Walmart-owned Sam’s Club told workers this week that it wants them “to feel valued” and be “treated with fairness, kindness, and empathy.” That messaging came alongside a chain-wide minimum wage raise to $15 an hour. Around 95% of the warehouse chain’s workers were already making at least that, but the aim is to have the company’s “average hourly rate” established at over $17.
“We want you to be competitively paid, whether you’ve found your destination job as, say, a forklift operator, meat cutter or cake decorator, or you’re just starting out and eager to climb the ladder,” CEO Kath McLay wrote in a memo to workers.
The EPI also found that “rising costs of living” have “diminished the purchasing power of the federal minimum wage” by 18% since 2009, leading to “a devastating fall in the earnings of the lowest-wage workers.”
Activists are currently focusing on certain business giants that haven’t yet established an hourly baseline of $15.
“We won’t stop fighting until McDonald’s and other fast-food companies pay at least $15 an hour, which is the bare minimum workers anywhere need to survive,” Patricia Mosley, a Michigan-based McDonald’s worker associated with the labor movement Fight for $15 said in a statement sent to Insider.
“McDonald’s USA recently announced an average 10 percent pay increase at its corporate-owned restaurants, while many franchisees are exploring increased wages, offering tuition assistance and piloting backup childcare programs,” a McDonald’s USA spokesperson said in a statement sent to Insider.
Retail workers in particular have acquired more leverage through the coronavirus pandemic. Some have rage-quit their jobs, in response to frustrating working conditions and abusive customers. Certain workers have begun “ghosting coasting,” where they show up for work long enough to get paid, only to then disappear. Retailers are beginning to address how the ongoing labor shortage may affect the holiday season, and that often means offering higher pay and signing bonuses to attract candidates and bolstering retention through competitive benefits. Companies like Amazon and Walmart have doubled down on perks for workers, like educational benefits.
While it may not go a long way in practice, a $15 baseline wage remains a key goal for some activists and workers. Labor activist group United for Respect’s corporate accountability director Bianca Agustin said in a statement to Insider that raising base pay to $15 an hour “would be the right thing to do and smart business practice, so associates can help ensure the safety and profitability of Walmart stores in the near and long term.”
Walmart’s current average wage across US stores is $16.40. Walmart worker and UFR member Peter Naughton said that he hopes his employer will raise its base pay, as doing so could change employees’ lives and spur wage increases from rival retailers.
“I might be able to get my own apartment,” Naughton said. “I’d have more money to spend. In fact, that would help corporations like Walmart because people would have more money to spend.”
Labor activists have long had a $15 wage as a goal, especially in service-sector industries like food service and retail. “Nine years later, we’ve made huge strides, and now we’re seeing wages on the rise for some restaurant and grocery workers,” Jamila Allen, a worker at Freddy’s Frozen Custard and Steakburgers in Durham, North Carolina, and a leader in the Fight for $15 and a Union, said in a statement to Insider.
The following chart shows just how much wages have changed during the pandemic for non-supervisory restaurant and grocery workers:
As seen in the chart, average hourly earnings for supermarket and other grocery store workers have gone up from $14.06 in February 2020 to $15.04 in June 2021, just passing $15. For restaurant workers, average earnings have increased from $13.86 in February 2020 to $15.31 in June 2021, passing the $15 mark in May 2021.
The data comes just months after Democrats failed to pass a $15 minimum wage in President Joe Biden’s American Rescue Plan, with eight Democrats voting against the inclusion of the wage hike. The federal minimum wage, which has remained unchanged since 2009, is just $7.25 an hour.
Meanwhile, a slew of businesses have raised their wages to be around – or above – $15 an hour. Most recently, CVS said it will be raising its minimum wage to $15 an hour by July 2022. Those wage raises at big chains don’t just impact their own workers: Big business raising wages can also raise pay for workers in the surrounding area, according to a March working paper.
An important distinction, though, is that the average wage doesn’t capture all workers. As the Washington Post notes, half of workers in those industries are still making below that figure. And recent research found that a $15 minimum wage still isn’t a living wage for many families.
America has a wage growth shortage, not a labor shortage
Experts like Heidi Shierholz, the director of policy at EPI, say that hiring shows the labor is there – so the shortage is more one of wage growth. Shierholz previously told Insider that raising the minimum wage could help solve labor market tightness.
