The minimum wage dominated economic news this week, first with a Congressional Budget Office analysis of the effects of raising the wage, then with Gap Inc.’s decision to raise the minimum wage for its workers to $10 per hour in 2015.
What these developments illuminated was, if nothing else, how much of a Rorschach Test the minimum wage fight has become. Raising the minimum wage is, quite simply, a policy with complex effects that will not uniformly benefit all employers and all workers. But that isn’t stopping wage-hike proponents and opponents from vastly simplifying the issue, and in the Gap and CBO news, there was plenty of ammunition for both sides.
Republicans, for example, confirmed that a higher minimum wage would be a job killer, thanks to one number from the 39-page CBO report: the estimate that raising the minimum wage to $10.10 could subtract 500,000 jobs from the economy. The White House, meanwhile, focused on the finding that a $10.10 wage would reduce the number of people in poverty by 900,000 and boost the pay of 16.5 million workers by the time it would take effect in 2016.
And while the administration trumpeted these numbers, it also took issue with the job-loss finding, saying the CBO may not have taken into account benefits from higher wages such as reduced absenteeism and turnover, as well as higher productivity.
Likewise, both sides in the debate see a messaging opportunity in the Gap’s announcement to raise its wages. The company’s explanation of its decision supported the White House’s argument that higher wages can benefit businesses by reducing turnover: “To connect and enhance the in-store and digital experience for our customers even more, we must attract and retain great talent,” the company said on its website. President Barack Obama even issued a statement commending the company on the move.
But Gap is also adamant that this decision is not political, as CEO Glenn Murphy said in a statement. The company is not taking any positions on the minimum wage debate, says a company spokeswoman. Additionally, there is some fodder for opponents in the Gap’s decision -- the National Retail Federation, which is against a minimum wage hike, says in an email to U.S. News that it “respects” Gap’s decision, which the federation emphasizes was made independently.
“We just want to make sure that whatever [retailers] decide, the decision is based upon their business model, not government mandates,” said Bill Thorne, senior vice president of communications and public affairs at the federation, in the email.
These two high-profile developments sharply intensified rhetoric on the topic when it already seemed to be reaching critical mass: fast food worker strikes late last year brought more attention to the issue, President Obama recently raised wages for federal contractor employees, and Democrats have introduced legislation proposing a $10.10 wage.
All of which is to say that while the minimum wage storyline advanced this week it appears that exactly what happens next is little closer to being decided.
Indeed, the most important minimum wage news this week may have also been the most tepid: Walmart is “looking at” supporting a rise in the minimum wage, Bloomberg reported Wednesday. The massive retailer added that while it opposes the idea of targeting a higher wage to specific employers or not including a phase-in period, it “remains neutral” on minimum wage legislation.
Combine a bitterly divided Congress with a policy that the CBO estimates will have mixed results and it seems there’s no hope for movement on the issue. But the nation’s largest retailer could have the power to shift the debate, should it choose to support a higher wage. It wouldn’t be the first time -- Walmart supported the minimum wage increase that passed in 2007, as Bloomberg noted.
Walmart doesn’t speak for all retailers, and indeed may benefit more from a minimum wage than its competitors. But sitting atop the Fortune 500 also means speaking with a very loud voice, as well as the potential to lead the charge on any political issue. That may mean more influence than any CBO report could create.