President Obama threw down the gauntlet in January’s State of the Union address, challenging Congress to raise the federal minimum wage to $9/hour, citing a rebounding economy and stagnating inequality.
The current federal minimum is at $7.25/hour, and it’s an uphill battle of red tape, political maneuvering, and competing ideologies to get it raised. However, Congress may be late to the table, as several retailers have taken matters into their own hands.
Walmart, the country’s largest retailer, opened the flood gates a few weeks ago when it announced that it would be raising its minimum pay to $9/hour for half a million workers. With unemployment creeping down to 5.7 percent from 9.8 percent five years ago, the job market is strong in 2015 and retailers like Walmart are facing tough competition from companies with above-average wages like Costco.
Times are a-changing
Nobel Prize-winning economist Paul Krugman chimed in immediately after the news broke, calling it a win for employees and the economy as a whole, arguing in The New York Times that, “Walmart is so big that its actions will probably lead to raises for millions of workers employed by other companies.”
“I’ve been telling people [that] Walmart just raised the federal minimum wage,” says Maryam Morse, senior principal and retail practice leader for Hay Group in an NBC News article.
Credit where credit is due: Once a very public underachiever on worker pay, Walmart has defied expectations, recast itself as an industry leader on wage policy, and others are following suit.
Good Guy TJX
TJX, the parent company of TJ Maxx, Marshalls, and HomeGoods, recently announced that its full- and part-time hourly U.S. employees will earn at least $9/hour starting in June, with workers who have been with the company over six months guaranteed $10/hour. Gap Inc., the ever-present clothier, is also aiming for a $10 hourly minimum in 2015.
Earlier in February, Ford Motor Company reached a new contract with labor that authorized an increase of $19,000 (50 percent) for nearly 500 entry-level workers, citing a recovering auto industry. TJX even projected that its earnings-per-share growth would be 4 percent lower in 2016 because of the wage increase.
Shareholder needs are being superseded by employee needs, and that’s a refreshing twist for the times we live in. Eat your heart out, lawmakers.
A new age of wages?
“This pay initiative is an important part of our strategies to continue attracting and retaining the best talent in order to deliver a great shopping experience for our customers, [and] remain competitive on wages in our U.S. markets,” said TJX CEO Carol Meyrowitz.
A raise in the minimum wage is no longer a nice idea – it’s the guiding strategy for 2015 and beyond. It’s might be a new age of high wages.
This was originally published on the Michael C. Fina blog.