The largest private employer in America, a company that possibly recently paid a majority of its employees less than $25,000 annually, is considering supporting an increase in the federal minimum wage.
For Wal-Mart, the move might make a whole lot of sense.
David Tovar, a Wal-Mart spokesman, told Bloomberg Wednesday that his company is “looking at” supporting a federal wage increase. “Whenever there’s debates,” he said, “it’s not like we look once and make a decision. We look a few times from other angles.” For now, the company remains neutral.
Tovar did give one reason why the company might support an increase. Boosting the wage, he said, would mean that some Walmart shoppers would “now have additional income” to spend at the store. At the same time, “it’s really hard to model behavior based on these kinds of changes,” Tovar told Bloomberg.
Wal-Mart has a total of 1.3 million U.S. employees. About 300,000 of those employees earn an average of $8.75 an hour, according to Berkeley’s Labor Research Center. Boosting the federal minimum to $10.10 an hour from the current $7.25, which is the proposal from President Obama and Senate Democrats, could have a big impact just from the store’s own employees.
Some economists are on board with the idea. “If suddenly all these low-wage workers have more income, they are likely to spend that money right away,” David Cooper of the left-leaning Economic Policy Institute told The Huffington Post last fall. “If an employee at McDonald’s or Pizza Hut suddenly has additional income,” he said, “they could spend it at Walmart.”
There’s not yet enough data out there to suggest the move would work, and Wal-Mart would most likely want to have more to go on than just the opinion of a few wage-increase advocates. But for a company with a problematic image when it comes to how it treats its workers, backing a change here could be a gain in itself. CVS isn’t the only U.S. mega-store capable of making a big PR move that could come with serious up-front costs.
And Wal-Mart wouldn’t be alone in rushing out ahead of a possible federal increase: On Wednesday, Gap announced that the company would increase its own minimum wage to $10 an hour by June 2015. That decision will impact about 65,000 U.S. employees. “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,” said the company’s CEO.
Supporting an increase also wouldn’t be a first for Wal-Mart. Back in 2005, CEO Lee Scott urged Congress to raise the federal wage from $5.15 an hour. “We can see first-hand at Wal-Mart how many of our customers are struggling to get by,” Scott said then. “Our customers simply don’t have the money to buy basic necessities between pay checks.” Congress eventually began a series of wage increases, which first took effect in 2007 and culminated in an increase to $7.25 starting in 2009.
A decade ago, Wal-Mart went all in on the argument that it could be a winner as a result of a wage increase. There’s no reason to think the company can’t do it again now.