“With major employers like Chipotle and McDonald’s and Walmart all raising their wages, that signals that they believe that they’re going to face a long-term challenge in attracting workers because they wouldn’t be bumping up wages if they didn’t believe that this is going to be a long-term issue,” Daniel Zhao, senior economist at Glassdoor, told Insider.
Allen said that Fight for $15 and a Union is still “keeping pressure” on the Senate to take action on the federal minimum.
“We’re fighting for a society where every worker in every community can thrive, and right now millions of Black and brown workers are being left behind, especially in the Midwest and here in the South.”
Remarks from a McDonald’s earning calls shows one strategy that may have helped the fast-food giant hire workers amidst the US labor shortage: Paying more.
In a Wednesday earnings call, CEO Chris Kempczinski linked the chain’s announcement of a wage hike to more ease in filling positions. McDonald’s was one of a myriad of chains struggling to hire workers in April, with one location paying prospective workers $50 to simply show up for an interview.
Insider’s Kate Taylor reported in May that the company was raising pay at corporate-owned locations by an average of 10%, an announcement that came after executives alluded to changes in compensation amidst a tight labor market.
“We’re seeing wages going up about 5% or so in our US restaurants. And that is also helping improve the situation,” Kempczinski said. He added: “After we made our announcement back in April, we’re getting close to full staffing levels.”
Something else that may have played a role, per Kempczinski: States winding down enhanced unemployment benefits early. He said that “applications in states that have ended early the federal stimulus have tended to do better,” and that he believed application rates would pick up as those benefits wind down. Taylor also reported in April that some McDonald’s franchisee were saying those enhanced benefits were making it difficult to find workers.
“What’s going on here? When people can make more staying at home than going to work, they will stay at home,” franchisees in the National Owner’s Association wrote in that April letter. “It’s that simple. We don’t blame them. We fault the system.” While it’s not really as simple as “people don’t want to work,” some Republican states that cut unemployment early are recovering faster.
It’s yet another entry in the labor shortage chronicles, where businesses and economists alike try to figure out how to lure workers back. The Washington Post’s Eli Rosenberg reported on a handful of businesses that raised wages to $15 an hour; they succeeded in luring in new workers and bringing turnover down.
Heidi Shierholz, the director of policy at the left-leaning Economic Policy Institute, previously told Insider that raising the minimum wage could be one simple solution to the labor shortage. Another prominent figure agrees with her: President Joe Biden recently said that businesses will need to pay $15 or “be in a bind for a little while.”
But the minimum wage hasn’t budged in 12 years, and recent attempts to increase it to $15 per hour have failed. Some McDonald’s workers have made their stance on that clear, striking against “starvation wages.”
Everywhere you look in the economy, there seems to be a shortage. The important things missing from shelves can be explained by factors like backed-up supply chains and a shipping crisis.
But another shortage that’s emerged – with increasing prominence as America’s recovery continues its long and winding path – is labor. Millions of workers are still out of work, even though businesses are reopening and want to hire.
One solution has to do with wages, and simply whether they’re enough to get people to do certain jobs after a pandemic. May’s jobs report showed wages on the rise for leisure and hospitality workers, but also showed workers quitting at the fastest rate documented in 20 years. While they saw significant pay jumps – by 7.2% from January to May – that only brought average hourly earnings up to $15.68.
“The wage growth that we’ve seen, say in leisure and hospitality, over the recent months, it’s so little more than just getting those wages in that industry back to where they would have been if COVID hadn’t happened,” Heidi Shierholz, the director of policy at the left-leaning Economic Policy Institute, told Insider. She said talk that such workers are getting more leverage may be “overstated,” and it probably won’t be sustained or permanent.
GOP governors in 25 states have decided that it’s too much leverage anyway, and that federal unemployment benefits in place for much of the pandemic have run their course. They’ve moved to end them months before their September expiration in President Joe Biden’s stimulus. It’s a decision that JPMorgan said is “tied to politics, not economics,” noting that many of these states didn’t have more job openings than jobless people.
Shierholz, a veteran of the Obama administration as chief economist at the Department of Labor, said broad reform is necessary in the labor market, and raising the minimum wage is a key aspect. That could both bring workers back and let higher wages stick, even after enhanced unemployment benefits taper off in September.
