Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
As pressure to raise the federal minimum wage increases, the U.S. companies with the most minimum wage workers - primarily retailers, restaurant chains, grocery chains, and hotel chains - will need to plan for possible changes.
Some companies are acting pre-emptively. Clothing retailer The Gap Inc. (NYSE: GPS) announced today (Thursday) that it plans to increase its wages to $10 an hour by next year, a change that will affect 65,000 workers.
The current federal minimum wage is $7.25 an hour.
The Gap, which operates such chains as Banana Republic and Old Navy, said it will raise wages to $9 this year and to $10 next year.
The latter figure is suspiciously close to the $10.10 an hour that U.S. President Barack Obama has made his target for the minimum wage. Should Congress act, The Gap will already have the change built in to its business plan.
And then there's Costco Wholesale Corp. (Nasdaq: COST), which favors a higher minimum wage because it will increase costs for rivals. Costco pays its employees a comparatively generous $11.50 an hour to start; average wages are nearly $21.
Other companies that would be affected by a minimum wage increase are mulling their options.
Wal-Mart Stores Inc. (NYSE: WMT) - the nation's largest private employer - and Dollar General Corp. (NYSE: DG) have said they're neutral on the issue but are looking into the possible benefits of a minimum wage raise.
Large industry groups like the National Retail Federation and the U.S. Chamber of Commerce remain opposed to a minimum wage increase, arguing it will cost jobs.
The minimum wage debate over jobs versus improving the lives of millions of the working poor will rage through most of this year, as the Democrats have fixed on it as a central campaign issue for the mid-term elections.
That means the companies with the most minimum wage workers all need to come up with a strategy to deal with whatever may happen. Even if Congress fails to raise the minimum wage this year, having a spotlight on the issue will create image problems no public company wants.
Here are the 10 companies with the most minimum wage workers - meaning the most at stake in the minimum wage debate this year...
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.
The Republicans argument against raising the minimum wage is based on the false premise that if employees cost more than businesses will buy less. The fact is businesses hire employees because they are an asset, not a liability. Employees don't cost a business money, they make it money.
Let's say you're a business owner with a profit goal of $500,000 a month, employing 1000 people that are each worth $500 a month in profit to you, thus meeting your goal. Then the minimum wage changes, raising your monthly overhead by $250 a month per employee.
You have one of two options here.
1. Do what the Republicans have predicted and lay people off. Let's say they're right and you lay off half of your people. Before the wage increase you were making $500,000 a month. After the wage increase, your profit dropped to $250,000. After the lay-off that Republicans claim will be necessary for you to cut cost, you only have 500 employees, each worth $250 a month, reducing your month profit to $125,000 a month. So much for your monthly profit goal huh?
2. Rather than abandoning your original profit goal, readjust your business model to meet it, working toward expanding your business to employ another 1000 people. So before the wage increase you made $500,000 a month. After the wage increase your profit was reduced to $250,000. After hiring another 1000 people, contradicting Republican's predictions, you're back up to $500,000 a month.
Something tells me that when it comes to economics, Republicans are either incompetent or corrupt. My guess is that it's a bit of both. The GOP is a puppet party, Their talking points and policies are all written for the by paid propagandists and lobbyists employed by the multi-national corporations that pull their strings.
I live in an area that has $10 a hour for mim wage already for a while now and everything is fine with the business.
Most of the minimum wage workers are being subsidized with food stamps, assisted living, and now insurance rebates. These programs come out of the pockets of taxpayers. So in reality evey taxpayer is subsidizing these minimum wage paying corporations with their tax dollars which allows the corporations to make millions . However, they do not seem inclined to raise wages to get their employees off welfare or lower their prices. I don't like subsidizing large corporations that screw their employees to keep wages low. The minimum wage should be raised to a living wage that does not require low paid workers to be a burden to the taxpayers.
Wow, Jame's analysis of how business works is an eye opener–it lays bare just how incorrectly people can rationalize when it comes to economics. He argues that in order to keep making the same total profit, employers will be forced to hire more labor when the price of the labor increases and the marginal profit of each employee decreases. How brilliant is that argument! LOL The laws of supply and demand are pretty universal, and with few exceptions when the price of something is increased above its market clearing rate, there will be a decrease in demand. In other words if the minimum wage is raised above where a particular skill level of worker is commanding in the free market, there will be less demand for that labor and there will be more unemployment. That's real economics.