To Raise or Not to Raise Wages?

Following Gap’s announcement this week that it will set the minimum wage for workers at $9 an hour this year and $10 an hour in 2015, big store chains from Wal-Mart to Sears said Thursday that they will continue to evaluate their wages.

But ultimately, industry watchers say it will depend greatly on whether or not they decide that they need to in order to remain competitive.

“I think more people will wait on the sidelines and not take on additional expenses,” said Ken Perkins, president of RetailMetrics, a retail research firm. “It’s a gamble on Gap’s part.”

Gap’s move comes at a time when the plight of hourly workers has made headlines. Protests by fast food workers asking for higher pay last year in cities across the country made headlines. Several states are considering raising their minimum wages. And President Obama is endorsing a bill in Congress that includes a proposed increase in the federal minimum wage to $10.10 an hour by 2016.

There’s no question that whatever the major players in the U.S. retail industry decide to do will have a big impact on the job market. In fact, the industry supports one in every four U.S. jobs, representing about 42 million workers.

Still, the industry has mostly shunned the idea of higher wages. The National Retail Federation, which represents some of the nation’s largest retailers, is fighting Obama’s proposal, saying it could force them to raise prices or reduce workforce.

Wal-Mart Stores Inc., the nation’s largest private employer with 1.3 million U.S. workers, said that less than one percent of its workforce is paid minimum wage. It said its average wage for both full- and part-time hourly workers is nearly $12 an hour.

“Our wages are determined on a market by market basis and we continually look at them in order to remain competitive,” said a Wal-Mart spokesman.

This article appeared in print on page 8 of the February 21st, 2014 edition of Hamodia.