“That’s smart, and it’s good economics,” Shierholz said. She also said that things like passing the PRO Act – legislation that could both strengthen unions and offer greater protections to nonunionized workers – would aid recovery.
Shierholz previously told Insider that prematurely ending unemployment benefits could stifle the recovery, especially since workers receiving those benefits are putting that money back into the economy. She said that if the concern is higher benefits keeping workers from work, ending benefits may not be the best route.
“You could quote unquote ‘deal with that’ by cutting off unemployment insurance benefits, which has all these terrible implications” – like stifling recovery and leave millions without income – “or you could do something like raise the minimum wage,” she said.
Boosting wages to $15 may be helping with hiring and retention
Anecdotal evidence suggests that the businesses that did raise wages to $15 an hour succeeded in luring in new workers and boosting morale while cutting turnover. The Washington Post’s Eli Rosenberg spoke with several business owners who had done just that. Progressives have long wanted to raise the federal minimum wage to exactly that $15-per-hour number.
At the 5th Street Group – which owns several restaurants in Charlotte and Charleston – raising starting wages to $15 an hour, and enacting new tipping measures for staffers who aren’t normally tipped, helped the group go from being 50% to 60% staffed to nearly fully staffed in a matter of three weeks, according to the Post.
However, the likelihood of a $15 minimum wage being enacted anytime soon is low. Progressives led by Sen. Bernie Sanders pushed for its inclusion in President Joe Biden’s American Rescue Plan, but the measure ultimately didn’t survive under reconciliation rules. Eight Democrats voted against it, signaling even party-line support was not quite there. Talks on what, exactly, a minimum wage hike should be have also stalled recently.
The federal minimum wage is still $7.25. Although the above map shows that many states have opted to increase the minimum beyond that level, several remain at the federal rate.
Rhode Island recently passed a bill to raise the minimum wage to $15 by 2025, becoming the ninth state to pass a $15 minimum wage.
“Take a look at nationally – right now, states that are taking away the unemployment benefit of $300,” Gov. Dan McKee said in a press conference after signing the minimum wage bill into law. “Those states are at $7.25 cents an hour. So Rhode Island is a leader on this.”
But while raising the minimum wage might be key to an equitable recovery, according to Shierholz, it doesn’t look like the proposition is going anywhere anytime soon – even if it could help solve the labor shortage that’s holding back a full economic recovery.
The wage hikes seen in recent weeks offer an encouraging hint of what the new US economy can look like, President Joe Biden said Thursday.
Large-scale employers have been raising their minimum wages as they look to attract workers through reopening. Companies such as McDonald’s, Amazon, and Under Armour have rolled out higher starting wages through May. The hikes appear to be in response to unexpected tightness in the labor market.
While millions of Americans remain unemployed, those on the sidelines are holding out for higher compensation before rejoining the workforce.
Republicans have blamed bolstered unemployment benefits for the labor shortage, saying they disincentivize jobless Americans from seeking work. Biden, however, sees a more encouraging trend behind the wage hikes. The raises “aren’t a bug” but “a feature” of the post-pandemic economy and show that workers are finally regaining bargaining power, the president said.
“Instead of workers competing for each other for jobs that are scarce, we want employers to compete with each other to attract workers,” Biden told a crowd in Cleveland, Ohio.
He continued: “That kind of competition in the market doesn’t just give workers more ability to earn a higher wage, it gives them the power and demand to be treated with dignity and respect in the workplace.”
Critics of the recent wage hikes have also deemed them a symptom of rampant inflation that could spark a new economic crisis. Stronger inflation typically does translate to higher pay, as workers demand greater compensation to counter rising prices.
Biden instead linked the raises to a reversal in long-stagnant wage growth. Worker salaries and wages have made up a smaller and smaller share of US economic output since the 1960s. At the same time, compensation for CEOs and shareholders has boomed.
Boosting compensation for workers at the bottom of the pay scale is long overdue and poses little risk to the recovery, the president said Thursday.
“We have more than ample room to raise workers’ pay without raising customer prices,” Biden added.
