Why Wal-Mart May Move to Support Minimum-Wage Hike

The company may have a lot to gain from a federal increase.

Demonstrators march and block traffic in a major intersection outside a Walmart store during rush hour September 5, 2013 in Hyattsville, Maryland.
National Journal
Matt Berman
Add to Briefcase
See more stories about...
Matt Berman
Feb. 20, 2014, midnight

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.

What We're Following See More »
AT HEART OF FEDERAL RACKETEERING LAWSUIT
A.T.F. Agents Filled Secret Coffers
1 hours ago
THE DETAILS

Agents for the Bureau of Alcohol, Tobacco, Firearms and Explosives " used a web of shadowy cigarette sales to funnel tens of millions of dollars into a secret bank account," according to a federal racketeering lawsuit filed by a group of tobacco farmers who claim they were "swindled out of $24 million." The agents allegedly used shipments of snack food disguised as tobacco. The Justice Department is reportedly investigating the matter, though as of now it is unclear how widespread the practice was or if it is still ongoing.

Source:
THE QUESTION
How Many Signatures Has the Petition for Trump’s Tax Returns Received?
1 hours ago
THE ANSWER

More than 1 million, setting a record. More than 100,000 signatures triggers an official White House response.

Source:
TIED TO RUSSIA INVESTIGATION
Sen. Collins Open to Subpoena of Trump’s Tax Returns
1 hours ago
THE LATEST

Sen. Susan Collins, who sits on the Intelligence Committee, "said on Wednesday she's open to using a subpoena to investigate President Donald Trump's tax returns for potential connections to Russia." She said the committee is also open to subpoenaing Trump himself. "This is a counter-intelligence operation in many ways," she said of Russia's interference. "That's what our committee specializes in. We are used to probing in depth in this area."

Source:
NPR ALSO LAUNCHES ETHICS WATCH
Obama Staffers Launch Group to Monitor Trump Ethics
1 hours ago
WHY WE CARE

"Top lawyers who helped the Obama White House craft and hold to rules of conduct believe President Donald Trump and his staff will break ethics norms meant to guard against politicization of the government — and they’ve formed a new group to prepare, and fight. United to Protect Democracy, which draws its name from a line in President Barack Obama’s farewell address that urged his supporters to pick up where he was leaving off, has already raised a $1.5 million operating budget, hired five staffers and has plans to double that in the coming months." Meanwhile, NPR has launched a "Trump Ethics Monitor" to track the resolution of ten ethics-related promises that the president has made.

Source:
DOESN’T WISH TO JOIN TRUMP
Christie Turned Down Labor Secretary
1 hours ago
THE DETAILS

Over a meatloaf lunch at the White House last week, Donald Trump offered the job of Labor secretary to New Jersey Governor Chris Christie, a longtime loyalist. Christie promptly turned down the offer, once again signaling that he has no desire to move to Washington, D.C. to join the Trump administration. The job ended up going to Alexander Acosta, who is expected to sail through the Senate confirmation process.

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login