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AFL-CIO Challenges NRF on Minimum Wage

Obama also reiterates call for raising hourly rate.

WASHINGTON — The AFL-CIO called out the National Retail Federation for opposing a proposed hike in the federal minimum wage rate to $10.10 from $7.25 an hour in a letter made public on Wednesday.

This story first appeared in the April 3, 2014 issue of WWD.  Subscribe Today.

AFL-CIO president Richard Trumka called the NRF’s opposition “misguided” and urged the association to follow Gap Inc.’s example in supporting a higher wage rate. Trumka expressed his view in a letter to Matthew Shay, president and chief executive officer of the NRF, dated March 20 but released Wednesday.

In a speech at the University of Michigan on Wednesday, President Obama praised Costco and Gap for paying their employees well above the minimum wage and urged other retailers and businesses to follow in their footsteps. Gap in February said it will increase its hourly minimum wage for U.S. employees to $9 this year and to $10 in 2015.

“Raising wages is not just a job for organizers, it’s not just a job for elected officials, it is also a job for businesses,” Obama said.

In his letter to the NRF, Trumka challenged the group’s statement at the end of January that said that fewer than 5 percent of hourly workers are paid the minimum wage rate and characterized it as primarily a “starting wage that allows teenagers or others with little job experience to enter the workforce.”

The NRF said at the time that an increase in the federal minimum wage would “negatively impact businesses that employ people in entry-level jobs and ultimately hurt the people it is intended to help.” Citing the U.S. Bureau of Labor Statistics’ current population survey, Trumka said half of all workers earning at or below the federal minimum wage are over 25 years old.

Obama echoed that sentiment when he said, “The fact is most people who would benefit from a higher minimum wage are not teenagers taking on their first job. The average age of folks getting paid the minimum wage is 35. A majority of lower-wage jobs are held by women. Many of them work full time, often to support a family.”

Retailers are divided over the federal minimum wage debate. Many merchants argue they already pay well above the federal wage rate and, in some cases, higher state wage rates, for a great majority of their employees.

Shay’s letter to Trumka on Wednesday said, “As the Congressional Budget Office has affirmed, raising the minimum wage will result in job loss at a time Americans can least afford it. There is great irony in the argument that raising the minimum wage is good for workers while, at the same time, passage of such a law puts the federal government in the position of raising the wages for some while eliminating wages for nearly half a million others.”

The nonpartisan CBO report said an increase in the federal wage rate to $10.10 could lead to a loss of 500,000 jobs. But the report also said a counterbalancing, positive effect would be an increase in income levels. It said raising the minimum wage to that level could lead to an increase in the average weekly incomes of about 16.5 million low-wage earners, increase the pay of low-wage earners by a total of $31 billion and lift 900,000 families above the poverty line.