While several companies have announced their own wage hikes, the latest efforts to introduce a higher minimum wage at the federal level have so far failed. The Senate voted down an amendment to raise the federal wage floor in March, and lawmakers haven’t made substantial progress toward such a hike since. And with eight Democrats defecting from the party and voting against the proposal, such legislation faces an uphill climb at least until the 2022 midterms.
Although a federal minimum wage increase to $15 an hour didn’t make it into the stimulus bill, Senate Democrats are meeting today to find a way to get it done somehow, a Democratic source told HuffPost.
According to the source, Senate Majority Leader Chuck Schumer will meet with the progressive senators who led the push for the $15 minimum wage increase, including Bernie Sanders of Vermont, Patty Murray of Washington, and Ron Wyden of Oregon. But the meeting will also include all seven moderate Democrats who voted against the $15 minimum wage hike: Joe Manchin of West Virginia, Kyrsten Sinema of Arizona, Chris Coons of Delaware, Tom Carper of Delaware, Jeanne Shaheen of New Hampshire, Maggie Hassan of New Hampshire, and Jon Tester of Montana.
When the Senate parliamentarian voted against including a minimum wage increase in the stimulus bill, Sanders – who co-sponsored a bill to raise the wage to $15 an hour by 2025 – promised he wouldn’t give up on efforts to get the job done.
“But let me be very clear: If we fail in this legislation, I will be back,” Sanders told reporters on March 1. “We’re going to keep going and, if it takes 10 votes, we’re going to raise that minimum wage very shortly.”
And in a call with reporters on Friday, progressive lawmakers, including Rep. Ro Khanna of California, joined labor leaders and activists to strategize how they could pass a minimum wage increase through Congress, whether by reconciliation or attaching it to a must-pass bill.
“There needs to be a clear plan, a clear strategy,” Khanna told The Washington Post in an interview. “It’s not enough to just say, well, we’re committed to this, we want to get it done.”
Manchin has previously said that a $15 minimum wage increase is too high and advocated for an $11 per hour increase instead. However, Sanders has remained adamant on achieving a $15 per hour increase to lift Americans out of poverty.
“In my mind, the great economic crisis that we face today is half of our people are living paycheck to paycheck,” Sanders said on Twitter on March 5. “And many millions of workers are, frankly, working for starvation wages. Raising the minimum wage is what the American people want, and it’s what we have got to do.”
Of the 32 million workers who would receive a raise under a $15 minimum wage, 24 million are in states where senators voted against it, according to a new report from the left-leaning Economic Policy Institute (EPI).
That works out to 75% of all the workers who would benefit from a higher federal minimum. The 32 million workers who would be impacted represent 21% of the overall workforce, according to the report.
Sen. Bernie Sanders’ push to include a provision for raising the wage to $15 by 2025 was voted down on Friday. Seven Democrats – including the moderates Joe Manchin and Kyrsten Sinema – joined Republicans in voting down the measure. Also voting against was independent Angus King of Maine, who caucuses with the Democrats.
The EPI report found that increasing the minimum wage to $15 by 2025 would also benefit America’s essential and frontline workers. It would be a wage hike for 19 million of them, around 60% of all workers impacted.
A $15 minimum wage has broad support. In an Insider poll, over 60% of respondents said they would definitely or probably support a $15 minimum wage. Respondents were more split on when an increase should come into effect: 39% said that, were the increase to go into effect, a “$15 minimum wage should be implemented immediately.” Conversely, 50% would “prefer a phased rollout, gradually raising the minimum wage annually to $15 in 2025.”
Sanders’ Raise the Wage Act would have raised the federal minimum wage to $15 by 2025. Even that schedule wasn’t quick enough for some minimum wage workers.
“We’ve been talking about this issue for years, and not just a couple of years,” Murray told Insider after her testimony. “That’s why I’m saying: When is the time gonna come? 2025 is too late for me, as I see it, for all workers across the country. “
Overall, the EPI report finds that the $15 increase by 2025 would have resulted in an annual pay increase of $3,300 for those working year-round.
Eight Senate Democrats broke from the majority and voted on Friday against the $15 minimum wage hike proposed by Sen. Bernie Sanders.
The vote scrapped Sanders’ push for the provision to be added back into the stimulus package being negotiated in Congress, after Senate parliamentarian Elizabeth MacDonough ruled that it should be nixed.
MacDonough ruled that the minimum wage increase violates the “Byrd Rule,” which prohibits “extraneous” policies as part of a reconciliation bill or resolution.
