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Retailers Remain Divided in Minimum Wage Debate

Gap Inc.’s plans to raise the minimum wage of U.S. store employees to $10 in 2015 failed to spur other American retailers to do the same.

Gap Inc.’s plans to raise the minimum wage of U.S. store employees to $10 in 2015 failed to spur other American retailers to do the same.

 

Wal-Mart, the nation’s largest employer, said Thursday it was “neutral” in the minimum wage debate. “Wal-Mart is looking at the impact of the potential minimum wage increase, as are many other business,” the company said. “When President [Obama] talks about an increase to $10.10 for federal contractors, we, as a smart business, look at the impact of the potential increase. We’ve been able to absorb any kind of increase, but we want to clear up the fact that Wal-Mart is not a minimum wage employer.”

The company claims that 99 percent of its store employees — both full time and part time — earn an average of $11.81 an hour, which is more than the state and federal minimum wage. “We believe it’s about opportunity, it’s not where you start, it’s where you go,” said a Wal-Mart spokeswoman.

Target was also noncommittal about the minimum wage, saying, “As a leading employer, Target recognizes the importance of considering how best to balance the needs of working Americans while maintaining a healthy business environment conducive to job creation. The vitality of our business, team members, guests and communities remains our focus, and we will thoughtfully engage in these important policy discussions.”

Macy’s said it also doesn’t have a specific position in the debate. “Macy’s hourly wages vary across the country, but on average are already above the minimum wage,” said a spokesman. “And of course, we regularly increase wages through an annual process of merit increases.”

Nordstrom said that the overwhelming majority of all salespeople earn the greater of an hourly rate or commissions from net sales. That means that regardless of how productive they are from selling, they are always paid for all of their time and this is always greater than minimum wage. For salespeople, Nordstrom’s average hourly rate is more than double minimum wage, and through commissions, salespeople have the opportunity to earn even more, a spokeswoman said.

AFL-CIO president Richard Trumka applauded Gap’s decision to raise the minimum wage for its workers and laid down a challenge to Wal-Mart, calling on the retail giant to not only raise its wage rate to $10.10 an hour but also agree to pay its workers a minimum of $25,000 a year.

“The AFL-CIO and all American workers are ready to meet the challenge of falling wages and rising inequality that has been growing painfully for decades,” Trumka said. “The Gap has issued an invitation to Wal-Mart, and offered America a new path forward. Will Wal-Mart respond and join the tens of millions who deserve a better future?”

Gap’s move comes as there is growing pressure nationwide to raise the federal and state minimum wage rates. President Obama urged Congress in his State of the Union address to pass an existing bill increasing the national minimum wage to $10.10 an hour from $7.25 and indexing it to inflation by the second half of 2016. He also signed an executive order last week to require federal contractors to pay federally funded employees a “fair wage” of at least $10.10 an hour.

“The National Retail Federation has been and remains opposed to efforts that raise the minimum wage,” said NRF senior vice president Bill Thorne. “Just when the economy seems to be showing signs of recovery, it makes absolutely no sense that the government would seek to enact such a sweeping change that would seriously impact business owners, especially small businesses. Gap Inc. decided that raising their wage makes sense for their business, and we certainly respect that. Our members look at their business models constantly and make wage decisions. It should be an individual business decision, not another burdensome government mandate.”

Nancy Green, general manager of Athleta, a Gap brand, said the issue of the minimum wage is one that’s been on the mind of chairman and chief executive officer Glenn Murphy for some time. “He felt it was the right thing to do to invest in talent,” she said. “We’ve been thinking about the digital and in-store experiences and how important the customer-service element is and how important it is to build strong teams. This is the entry point to attract the best people and retain them.”