $12 and passed 100 percent of it on to consumers, it would only have to raise prices by 1 percent – and they’d still be lower than everybody else’s.
Finally, Walmart may have realized that making its employees a little more happy is probably a good way to tamp down the labor unrest that’s started flaring up with greater frequency in recent months. “With the increase in a minimum wage, you retain good people,” Florida store manager Claudine McKenzie told me. “The higher people get paid, the more satisfied they are.”
But before you cheer, Walmart quickly backtracked:
Another Walmart spokeswoman said Tovar’s comments had been taken out of context and that the retailer had not changed its position on the minimum wage. “We are looking at it, as you would expect any large company. That does not mean we have changed our position,” she said.
All of this is happening amidst continuing debate over the Congressional Budget Office report on the proposed minimum wage increase. Conservatives ignored the 16.5 million low-wage workers who would see a substantial pay hike and laser-focused on the CBO’s estimate that companies may cut a half-million low-wage jobs. Yesterday the National Review’s Reihan Salam speculated that long-term job losses could be higher still, building dire – and conveniently untestable – predictions on the CBO’s cautious footnotes.
Progressives quickly pushed back, with former White House economist Jared Bernstein showing that the CBO’s job loss estimate is higher than the academic consensus, and The New Republic’s Mike Konczal writing that the CBO were “definitely putting a thumb on the scale” in favor of the conservative job loss argument. But CBO chief Doug Elmendorf defended his report, saying his analysts disagreed with economists who say a minimum wage hike would have no discernible effect on hiring.
Ultimately the job loss debate is arguing about how many angels can dance on the head of a pin. If the minimum wage is increased to $10.10 and the economy grows 3.1 million low-wage jobs by 2016 – on pace with projections by the Bureau of Labor Statistics in December – conservatives will argue there would have been 3.6 million new jobs without the minimum wage hike. They won’t be able to prove that, but neither will progressives be able to prove them wrong.
But the benefits for low-wage workers would be immediate and measurable, with millions of hardworking Americans lifted out of poverty … and able to afford a few more groceries, clothes, school supplies, and other items on the shelves at Walmart and other retailers.
It seems absurd to refuse those immediate, measurable benefits for 97% of low-wage workers affected – according to the CBO’s estimate – based on speculative and untestable costs to the other 3% of low-wage workers. But that’s precisely the kind of absurdity that dominates our political dialogue.