“It is hard for me to understand how drilling for oil in the Arctic National Wildlife Refuge was compliant with the Byrd rule, but raising the minimum wage is not,” Sanders said.
President Joe Biden has also expressed support for gradually raising the minimum wage to $15 an hour.
The bill was abandoned in the Senate after eight Democrats voted against the proposal:
Sen. Joe Manchin of West Virginia
Manchin, a moderate Democrat who holds Byrd’s former Senate seat, had previously expressed disapproval of the minimum wage hike, standing with the Senate parliamentarian MacDonough.
“My only vote is to protect the Byrd Rule: Hell or high water,” the senator told CNN in February. “Everybody knows that. I’m fighting to defend the Byrd Rule. The President knows that.”
Sen. Kyrsten Sinema of Arizona
Sinema, another key moderate who had previously thrown cold water on the minimum wage hike, also voted against the proposal on Friday. To represent her “nay” vote, the Arizona senator dramatically voted with a “thumbs-down” to the Senate clerk, sparking backlash from progressive senators.
Despite her “thumbs-down” vote, Sinema said in a statement that she would be open to renegotiating a minimum wage increase “separate” from the relief package.
“Senators in both parties have shown support for raising the federal minimum wage, and the Senate should hold an open debate and amendment process on raising the minimum wage, separate from the COVID-focused reconciliation bill,” Sinema said in a statement.
Sen. Jon Tester of Montana
Tester voted against the proposal on Friday. Manchin said he and Tester hoped the spending in the stimulus package as a whole would be better “targeted” and “helping the people that need help the most.”
Sen. Jeanne Shaheen of New Hampshire
Shaheen’s office told Boston.com, the news site for the Boston Globe, in a statement that the senator from New Hampshire supports the minimum wage hike, but only with “safeguards” to protect small businesses and restaurants that have borne the economic brunt of the coronavirus pandemic to ensure they “don’t go under.”
“I also think we should work with some of those folks who are affected to help figure out how we can get them through an increase in the minimum wage,” Shaheen told WMUR9. “We have nursing homes in New Hampshire who are having difficulties employing people because of the wage scale.”
Sen. Maggie Hassan of New Hampshire
Another senator from New Hampshire, Hassan, rejected the minimum wage hike proposal. Like Shaheen, Hassan said she supports a separate bill to push the increase through Congress rather than bulking it with the stimulus package.
“Well so there’s isn’t going to be an increase in the minimum wage in this package,” Hassan said in an interview with WMUR9. “That being said, I think it’s really important that we all recognize that people who work 40 hours a week should be able to get by. They shouldn’t be living at or below the poverty level when they’re working hard.”
Sen. Angus King of Maine
King, an independent from Maine who typically caucuses with Democrats, also voted against Sanders’ proposal. He told The Wall Street Journal last week that, while he supports increasing the minimum wage to $15 an hour, he expressed concern that increase labor costs could prompt businesses to make lay off employees.
During the pandemic, “a lot of restaurants are just hanging on by the thread,” he said.
Sen. Tom Carper of Delaware
Two senators from Delaware, Sens. Carper and Coons, were surprising dissenters to the minimum wage hike, especially hailing from Biden’s home state where local Democrats have thrown their support behind such a policy.
Carper threw cold water on the proposal on Friday, citing a need to protect struggling businesses from the increased labor costs.
“I have backed a $15 minimum wage on the federal level for years,” Carper said in a statement to Delaware Online. “At a time when our economy is still slowly recovering, though, policymakers have a responsibility to be especially mindful of the fragile state of small businesses all across this country – many of which are fighting just to stay open during this unprecedented crisis.”
Sen. Chris Coons of Delaware
Like the other senators who dissented, Coons said he was concerned about how the minimum wage increase would impact small businesses.
“Every Democrat and many Republicans agree that the federal minimum wage of $7.25 is too low and has been for too long,” Coons said in a statement to Delaware Online. “It has to be raised. President Biden has called for us to raise it to $15 an hour. I will work with my colleagues on legislation to raise the minimum wage and index it annually.”
Sen. Bernie Sanders said Democrats would try to devise a backdoor to implement a $15 minimum wage after a pay hike was struck from the $1.9 trillion stimulus package on Thursday evening – a major setback for progressives.
