The last time Congress passed a minimum wage increase, Wal-Mart’s chief executive at the time seemed to lead the way.
“The U.S. minimum wage of $5.15 an hour has not been raised in nearly a decade, and we believe it is out of date with the times,” then-chief executive H. Lee Scott Jr. said in a 2005 speech to company executives that connected low wages to troubles for the retailer’s patrons. “Our customers simply don’t have the money to buy basic necessities between paychecks.”
Two years later, Congress approved raising the rate to the current level of $7.25 an hour.
Now that President Obama has proposed raising the minimum wage to $9 an hour, however, the retailing behemoth is more reticent. The company has not yet taken a position on the issue, a spokesman said.
“At this point, we are still reviewing a number of President Obama’s proposals from the State of the Union speech,” the Wal-Mart spokesman said.
In many ways, Obama’s proposal promises to reignite the protests from many business groups that begin every time the prospect of raising the minimum wage comes up.
One of the key players, the National Federation of Independent Business, which counts 350,000 small businesses as members, opposes the hike with the argument that raising the minimum wage will make it harder for businesses to hire and would have little impact on poverty.
“It puts up barriers to job creation,” said NFIB spokeswoman Cynthia Magnuson, citing studies to back up her point. That criticism has been echoed by GOP lawmakers, including House Speaker John A. Boehner (R-Ohio).
But the White House argues that “modestly” raising the pay rate will not stall the jobs recovery. “A range of economic studies show that modestly raising the minimum wage increases earnings and reduces poverty without jeopardizing employment,” according to the White House press office.
As Wal-Mart remains quiet, the nation’s businesses are not completely united in opposition.
At a White House meeting of executives of small and medium-sized business in November that covered a range of economic issues, one advocated for raising the rate.
“I think it’s the ethical thing to do, to come up with a wage that a person can live on, and then index it to inflation,” said David Bolotsky, the founder and chief executive of uncommongoods.com, which sells independently designed goods and employs about 100 people. “It engendered a lot of discussion. [But] this was a group of businesses that I would call generally progressive.”
There are even some, such as Kelly Services staffing agency chief executive Carl Camden, who say the problem with Obama’s proposal is that it doesn’t go far enough.
“It needs to be closer to $12.50 an hour,” Camden said. “How’s that for a weird position?”
Like Bolotsky, Camden argued that businesses that pay only the minimum wage in effect may be getting a government subsidy because those wage-earners could be eligible for government help such as food stamps and Medicaid.
“Right now, we have a system of subsidizing low-wage work in the country,” Camden said.