Minimum Wage Increase Stalls, but Debate Continues

Raising the federal minimum wage was heavily debated in Congress this past week, with Senate Parliamentarian Elizabeth MacDonough declaring late Feb. 25 that raising the wage from $7.25 to $15 by 2025 would have to be removed from President Joe Biden’s COVID relief package and be considered as a stand-alone bill or as part of other legislation.

Proponents of raising the minimum wage argue raising the threshold would lift many workers out of poverty and provide pay increases to essential workers who have served the nation amid the pandemic. Opponents, meanwhile, say it would harm small businesses and cost 1.4 million Americans their jobs.

Speaking before Congress on Feb. 25, Costco CEO W. Craig Jelinek revealed plans it would be increasing its starting wage to $16 an hour starting the first week of March. “I want to note this isn't altruism,” Jelinek said. “At Costco we know that paying employees good wages ... makes sense for our business and constitutes a significant competitive advantage for us. It helps us in the long run by minimizing turnover and maximizing employee productivity.”

Issaquah, Wash.-based Costco, which has about 558 U.S. stores and 180,000 U.S. employees, raised its minimum wage to $14 in 2018 and $15 in 2019.

Raising starting wages to $15 is not as practical for smaller, independent retailers, said National Grocers Association (NGA) CEO Greg Ferrara in an opinion piece shared with WGB. “Independent community grocers already work within very tight profit margins, usually less than 1%. Large national retailers might have the scale or cash reserves to absorb the new expenses, but smaller supermarkets would suffer, leaving holes in communities that might never be filled,” he said.

Ferrara's statements are supported by the results of a recent poll of 5,089 small business owners by Alignable, a small business network with more than 6 million members.

The poll, conducted between Feb. 13-17, found that 51% of small business owners say the $15-an-hour minimum wage legislation would have a negative impact on their businesses. Only 7% said it would have a positive effect, while 42% said it would have no effect because they already pay more than $15 an hour.

By industry, Alignable found 68% or retailers predict the higher wage would have a negative effect, with 47% saying the effect would be significant, 21% saying it would be slight, 29% saying it would have no effect because they already pay $15 an hour, and 3% saying it woould be positive.

Alignable said there are two factors retailers wish legislators would take into account prior to pushing forward a higher wage: vast differences in the cost-of-living across the country and the fact that many teens and young adults find their first jobs at retail businesses—two reasons also cited by Ferrara.

“The National Grocers Association is telling Congress that any increase in the federal minimum wage must consider employer size and regional differences in the cost of living, and [that] grocers need to be able to pay a training wage for younger, less experienced workers,” Ferrara said.

Small business owners in the restaurant industry, at 64%, also predict a negative effect if the federal wage was increased. Fifty percent said the effect would be significant, while 14% said slight,  7% said positive and 29% said no effect because they already pay more than $15 an hour.