Senate parliamentarian Elizabeth McDonough ruled that a $15 minimum wage violated the strict guidelines of the reconciliation process. It’s the legislative method Democrats are using to approve the package in a party-line vote without Republican support.
In a statement, Sanders criticized McDonough’s decision. “It is hard for me to understand how drilling for oil in the Arctic National Wildlife Refuge was compliant with the Byrd rule, but raising the minimum wage is not,” the Vermont Democrat said, referring to a part of the 2017 GOP tax law allowed through reconciliation.
Then he said he will work with other Senate Democrats on “an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages.”
There were early signs of Democratic support for the move on Thursday evening. Sen. Brian Schatz of Hawaii tweeted “COUNT ME IN” on the Sanders proposal.
Sen. Ron Wyden of Oregon, chair of the tax-writing Senate Finance Committee, also said in a statement: “I’m looking at a tax penalty for mega-corporations that refuse to pay a living wage.”
Democrats are rushing to approve the emergency spending package ahead of March 14, the deadline when enhanced unemployment insurance starts to expire.
Yet designing and gathering support for a new plan to raise wages could complicate the swift timeline Democrats are pursuing. Some centrist Democrats may be reluctant to raise taxes on large corporations during the economic downturn.
It’s also unclear whether the proposal would be supported by Sen. Joe Manchin, a key West Virginia Democrat. The provision would also have to clear the reconciliation process governed by the parliamentarian.
House Democrats on Wednesday were setting the stage for a floor vote on Friday, as their Senate counterparts waited for a key ruling that would determine whether a $15 minimum wage could be included in the stimulus package.
In a press call, House Majority Leader Steny Hoyer said Democrats aimed to “pass a final bill and send it to the president by the 12th of March.”
That deadline would be two days before enhanced unemployment insurance programs start ending for many jobless Americans, including a $300 weekly federal supplement. Democrats have continued trying to gather support for the plan.
“Right now, it’s more important than ever that we do everything that we can to crush the virus, rebuilding our economy for working people and families that need the support to get back on their feet,” Rep. Pete Aguilar told reporters.
Republicans are strongly opposed to the Democratic plan, arguing it contains a litany of progressive priorities.
“They’re gonna try to muscle it through on a totally partisan basis,” Senate Minority Leader Mitch McConnell said on Tuesday. “It also includes a number of things that have absolutely nothing to do with COVID.”
The floor vote would send the legislation to the Senate, which is expected to take it up next week. The House bill includes $1,400 stimulus checks, $400 federal unemployment benefits, and aid to state and local governments.
It also includes a gradual increase of the federal minimum wage to $15 an hour – a measure that has been a lightning rod of criticism among Republicans and several Democrats.
Democrats are employing a tactic known as reconciliation to shield the package from a filibuster. It only needs a simple majority of 51 votes to get through the Senate, instead of the usual 60.
But reconciliation has strict budgetary rules, including a set of requirements that every element has a substantial impact on federal spending, the debt, and revenue over 10 years. The Senate parliamentarian governing the process will decide whether the minimum wage boost complies with those guidelines.
Democrats and Republicans made their cases to the parliamentarian early on Tuesday morning. A ruling on the wage bump could come later on Wednesday or early Thursday.
Still, some Democrats like Sen. Joe Manchin of West Virginia are opposed, complicating the bill’s path to final approval. He has said he would push for an increase to $11 an hour instead. A ruling that the wage increase complies with the rules of reconciliation may set off another furious round of negotiations on a middle ground.
“I’m an optimist,” Sen. Dick Durbin of Illinois told reporters. “I think even though several Democrats have some concerns that we can still find a basis for agreement.”
The Biden administration has pressed for a $15 minimum wage in the package. But White House officials have said that Senate Democrats will be in charge of striking a possible deal on a smaller wage increase.
“The compromise will be between members of the Senate who may have disagreement on where the minimum wage should sit or what the process should be,” White House Press Secretary Jen Psaki said on Wednesday.
Democrats on Wednesday also struggled to confirm Neera Tanden, Biden’s pick to head the Office of Management and Budget. Two committee votes on her nomination were cancelled earlier in the day, sowing further doubt about whether she can get enough votes in the Senate to be confirmed.