At the very least, the minimum wage should be increased from the current $7.25 an hour to $10.50 — and to $15 in areas of the country with a higher cost of living. Had the federal minimum simply kept up with inflation from the late 1960s, it would already be well over $10 today.
Contrary to the predictable pontifications of conservative pundits, such a raise won’t cause many low-wage workers to lose their jobs.
Unlike industrial jobs, these sorts of retail service jobs can’t be outsourced abroad. Nor are they likely to be replaced by automated machinery and computers. The service these workers provide is personal and direct: Someone has to be on hand to help customers and dole out the burgers.
And don’t believe critics who say any wage gains these workers receive will be passed on to consumers in higher prices. Big-box retailers and fast-food chains have to compete intensely for consumers. They have no choice but to keep their prices low.
This means wage gains for low-paid workers are most likely to come out of profits – which, in turn, would slightly reduce returns to shareholders and compensation packages of top executives.
That wouldn’t be such a bad thing.
According to a report by the National Employment Law Project, most low-wage workers are employed by large corporations that have been enjoying healthy profits. Three-quarters of these employers (the fifty biggest employers of low-wage workers) are raking in higher revenues now than they did before the recession.
McDonald’s — bellwether for the fast-food industry — posted strong results during the recession by attracting cash-strapped customers, and its sales have continued to rise. McDonald’s CEO, Don Thompson, was awarded a big-whopper of a compensation package last year, valued at $13.8 million.
Yum!Brands, which operates and licenses Taco Bell, KFC, and Pizza Hut, has also done wonderfully well. Its CEO, David Novak, received $11.3 million in compensation last year. The company enjoyed a 13 percent gain in annual earnings — its eleventh straight year of double-digit growth. Shareholders got a return of 15 percent.
Walmart – the nation’s largest employer – also continues to grow despite a sluggish economy, and pays its executives handsomely. The total compensation of Walmart’s CEO, Michael Duke, was $20.7 million last year, up from $18.1 million in 2011. Total sales rose 5 percent to $466.1 billion. Earnings per share rose 10.6 percent.
Not incidentally, the wealth of the Walton family – which still owns the lion’s share of Walmart stock — now exceeds the wealth of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.
It would not be a tragedy if some of these shareholder returns and compensation packages had to be trimmed in order that low-wage workers at McDonald’s, KFC, and Walmart got a raise.
Indeed, if this nation is to reverse the scourge of widening inequality, such a trimming is necessary.