Business interests view Wal-Mart’s newly pledged pay raise as new ammunition in the fight against an increase in the federal minimum wage.
Earlier this week, the discount retail giant announced it would raise its starting wage to $9 an hour — $1.75 above the federal minimum wage of $7.25 — in its U.S. stores by April.
The move won accolades from the White House and other proponents of higher wages for hourly workers.
But business groups are also pouncing on the action, saying it is evidence that decisions about employee wages are best left to the private sector — not the federal government.
“Our members feel this is the perfect example of the free market working the way it is intended to work,” said Jack Mozloom, a spokesman for the National Federation of Independent Business (NFIB).
“Wal-Mart made a decision based on what is best for Wal-Mart and our members want that benefit of the doubt.”
Though they want to, Mozloom said not all businesses could afford to do what Wal-Mart is doing.
“Small business owners typically rely more heavily on entry level, hourly workers,” he said. “If they were forced by the government and busy-body politicians to keep up with Wal-Mart than they would lose their customers because they would have to raise prices or lay off employees.”
President Obama has called on Congress to increase the federal minimum wage to $10.10 an hour, but Republicans have argued that forcing business to pay employees more could have adverse effects.
In lieu of congressional action — and at Obama’s direction — the Labor Department issued new regulations in October that require federal workers to be paid at least $10.10 an hour.
On Friday, White House spokesman Josh Earnest touted Wal-Mart’s move as evidence that raising wages makes economic sense for corporations.
“What these executives concluded was that offering more flexible scheduling policies to their workers and raising their wages was good for their bottom line and good for business.”
Business groups cautioned against such broad conclusions.
Randy Johnson, the senior vice president of labor, immigration and employee benefits for the U.S. Chamber of Commerce, said a minimum wage mandate would reduce job growth.
“When businesses have the capability of raising wages and improving employee benefits without compromising the jobs of other employees they do exactly what Wal-Mart has done,” he said in a prepared statement last week. “This is the responsible way to address the minimum wage.”
Wal-Mart’s decision to increase pay for nearly 500,000 full-time and part-time workers, the National Retail Federation said shows the power of the marketplace.
“Government mandates that arbitrarily require businesses to implement politically driven policy are unnecessary and, in fact, create hurdles to job creation, curtail capital investment and pose as barriers to a sustained economic recovery,” NRF President and CEO Matthew Shay said in a statement.
But advocates for a federal hike in minimum wage say if Wal-Mart’s decision shows anything, it’s that collective bargaining works.
“While the increase in wages is not anywhere near sufficient in terms of a living wage, the largest private-sector employer and the world’s richest family are having to be responsive to what Wal-Mart workers have been demanding,” said Damon Silvers, AFL-CIO’s policy director and special counsel.
Wal-Mart workers began demanding that the company increase minimum wages to $15 an hour back in 2012 and have participated in labor protests for expanded worker rights every Black Friday since.
“Wal-Mart making this decision will put pressure on other low-wage employers and not just in retail,” Silvers said. “This will put pressure on the dollar store, fast food, on home health care employers, on hotels and restaurants. Across the low wage economy this is going to have some impact.”
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