Walmart’s CEO tells Congress to hike the minimum wage – Well he would say that, wouldn’t he?
During the trial at the center of the ‘Profumo Affair‘ which rocked the British government in 1963, Mandy Rice-Davies, a model and “showgirl”, was told that that Lord Astor, a Conservative Party politician, had denied having an affair or even having met her. She famously giggled, and replied “Well he would say that, wouldn’t he?”
When I read last week that Walmart CEO Doug McMillon is calling on Congress to raise the federal minimum wage from its current $7.25 an hour, Rice-Davies’ words popped into my head; “Well he would say that, wouldn’t he?”
Walmart currently has a starting minimum wage of $11 an hour. If Mr. McMillon thinks this is too low there is nothing stopping him from raising it. He doesn’t need Congress to make him do it.
No, what Mr. McMillon wants is for Congress to force other businesses to pay their workers more. He will pay Walmart’s workers more, but only if other companies are coerced into raising their wage bills.
This might not be a problem for a large employer like Walmart with its economies of scale. But it will be a problem for smaller employers. Indeed, when the Citizens League looked into plans to hike Saint Paul’s minimum wage to $15 an hour, they found that most of St. Paul’s large employers such as Allina Health, Ecolab, HealthPartners, and Securian already pay the majority of their workers at least $15 per hour. Instead, it will be the city’s smaller businesses who will be hit hard by this steep rise in their labor costs.
Big businesses like Target and Amazon have been raising their base pay recently. They may say they have done this in response to pressure from groups like Fight for 15. Don’t believe them. They have done it because the labor market is tight and they have to pay more for workers. If a CEO says they were moved to raise base pay because of a sad story they heard from an employee, well, they would say that, wouldn’t they?
John Phelan is an economist at the Center of the American Experiment.