WASHINGTON — The minimum wage has become an election-year wedge issue.
This story first appeared in the May 1, 2014 issue of WWD. Subscribe Today.
The Senate on Wednesday failed to advance legislation supported by President Obama to increase the federal minimum wage rate to $10.10 an hour, setting it up as a major issue in the Congressional midterm elections in November. The Senate voted 54 to 42 in favor of the legislation, falling short of the 60 votes needed to advance the bill for debate. The vote fell solidly along party lines, with the majority of Democrats voting for it and the majority of Republicans voting against it.
Sen. Tom Harkin (D., Iowa) was the lead sponsor of the bill, which would increase the minimum wage to $10.10 an hour by 2016 from the current $7.25 an hour in three phases and would provide for automatic annual increases linked to changes in the cost of living.
Speaking from the White House after the vote, Obama chastised Republicans for failing to let the bill advance in the Senate and implored voters to turn up the pressure.
“After 14 months since I’ve called on Congress to reward millions of hard-working Americans…to raise the federal minimum wage, we saw this morning a majority of senators saying ‘yes’ but almost every Republican saying ‘no’ to giving America a raise,” Obama said. “By preventing even a vote on this bill, they prevented a raise for 28 million hard-working Americans. They said ‘no’ to helping millions work their way out of poverty.”
Obama praised Gap Inc. for pledging to raise its minimum wage for U.S. store employees to $10 an hour next year, and also pointed to recent action taken by 10 state legislatures and the District of Columbia to raise their minimum rates.
“We have seen big companies like the Gap and small businesses, from a pizza joint in St. Louis to an ice cream parlor in Florida, increasingly choosing to raise wages for their employees because they know it’s good business,” Obama said. “They know that it means employees are more likely to stay on the job, less turnover. It means that they are going to be more productive and customers will see the difference.”
Obama implored voters to raise their voices and pressure their members of Congress. He said, “If your member of Congress doesn’t support raising the minimum wage, you’ve got to let them know they are out of step. And that if they keep putting politics ahead of working Americans, you will put them out of office.”
Phillip Swagel, a professor of international economic policy at the University of Maryland, said: “Democrats are looking to motivate their base, with an eye especially to keep the Senate [in the November elections]. They are playing defense. The minimum wage is an attempt for them to set up the distinction against Republicans on issues of inequality and concern for the middle class.”
Swagel said Republicans can look at the economic data and argue that “this is the wrong time to impose new costs on businesses and lead them to hire fewer new workers and create fewer new jobs. Each side is staking out a position and is happy to stick with it.”
The last increase in the minimum wage was in 2007 when President George W. Bush signed the first such increase in nearly a decade, lifting the rate to $7.25 an hour from $5.15 over two years.
Retailers remain divided over the issue. While Gap said it would raise its wage rate, other retailers did not follow its lead, prompting the AFL-CIO to call on retailers to follow Gap’s example. Wal-Mart Stores Inc., the nation’s largest retailer, has said it is “neutral” in the debate.
David French, senior vice president of government relations at the National Retail Federation, which is opposed to a wage rate increase, said the issue will “work both ways as a wedge” in the midterm elections. French said, “The President is hoping it will be a wedge issue to render Republicans unsympathetic to low-wage workers, but I think the Republicans are quite comfortable with the wedge issue, suggesting that the President doesn’t have a plan for job growth.”