Skip to main content

By Alexander Kaufman
Huffington Post, April 2, 2015

Some of the country’s biggest employers are finally raising wages amid mounting pressure from protesters and a hardier job market.

McDonald’s on Wednesday became the latest major company to give workers -- albeit a fraction of its total workforce -- a pay bump that will lift average hourly pay to $9.90 from $9.01. The move, which will go into effect on July 1, follows a similar change made in February by Walmart, the nation’s largest private employer.

What, after years of stagnant wage growth for low-paid workers, is causing corporations to shell out more to their staff?

For some companies, the pay raise has been compelled by a sense of ethical leadership. Aetna Chairman and CEO Mark Bertolini raised the minimum wage at the health insurance company to $16 per hour after reading French economist Thomas Piketty’s bestseller Capital In The Twenty-First Century, which warns of the increasingly wide gap between rich and poor.

Other firms have been motivated by the desire to maintain market share.

“We’ve known for a really long time that if you look like a good corporate citizen, that’s good for sales,” Bob Keener, spokesman for the nonprofit Business for a Fair Minimum Wage, told The Huffington Post. “If you make a big public announcement about how you’re going to raise wages, you look like a good corporate citizen, and that’s going to increase your sales.”

Competition is also driving wages up. Call it a wage-hike domino effect. As the U.S. economy continues to add jobs, even retailers who claim to keep prices low in part by minimizing payroll expenses must increase how much they pay their workers to avoid losing them.

Since apparel giant Gap Inc. raised its minimum wage to $9 per hour last year, the company has seen a major influx in applicants, The Washington Post reported. ...

Plus, higher wages are good for business. Sales at McDonald’s and Walmart have languished over the past year, and boosting wages could actually be part of a strategy to help turn things around.

For every extra $1 a company spends each month in payroll, it could get back anywhere from $4 to $28 in monthly sales, according to a 2007 study by professors at the Massachusetts Institute of Technology, the University of Pennsylvania’s Wharton School and elsewhere. ...

Read more

 

Copyright 2015 Huffington Post